AN ACT to amend the Indiana Code concerning insurance.
located outside the state described in clause (A), the state
to which the greatest percentage of the insured's taxable
premium for the insurance contract is allocated.
(2) With respect to an affiliated group, if more than one (1) insured from the affiliated group is a named insured on a single nonadmitted insurance contract, the home state determined under subdivision (1) of the member of the affiliated group that has the largest percentage of premium attributed to the member under the insurance contract.
Sec. 15. "Independently procured insurance" means insurance procured by an insured directly from a surplus lines insurer or other nonadmitted insurer under the law of the home state.
Sec. 16. "Insurer eligibility requirements" means the criteria, forms, and procedures that are:
(1) established to qualify as a surplus lines insurer under the law of the home state; and
(2) consistent with the NRRA.
Sec. 17. "Member" means a person chosen by a compacting state as the compacting state's representative to the commission.
Sec. 18. "Multistate risk" means a risk with insured exposures in more than one (1) state.
Sec. 19. "Nonadmitted insurance" means:
(1) surplus lines insurance; or
(2) independently procured insurance;
procured from a nonadmitted insurer.
Sec. 20. "Nonadmitted insurer" means an insurer that is not authorized to transact the business of insurance under the law of the home state.
Sec. 21. "Noncompacting state" means a state that has not adopted this compact.
Sec. 22. "NRRA" refers to the federal Nonadmitted and Reinsurance Reform Act of 2010 (Subtitle B of Title V of P.L.111-203).
Sec. 23. "Policyholder notice" means the disclosure notice or stamp that must be furnished to an applicant or a policyholder in connection with a surplus lines insurance placement.
Sec. 24. "Premium tax" means, with respect to nonadmitted insurance, a tax, a fee, an assessment, or another charge imposed by a government entity based on a payment made as consideration for the nonadmitted insurance.
Sec. 25. "Principal place of business" means, with respect to determining the home state of an insured, the state where the:
state and contracting state in acquiring premium tax and
clearinghouse transaction data from surplus lines licensees
and insureds to report to the clearinghouse. The rules
described in this subdivision must be adopted with input from
surplus lines licensees and must be based on readily available
data, with simplicity and uniformity for the surplus lines
licensee as a material consideration.
(2) Uniform clearinghouse transaction data reporting requirements for all information reported to the clearinghouse.
(3) Methods by which compacting states and contracting states will require surplus lines licensees and insureds to pay premium tax and report clearinghouse transaction data to the clearinghouse, including processing clearinghouse transaction data through state stamping and service offices, state insurance departments, or other state designated agencies or entities.
(4) That nonadmitted insurance of multistate risks is subject to all regulatory compliance requirements of the home state exclusively. The regulatory compliance requirements that will be applicable to surplus lines insurance under the rules described in this subdivision include the following:
(A) Licensure requirements for persons to sell, solicit, or negotiate surplus lines insurance.
(B) Insurer eligibility requirements or other approved nonadmitted insurer requirements.
(C) Diligent search requirements.
(D) Providing state transaction documentation and clearinghouse transaction data regarding the payment of premium tax under this compact.
The regulatory compliance requirements that will be applicable to independently procured insurance placements under the rules described in this subdivision include providing state transaction documentation and clearinghouse transaction data regarding the payment of premium tax under this compact.
(5) That each compacting state and each contracting state may charge its own rate of taxation on the premium allocated to the compacting state or contracting state based on the applicable allocation formula. However:
(A) the state shall establish a single rate of taxation applicable to all nonadmitted insurance transactions; and
(11) That each surplus lines licensee is required to be licensed only in the home state of each insured for whom the licensee has procured surplus lines insurance.
(A) a policy considered to be surplus lines insurance in the insured's home state shall be:
(i) considered to be surplus lines insurance in all compacting states and contracting states; and
(ii) taxed as a surplus lines transaction in all states to which a portion of the risk is allocated;
(B) each compacting state and each contracting state shall require each surplus lines licensee to pay to every other compacting state and contracting state premium taxes on each multistate risk through the clearinghouse at the tax rate charged on surplus lines transactions in the other compacting state or contracting state on the portion of the risk in the compacting state or contracting state, as determined by the applicable uniform allocation formula adopted by the commission;
(C) a policy considered to be independently procured insurance in the insured's home state is considered to be independently procured insurance in all compacting states and contracting states; and
(D) each compacting state and each contracting state shall require the insured to pay every other compacting state and contracting state the independently procured insurance premium tax on each multistate risk through the clearinghouse, as determined by the uniform allocation formula adopted by the commission.
