On July 15, South Dakota officially became the sixth state to sign the Non-Admitted Insurance Multi-State Agreement (NIMA). Insurance Director Merle Scheiber signed on behalf of South Dakota, which collected nearly $29 million in excess and surplus lines premium in 2009. With the addition of South Dakota, NIMA states now represent 19.6% of the surplus lines market according to 2009 data.
NIMA is an agreement that provides a mechanism to report, collect, allocate and distribute surplus lines tax revenues consistent with the Non-Admitted and Reinsurance Reform Act (NRRA). The NRRA became part of the Dodd-Frank Wall Street Reform legislation passed in 2010 that allows only the home state to require premium tax payments for non-admitted insurance. Without this agreement, several states could potentially lose surplus lines tax revenues; the lack of an agreement could create distortions in the marketplace.
The participating states now include Florida, Mississippi, Hawaii, Connecticut, Louisiana and South Dakota. Several states have passed legislation and expressed interest in joining NIMA, but are prohibited from officially joining until the July 21, 2011 deadline established in the federal legislation. NIMA member states plan to wait until after the July 21 deadline to elect officers and select a clearinghouse to administer the funds. The State of Florida has agreed to temporarily house the NIMA website, which will contain the signature documents from member states.