Bill would update surplus lines insurance provisions

Lawmakers gave first-found approval March 30 to a bill that would bring Nebraska’s Surplus Lines Insurance Act into compliance with federal law.

LB70, introduced by Boys Town Sen. Rich Pahls at the request of the state Department of Insurance, would amend several sections of the Surplus Lines Insurance Act to conform to federal law passed in 2010 as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

A Banking Commerce and Insurance Committee amendment, adopted 28-0, replaced the bill.

Among other provisions, the bill would allow the state director of insurance to join the Nonadmitted Insurance Multi-State Agreement (NIMA).

Pahls said NIMA allows states to allocate surplus lines taxes among themselves based on location of risk, rather than on the basis of the home state of the insured as otherwise required by federal law. This would allow Nebraska to continue to collect surplus lines taxes to the fullest extent, he said, adding that the state currently collects approximately $3.9 million per year.

“We will preserve as much of that as possible,” Pahls said.

The bill also would repeal an additional tax levied by Nebraska because NIMA requires participating states to have a single tax rate. LB70 would take effect July 21, 2011 to comply with federal law.

The bill advanced on a 28-0 vote.