HP0993, LD 1352, item 1, An Act To Implement the Requirements of the Federal Nonadmitted and Reinsurance Reform Act of 2010

An Act To Implement the Requirements of the Federal Nonadmitted and Reinsurance Reform Act of 2010

Emergency preamble. Whereas, acts and resolves of the Legislature do not become effective until 90 days after adjournment unless enacted as emergencies; and

Whereas, the federal Nonadmitted and Reinsurance Reform Act of 2010, Title V, Subtitle B of the Dodd-Frank Wall Street Reform and Consumer Protection Act, Public Law 111-203, which takes effect July 21, 2011, was enacted after the adjournment of the Second Regular Session of the 124th Legislature and requires states to revise their eligibility standards for surplus lines insurance and directs states to adopt a multistate premium tax allocation system before June 16, 2011; and

Whereas, the implementation dates imposed by federal law are less than 90 days after the anticipated adjournment of the Legislature; and

Whereas, in the judgment of the Legislature, these facts create an emergency within the meaning of the Constitution of Maine and require the following legislation as immediately necessary for the preservation of the public peace, health and safety; now, therefore,

Be it enacted by the People of the State of Maine as follows:

Sec. 1. 24-A MRSA §2002-A, sub-§3, ¶C, as enacted by PL 1993, c. 153, §16, is amended to read:

C. Insurance on operations of railroads engaged in transportation in interstate commerce and their property used in such operations; or

Sec. 2. 24-A MRSA §2002-A, sub-§3, ¶D, as enacted by PL 1993, c. 153, §16, is amended to read:

D. Insurance on aircraft owned or operated by manufacturers of aircraft or of aircraft operated in commercial interstate flight, or cargo of such aircraft, or against liability other than workers' compensation and employer's liability arising out of the ownership, maintenance or use of such aircraft . ; or

Sec. 3. 24-A MRSA §2002-A, sub-§3, ¶E is enacted to read:

E. Insurance sold to an exempt commercial purchaser in compliance with the requirements of the federal Nonadmitted and Reinsurance Reform Act of 2010, Public Law 111-203, Section 525.

Sec. 4. 24-A MRSA §2003, sub-§2, as enacted by PL 1969, c. 132, §1, is amended to read:

2. To "export" means to place in an unauthorized insurer under this Surplus Lines Law insurance covering a subject of insurance resident, located or to be performed in Maine when the State has jurisdiction over the placement of coverage in accordance with the federal Nonadmitted and Reinsurance Reform Act of 2010, Public Law 111-203, Section 522.

Sec. 5. 24-A MRSA §2016, sub-§2, as enacted by PL 1991, c. 674, §1, is repealed.

Sec. 6. 24-A MRSA §2101, sub-§2, ¶E, as amended by PL 1973, c. 625, §141, is further amended to read:

E. The employee, compensated on salary only, of a Maine employer who on behalf of the employer assists in the procurement or administration of insurance coverages on the property, risks and insurable interests of the employer . ; or

Sec. 7. 24-A MRSA §2101, sub-§2, ¶F is enacted to read:

F. Transactions outside this State arising from the unsolicited application of the insured, if the transaction is lawful in the jurisdiction in which it occurs and the applicable premium tax has been paid in compliance with Title 36, section 2513.

Sec. 8. 24-A MRSA §2113, as corrected by RR 2001, c. 2, Pt. A, §39, is repealed.

Sec. 9. 36 MRSA §191, sub-§2, ¶PP, as corrected by RR 2009, c. 2, §107, is amended to read:

PP. The disclosure to the Department of Conservation of information contained on the commercial forestry excise tax return filed pursuant to section 2726, such as the landowner name, address and acreage, to facilitate the administration of chapter 367; and

Sec. 10. 36 MRSA §191, sub-§2, ¶QQ, as reallocated by RR 2009, c. 2, §108, is amended to read:

QQ. The disclosure of registration, reporting and payment information to the Department of Agriculture, Food and Rural Resources necessary for the administration of Title 32, chapter 28 . ; and

Sec. 11. 36 MRSA §191, sub-§2, ¶RR is enacted to read:

RR. The disclosure to tax officials of other states, and to clearinghouses and other administrative entities acting on behalf of participating states, of information necessary for the administration of a multistate agreement entered into pursuant to section 2532.