(13) Uniform foreign insurer eligibility requirements, as authorized by the NRRA.
(14) A uniform policyholder notice.
(15) Uniform treatment of purchasing group surplus lines insurance placements.
Sec. 2. The commission has the following powers:
(1) To adopt rules and operating procedures under IC 27-18-8 that:
(A) have the force and effect of law; and
(B) are binding;
in the compacting states to the extent and in the manner provided in this compact.
compliance, and tax allocations; and
(B) serve as a resource for state insurance departments and other state departments.
(16) To establish a budget and make expenditures.
(17) To borrow money.
(18) To appoint and oversee committees, including advisory committees comprised of members, state insurance regulators, state legislators or their representatives, insurance industry and consumer representatives, and other interested persons designated in this compact and the bylaws.
(19) To establish an executive committee under IC 27-18-4-4 that:
(A) is comprised of at least seven (7) and not more than fifteen (15) representatives, including officers elected by the commission and such other representatives as are provided for in this article or determined by the bylaws, who:
(i) serve a one (1) year term; and
(ii) are each entitled to one (1) vote;
(B) has the power to act on behalf of the commission, except for rulemaking, when the commission is not in session;
(C) oversees the day to day activities of the administration of this compact, including the activities of the operations committee created under subdivision (20) and IC 27-18-4-5, and compliance and enforcement of the provisions of this compact and the bylaws and rules; and
(D) has other duties as provided in this article and as considered necessary.
(20) To establish an operations committee under IC 27-18-4-5 consisting of at least seven (7) and not more than fifteen (15) representatives to provide analysis, advice, determinations, and recommendations regarding:
(A) technology, software, and systems integration to be acquired by the commission; and
(B) the establishment of mandatory rules to be adopted by the commission.
(21) To enter into contracts with contracting states to enable contracting states to use the services of and fully participate in the clearinghouse under the terms and conditions set forth in the contracts.
(22) To adopt and use a corporate seal.
appointed and serve for a term in accordance with the bylaws.
(d) The executive committee has the authority and duties set forth in the bylaws, which must include the following:
(1) Managing the affairs of the commission in a manner consistent with the bylaws and purposes of the commission.
(2) Establishing and overseeing:
(A) an organizational structure within; and
(B) appropriate procedures for the commission to provide for the creation of;
rules and operating procedures.
(3) Overseeing the offices of the commission.
(4) Planning, implementing, and coordinating communications and activities with other state, federal, and local government organizations to advance the goals of the commission.
(e) The commission shall annually elect officers from the membership of the executive committee. The officers have the authority and duties specified in the bylaws.
(f) The executive committee may:
(1) subject to the approval of the commission; and
(2) according to terms and conditions, and for compensation, that the commission determines to be appropriate;
appoint or retain an executive director.
(g) The executive director:
(1) shall serve as secretary to the commission;
(2) shall not serve as a member of the commission; and
(3) shall hire and supervise other persons as authorized by the commission.
Sec. 5. (a) The commission shall establish an operations committee.
(b) All actions of the operations committee are subject to the review and oversight of the commission and the executive committee, and must be approved by the commission.
(c) The executive committee shall accept the determinations and recommendations of the operations committee unless good cause is shown why those determinations and recommendations should not be approved. Disputes as to whether good cause exists to reject a determination or recommendation of the operations committee must be resolved by a majority vote of the commission.
(d) The operations committee consists of not more than fifteen (15) representatives (or one (1) representative for each state if there are less than fifteen (15) compacting states) who are
appointed and serve for a term according to the bylaws.
(e) The operations committee shall have responsibility for the following:
(1) Evaluating technology requirements for the clearinghouse, assessing existing systems used by state regulatory agencies and state stamping offices:
(A) to maximize the efficiency and successful integration of the clearinghouse technology systems with state and state stamping office technology platforms; and
(B) to minimize costs to the states, the state stamping offices, and the clearinghouse.
(2) Making recommendations to the executive committee based on the operations committee's analysis and determination of the clearinghouse technology requirements and compatibility with existing state and state stamping office systems.
(3) Evaluating the most suitable proposals for adoption as mandatory rules, assessing the proposals for ease of integration by states and likelihood of successful implementation, and reporting to the executive committee the operations committee's determinations and recommendations.
