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Washington State Office of the Insurance Commissioner

Non-admitted and Reinsurance Reform Act (NRRA)

The NRRA significantly changes surplus line insurance placements in Washington.

  • It impacts all insurers eligible to write non-admitted insurance in Washington, all licensed surplus lines brokers and the Surplus Line Association of Washington.
  • The NRRA doesn't change the kinds of insurance an insurer may write in the non-admitted market. 
  • Each state continues to determine which kinds of insurance an insurer may write in their state. 
  • The NRRA doesn't impact insurance offered by authorized insurers in Washington.

 

How does the NRRA affect:

Select a question to display the answer.

How will these rules be applied?
  • New and renewal policies with an effective date prior to July 21, 2011 will be subject to the laws and regulations of Washington and other jurisdictions, as applicable, in effect on July 20, 2011 and earlier.
  • The effective date of the policy will control with respect to all modifications to the policy, such as endorsements, (including risk - and premium - bearing endorsements), installment payments and premium audits. 
  • New and renewal policies with an effective date on or after July 21, 2011, and any modifications thereto, will be subject only to the laws and regulations of Washington if Washington is the Home State of the insured.
Basic background information

On July 21, 2010, President Obama signed the federal Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank") into law, which contains the NRRA (codified at 15 U.S.C. § 8201 et seq.). 

The Washington State Legislature passed House Bill 1694 (2011 Legislative Session) which conforms Washington law to the NRRA. 

These regulatory changes affect the manner in which Washington regulates and taxes surplus lines insurance: 

  • The NRRA provides that only an insured's "Home State" may require the payment of premium tax for non-admitted insurance. 
  • The NRRA subjects the placement of non-admitted insurance solely to the statutory and regulatory requirements of the insured's Home State, and provides that only the insured's Home State may require a surplus lines broker to be licensed to sell, solicit or negotiate non-admitted insurance with respect to such insured. 

15 U.S.C. § 8206(9), applies only to property and casualty insurance and expressly excludes workers' compensation insurance.

Who may I contact with questions?

If you have any questions or need assistance, please contact:

 

What are some of the key definitions related to the NRRA?

 

License requirements

Only the insured's Home State may require a surplus lines broker to be licensed to sell, solicit or negotiate non-admitted insurance with respect to a particular placement.  If Washington is the insured's Home State, the surplus lines broker must be licensed in Washington.

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Premium taxes and payments

The NRRA provides that only an insured's "Home State" may require the payment of premium tax for non-admitted insurance:

    • Washington is the insured's Home State if the insured maintains its principal place of business here or, in the case of an individual, the individual's principal residence is here. 
    • If Washington is considered the insured's Home State, only Washington requirements regarding the placement of such business will apply. 
    • If 100% of the insured risk is located outside of Washington, then the insured's Home State is the state to which the greatest percentage of the insured's taxable premium for that insurance contract is allocated.

As of July 21, 2011, the NRRA permits only the insured's Home state to require the payment of premium tax for non-admitted insurance. 

Until July 21, 2011, the laws and regulations of Washington and other jurisdictions, as applicable, will continue to apply to premium tax due on multi-state placements.

Washington has not entered into any tax sharing arrangement with other states.  It is the intent of the OIC to issue additional guidance if and when that occurs.

    • Where Washington is the insured's Home State under a surplus line policy, 100% of the premium is subject to taxation by Washington State, even though part of the risk is located outside of Washington state. 
    • The Washington tax rate of 2% should be applied to 100% of the premium of new and renewal policies with an effective date on or after July 21, 2011, when Washington is the insured's Home State.

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Non-admitted insurer eligibility

The NRRA restricts the eligibility requirements a state may impose on non-admitted insurers.  See 15 U.S.C. § 8204. 

    • For non-admitted insurers domiciled in a U.S. jurisdiction, a broker is permitted to place non-admitted insurance with such insurers provided they are authorized to write such business in their state of domicile and maintain minimum capital and surplus of $15 million.
    • For non-admitted insurers domiciled outside the U.S., a broker may place business with such insurers provided the insurer is listed on the Quarterly Listing of Alien Insurers maintained by the International Insurance Department of the NAIC.

Washington does not maintain a list of eligible insurers however, Surplus Lines Association of Washington monitors various insurers for indicators of financial solvency. 

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Diligent search requirements

RCW 48.15.040 requires the surplus line broker to perform a diligent search of the admitted market and file a certification within 60 days of procuring the surplus line insurance.  (Note that RCW 48.15.040 (3) prohibits the procurement of non-admitted insurance for the purpose of securing a lower premium.)

  • The Surplus Line Association of Washington maintains certification forms designed to meet our requirements.  You may reach them at 206-682-3409 or visit their web site.

A surplus lines broker seeking to procure or place non-admitted insurance on behalf of an "exempt commercial purchaser" is not required to perform a diligent search if:

  1. The broker has disclosed to the exempt commercial purchaser that insurance may or may not be available from the admitted market that may provide greater protection with more regulatory oversight; and
  2. The exempt commercial purchaser has subsequently requested in writing for the broker to procure or place such insurance from a non-admitted insurer.

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Questions?

 




Updated 04/25/2012

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