Sec. 12. 36 MRSA §2513, first ¶, as amended by PL 2009, c. 625, §9, is further amended to read:

Every insurance company or association that does business or collects premiums or assessments including annuity considerations in the State, including surety companies and companies engaged in the business of credit insurance or title insurance, shall, for the privilege of doing business in this State and in addition to any other taxes imposed for that privilege, pay a tax upon all gross direct premiums including annuity considerations, whether in cash or otherwise, on contracts written on risks located or resident in the State for insurance of life, annuity, fire, casualty and other risks at the rate of 2% a year. Every surplus lines nonadmitted insurer that does business or collects premiums in the State shall, for the privilege of doing business in this State and in addition to any other taxes imposed for that privilege, pay a tax upon all gross direct premiums, whether in cash or otherwise, on contracts written on risks located or resident in the State at the rate of 3% a year as provided in section 2531. The producer of those contracts must collect the tax and report and pay the tax to the State Tax Assessor as provided in section 2521-A, except that an insurance agency may elect to collect and pay the tax on surplus lines premiums on behalf of all of its employees who are surplus lines producers. For purposes of this section, the term "annuity considerations" includes amounts paid to an insurance company for the purchase of a contract that may result in an annuity, even if the annuitization never occurs or does not occur until some time in the future and the amounts are in the meantime applied to an investment vehicle other than an annuity. This section does not apply to mutual fire insurance companies subject to tax under section 2517 or to captive insurance companies formed or licensed under Title 24-A, chapter 83 or under the laws of another state.

Sec. 13. 36 MRSA §2519, as repealed and replaced by PL 1973, c. 727, §9, is amended to read:

§ 2519. Ratio of tax on foreign insurance companies

Any insurance company incorporated by a state of the United States or province of the Dominion of Canada whose laws impose upon insurance companies chartered by this State any greater tax than is herein provided shall pay the same tax upon business done by it in this State, in place of the tax provided in any other section of this Title. If it is not paid as provided in section 2521-A, the Superintendent of Insurance shall suspend the right of said company to do business in this State. Any insurance company incorporated by another country shall be is regarded for the purpose of this section as though incorporated by the state where it has elected to make its deposit and establish its principal agency in the United States. For nonadmitted insurance premiums subject to section 2531, the rate applied pursuant to this section must be the highest rate that the state or province applies to nonadmitted insurance premiums taxed in that state or province.

Sec. 14. 36 MRSA §2531 is enacted to read:

§ 2531. Taxation of nonadmitted insurance coverage

1. Generally. All gross direct insurance premiums and annuity considerations paid to insurers that do not have certificates of authority to do business in this State, issued by the Superintendent of Insurance pursuant to Title 24-A, are subject to taxation in accordance with this section if this State is the insured's home state, as defined in the federal Nonadmitted and Reinsurance Reform Act of 2010, Public Law 111-203, Section 527. This section does not apply to reinsurance premiums paid by an authorized domestic insurer.

2. Rate and incidence of tax. Except as otherwise provided in section 2519 or 2532, the rate of taxation is 3% of the premiums subject to tax under this section. For all coverage placed in accordance with Title 24-A, chapter 19, the tax must be paid by the surplus lines producer. For all other nonadmitted insurance, the tax must be paid by the insured.

3. Returns. Except as otherwise provided in accordance with a multistate agreement entered into pursuant to section 2532, every producer holding surplus lines authority in this State shall file a return and pay the tax due in accordance with section 2521-A and every insured subject to tax in accordance with this section shall file a return and pay the tax due subject to the same requirements as provided in section 2521-A. An insurance agency may elect to collect and pay the tax on surplus lines premiums on behalf of all of its employees who are surplus lines producers and file a single return.

Sec. 15. 36 MRSA §2532 is enacted to read:

§ 2532. Authority to enter into multistate agreement

The assessor may enter into a multistate agreement, in accordance with the federal Nonadmitted and Reinsurance Reform Act of 2010, Public Law 111-203, Section 521, for the reporting of nonadmitted insurance premiums and the collection and allocation of nonadmitted insurance taxes. For any nonadmitted insurance premiums that are subject to taxation by this State and interstate allocation of taxes in accordance with the federal Nonadmitted and Reinsurance Reform Act of 2010, Public Law 111-203, Section 521, the rate of taxation on each participating state's share of the premium must be that state’s applicable nonadmitted insurance premium tax rate.

Sec. 16. Effective date. This Act takes effect July 21, 2011, except that that section of this Act that enacts the Maine Revised Statutes, Title 36, section 2532 takes effect when approved.

Sec. 17. Application. This Act applies to taxes on all premiums received on or after July 1, 2011.

Emergency clause. In view of the emergency cited in the preamble, this legislation takes effect when approved, except as otherwise indicated.

SUMMARY

This bill amends surplus lines eligibility standards and nonadmitted insurance premium tax laws to conform to the requirements of the federal Nonadmitted and Reinsurance Reform Act of 2010. It authorizes the State Tax Assessor to enter into a multistate agreement as directed by federal law; transfers the administration of self-procured insurance premium taxes from the Department of Professional and Financial Regulation, Bureau of Insurance to the Department of Administrative and Financial Services, Maine Revenue Services; and makes conforming technical changes to other provisions of the surplus lines insurance and premium tax laws.

HP0993 LD 1352	First Regular Session - 125th Maine Legislature		LR 588 Item 1
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