(4) Other duties and responsibilities delegated to the operations committee by the bylaws, the executive committee, or the commission.
(f) All representatives of the operations committee must be individuals who have extensive experience or employment in the surplus lines insurance business, including executives and attorneys employed by:
(1) surplus lines insurers;
(2) surplus lines licensees;
(3) law firms;
(4) state insurance departments; or
(5) state stamping offices.
(g) Operations committee representatives from compacting states that use the services of a state stamping office shall appoint the chief operating officer or a senior manager of the state stamping office to the operations committee.
Sec. 6. (a) A legislative committee comprised of state legislators or state legislators' designees shall be established to monitor the operations of and make recommendations to the commission, including the executive committee.
(b) The bylaws must determine the manner of selecting the
members of the legislative committee and the term of office of the
legislative committee members.
(c) Before the commission adopts any:
(1) uniform standard;
(2) revision to the bylaws;
(3) annual budget; or
(4) other significant matter as provided in the bylaws;
the executive committee shall consult with and report to the legislative committee.
Sec. 7. The commission may establish additional advisory committees, as the bylaws provide, for carrying out the commission's functions.
Chapter 5. Corporate Records of the Commission
Sec. 1. The commission shall maintain the commission's corporate books and records in accordance with the bylaws.
Chapter 6. Qualified Immunity, Defense, and Indemnification
Sec. 1. (a) The members, officers, executive director, employees, and representatives of the commission, members of the executive committee, and members of any other committee of the commission are, personally and in their official capacity, immune from suit and liability for a claim for damage to or loss of property, personal injury, or other civil liability caused by or arising out of an actual or alleged act, error, or omission:
(1) that occurs; or
(2) that the person against whom the claim is made has a reasonable basis for believing to have occurred;
within the scope of commission employment, duties, or responsibilities.
(b) This section does not protect a person described in subsection (a) from suit or liability for damage, loss, injury, or liability caused by the intentional or willful or wanton misconduct of the person.
Sec. 2. (a) The commission shall defend a member, officer, executive director, employee, or representative of the commission, the executive committee, or any other committee of the commission in a civil action seeking to impose liability arising out of an actual or alleged act, error, or omission:
(1) that occurs; or
(2) that the person against whom the claim is made has a reasonable basis for believing to have occurred;
within the scope of commission employment, duties, or responsibilities if the actual or alleged act, error, or omission did
not result from the person's intentional or willful or wanton
(b) This section does not prohibit a person described in subsection (a) from retaining the person's own counsel.
Sec. 3. The commission shall indemnify and hold harmless a member, officer, executive director, employee, or representative of the commission, executive committee, or other committee of the commission for the amount of a settlement or judgment obtained against the person arising out of an actual or alleged act, error, or omission:
(1) that occurs; or
(2) that the person against whom the claim is made has a reasonable basis for believing to have occurred;
within the scope of commission employment, duties, or responsibilities if the actual or alleged act, error, or omission did not result from the person's intentional or willful or wanton misconduct.
Chapter 7. Meetings and Acts of the Commission
Sec. 1. The commission shall meet and take action consistent with this compact and the bylaws.
Sec. 2. (a) Each member of the commission has the right and power to:
(1) cast a vote to which the compacting state represented by the member is entitled; and
(2) participate in the business and affairs of the commission.
(b) A member shall vote in person or by other means provided in the bylaws.
Sec. 3. The commission:
(1) shall meet at least once during each calendar year; and
(2) shall hold additional meetings according to the bylaws.
Sec. 4. Public notice shall be given of all meetings, and all meetings shall be open to the public, except as set forth in the rules or in this compact.
Sec. 5. The commission shall adopt rules concerning the commission's meetings consistent with the principles contained in 5 U.S.C. 552b.
Sec. 6. The commission and the commission's committees may close a meeting, or a part of a meeting, upon a determination by the commission by majority vote that an open meeting would be likely to do any of the following:
(1) Relate solely to the commission's internal personnel practices and procedures.
Sec. 4. (a) Not later than thirty (30) days after a rule is adopted, any person may file a petition for judicial review of the rule.
(b) The filing under subsection (a) of a petition for judicial review of a rule does not stay or otherwise prevent the rule from becoming effective unless the court finds that the petitioner has a substantial likelihood of success.
(c) The court shall give deference to the actions of the commission consistent with applicable law and shall not find a rule that is the subject of a petition under this section to be unlawful if the rule represents a reasonable exercise of the commission's authority.
