The NRRA mandates that, as of July 21, the insured's home state is the only state with jurisdiction over multistate surplus-lines transactions and the only state that can require a tax be paid by the broker.

Two competing proposals have been developed to implement the law and create a system to share premium taxes among states.

The Surplus Lines Multistate Compliance Compact Commission (SLIMPACT) is one proposal supported by officials of the National Conference of Insurance Legislators (NCOIL). A total of nine states support SLIMPACT, although its bylaws mandate it cannot go into operation until 10 states join.

The other competing proposal is the Nonadmitted Insurance Multistate Agreement (NIMA), which is supported by the National Association of Insurance Commissioners (NAIC) and is being coordinated through the Florida Office of Insurance Regulation.

The Kentucky compromise proposal was first disclosed earlier this month as state regulators and legislators agreed to begin discussing possible ways to break the SLIMPACT-NIMA impasse. It allows brokers to continue to operate under a basically unchanged allocation system.

An official the National Association of Professional Surplus Lines Offices (NAPSLO), says, "NAPSLO, and the industry, are pleased to see regulators vote to approve Kentucky's allocation proposal."

David Leonard, NAPSLO legislation co-chairman, adds, "The Kentucky proposal presents a workable methodology that would be a vast improvement over other tax methodologies under discussion, and we hope that other state groups will also adopt the proposal."