On April 15, the Florida Office of Insurance Regulation (OIR) confirmed that the state will withdraw from the Nonadmitted Insurance Multistate Agreement (NIMA), effective June 1.
“As a member since 2011, Florida was fully committed along with the other member states to the benefits envisioned by this multistate agreement, to include the reporting, payment, collection and allocation of premium taxes for nonadmitted insurance,” an agency spokeswoman told Business Insurance in an email.
The OIR spokeswoman noted that while NIMA had its benefits, full nationwide participation—particularly among larger states—did not occur as anticipated. This is what led to the OIR’s decision to withdraw Florida from the agreement.
On the other hand, the OIR spokeswoman remarked that Florida will continue to rely on the Florida Surplus Lines Service Office's (FSLSO) clearinghouse services on a single-state basis through an independent contract separate from the NIMA.
With Florida’s withdrawal only South Dakota, Utah, Wyoming, and Puerto Rico remain as members of the agreement. The state’s withdrawal was “very likely the death blow to the multi-state surplus lines premium tax allocation mechanism,” said the Council of Insurance Agents & Brokers (CIAB) in a message to its members.
“With the withdrawal of Florida, NIMA loses its largest market and brings us one step closer to finally realizing the long-delayed goal of the Nonadmitted and Reinsurance Reform Act (NRRA) for a single, uniform, approach to the taxation of multi-state surplus lines placements,” the CIAB further said in its statement.
According to an article on Business Insurance, the NIMA was originally a response to the NRRA. The NRRA sought to “clarify that the only rules governing the placement of a surplus lines policy, including collecting premium taxes, are those of the home state of the insured.” Some states, however, decided to develop their own interstate compacts to allocate premium taxes among its members.