Chapter 9. Commission Records and Enforcement
Sec. 1. (a) The commission shall adopt rules establishing conditions and procedures for public inspection and copying of the commission's information and official records, not including information and records involving the privacy of individuals, insurers, or insureds, or surplus lines licensee trade secrets.
(b) State transaction documentation and clearinghouse transaction data collected by the clearinghouse may be used only for purposes expressed in or reasonably implied under the provisions of this compact, and the commission shall afford the state transaction documentation and clearinghouse transaction data the broadest protections as permitted by applicable law for proprietary information, trade secrets, or personal data.
(c) The commission may adopt additional rules under which the commission may:
(1) make available to federal and state agencies, including law enforcement agencies, records and information otherwise exempt from disclosure; and
(2) enter into agreements with agencies described in subdivision (1) to receive or exchange information or records subject to nondisclosure and confidentiality provisions.
Sec. 2. (a) Except for privileged records, data, and information, the laws of a compacting state pertaining to confidentiality or nondisclosure do not relieve a compacting state member of the duty to disclose any relevant records, data, or information to the commission.
(b) Disclosure to the commission as described in subsection (a) does not waive or otherwise affect a confidentiality requirement.
(c) Except as otherwise expressly provided in this compact, the commission is not subject to the laws of a compacting state
described in subsection (a) with respect to records, data, and
information in the commission's possession.
(d) Confidential information of the commission remains confidential after the information is provided to a member.
(e) The commission shall maintain the confidentiality of information provided by a member if that information is confidential under the member's state's law.
Sec. 3. (a) The commission shall monitor compacting states for compliance with the bylaws and rules.
(b) The commission shall provide written notice of noncompliance to a compacting state that does not comply with the bylaws and rules.
(c) If a compacting state that receives a notice of noncompliance under subsection (b) fails to remedy the noncompliance within the time specified in the notice of noncompliance, the compacting state is considered to be in default under IC 27-18-14.
Chapter 10. Dispute Resolution
Sec. 1. (a) The commission shall attempt, upon the request of a member, to resolve disputes or other issues that:
(1) are subject to this compact; and
(2) may arise between two (2) or more compacting states, contracting states, or noncompacting states.
A member may not bring an action in a court with jurisdiction alleging a violation of a provision, standard, or requirement of this compact unless the commission, at the member's request, has attempted to resolve the dispute concerning the alleged violation.
(b) The commission shall adopt a rule providing alternative dispute resolution procedures for disputes described in subsection (a).
Sec. 2. The commission shall provide alternative dispute resolution procedures to resolve any disputes between insureds or surplus lines licensees concerning tax calculation or allocation or related issues that are the subject of this compact.
Sec. 3. Alternative dispute resolution procedures provided under this chapter must be used in circumstances where a dispute arises as to which state constitutes the home state.
Chapter 11. Review of Commission Decisions
Sec. 1. Except as necessary in adopting rules to fulfill the purposes of this compact, the commission does not have authority to regulate insurance in the compacting states.
Sec. 2. (a) Not later than thirty (30) days after the commission has given notice of a rule or allocation formula, a third party filer
or compacting state may appeal the commission's determination to
a review panel appointed by the commission.
(b) The commission shall adopt rules to establish procedures for the appointment of a review panel to consider an appeal described in subsection (a) and to provide for notice and hearing in the appeal.
(c) An allegation that the commission, in making a compliance or tax determination, acted arbitrarily, capriciously, or in a manner that is an abuse of discretion or otherwise not in accordance with the law is subject to judicial review in accordance with IC 27-18-2-6.
Sec. 3. (a) The commission may monitor and review commission decisions, and may reconsider commission decisions upon a finding that the determinations or allocations do not meet the relevant rule.
(b) The commission may withdraw or modify a determination or allocation described in subsection (a) after proper notice and hearing, subject to appeal under section 2 of this chapter.
Chapter 12. Finance
Sec. 1. (a) The commission shall pay or provide for the payment of the reasonable expenses of the commission's establishment and organization.
(b) To fund the cost of the commission's initial operations, the commission may accept contributions, grants, and other forms of funding from state stamping offices, compacting states, and other sources.
Sec. 2. (a) The commission shall collect a fee, payable by the insured directly or through a surplus lines licensee, on each transaction processed through the compact clearinghouse, to cover the cost of the operations and activities of the commission and the commission's staff.
(b) The revenue from the fee collected under subsection (a) must be sufficient to cover the commission's annual budget.
Sec. 3. The commission's budget for a fiscal year shall not be approved until the budget has been subject to notice and comment as provided in IC 27-18-8.
Sec. 4. (a) The commission shall be regarded as performing essential governmental functions in:
(1) exercising the commission's powers and functions; and
(2) carrying out the provisions of:
(A) this compact; and
(B) any law relating to this compact.
compacting states enact the amendment into law.
Sec. 4. (a) Subject to subsection (b), if this compact does not take effect under section 2(b) of this chapter or becomes ineffective, the Indiana department of insurance has the authority to enter into contracts to implement the requirements of the NRRA.
(b) The Indiana department of insurance shall not enter into a contract under subsection (a) (including a compact or multistate agreement) that is related to reporting, payment, collection, or allocation of fees or taxes on nonadmitted insurance, unless the Indiana department of insurance has done all of the following:
(1) Completed a fiscal analysis of the impact of the contract.
(2) Studied the expected effect of the contract on Indiana's gross receipt of premium tax.
(3) Reviewed whether the contract will create undue administrative burdens on the state of Indiana or surplus lines licensees.
(4) Concluded that entering into the contract:
(A) is in Indiana's financial best interest; and
(B) is consistent with the requirements of the NRRA.
Chapter 14. Withdrawal, Default, and Termination
Sec. 1. (a) Subject to subsection (b), after this compact becomes effective, the compact continues in force and remains binding upon every compacting state.
(b) A compacting state may withdraw from this compact by enacting a statute specifically repealing the statute that enacted this compact into law.
Sec. 2. (a) The effective date of a compacting state's withdrawal under section 1 of this chapter is the effective date of the statute repealing the statute that enacted this compact.
(b) Except by mutual agreement of the commission and the withdrawing state, a withdrawal under subsection (a) does not apply to a tax or compliance determination that has already been approved on the date the repealing statute becomes effective, unless:
(1) the compacting state and commission mutually agree that the withdrawal applies to the tax or compliance determination; or
(2) the approval of the tax or compliance determination is rescinded by the commission.
Sec. 3. (a) The member representing a compacting state shall immediately notify the executive committee of the commission in writing upon the introduction in the state's legislature of legislation
to repeal this compact in the state.
(b) Not more than ten (10) days after receiving notice under subsection (a) of the legislation under which a state would withdraw from this compact, the commission shall notify the other compacting states of the introduction of the legislation.
(c) A withdrawing state is responsible for all obligations, duties, and liabilities incurred through the effective date of the state's withdrawal, including obligations the performance of which extends beyond the effective date of withdrawal.
(d) To the extent that obligations described in subsection (c) have been released or relinquished by mutual agreement of the commission and the withdrawing state, the commission's determinations before the effective date of the state's withdrawal continue to be effective and shall be given full force and effect in the withdrawing state, unless formally rescinded by the commission.
(e) A state that has withdrawn from this compact shall be reinstated upon the effective date of the state's legislature's reenactment of this compact.
Sec. 4. (a) If the commission determines that a compacting state has defaulted in the performance of any of the compacting state's obligations or responsibilities under this compact or under the bylaws or rules, the commission shall, after notice and hearing under the bylaws, suspend all rights, privileges, and benefits conferred by this compact on the defaulting state, effective on the effective date of default as fixed by the commission.
(b) The grounds for the suspension of a compacting state for default under subsection (a) include:
(1) the failure of the compacting state to perform its obligations or responsibilities; and
(2) other grounds designated in commission rules.
(c) Upon making a determination under subsection (a), the commission shall immediately notify the defaulting state in writing of:
(1) the defaulting state's suspension, pending resolution of the default;
(2) the conditions for resolution of the default; and
(3) the period within which the defaulting state must resolve the default.
(d) If a defaulting state notified under subsection (c) fails to resolve the default within the period specified by the commission under subsection (c)(3):
limits imposed on the legislature of a compacting state:
(1) the conferral upon the commission of obligations, duties, powers, and jurisdiction through this compact is ineffective as to the compacting state; and
(2) the obligations, duties, powers, and jurisdiction:
(A) remain in the compacting state; and
(B) shall be exercised by the agency of the compacting state to which the obligations, duties, powers, or jurisdiction are delegated by law in effect at the time this compact becomes effective.