All states but Michigan have amended their laws to address this provision, the GAO says, and states had largely adopted a definition of "home state" consistent with terminology in the NRRA.

The GAO says the NRRA was passed because supporters argued it would "make it easier for surplus-lines insurers and brokers conducting business across states."

To that end, the GAO report says, "According to officials of an association representing surplus-lines insurers and brokers, the home-state provision has produced significant benefits for the surplus-lines industry by reducing the need for insurers to comply with differing sets of rules, disclosures and requirements."

The NRRA also allows, but does not require, states to form an interstate compact to allocate premium taxes paid to the home state. However, the GAO notes that only a few states have chosen to do so. Most states, the study says, are collecting and retaining 100% of the premium taxes.

States making additional requirements

Another section of the NRRA, GAO notes, seeks to establish uniformity in the criteria states use to determine which insurers are eligible to sell insurance on a surplus-lines basis. "Specifically," GAO says, "NRRA states that a state may not impose eligibility requirements on or establish eligibility criteria for surplus-lines insurers domiciled in the United States that are authorized to write policies in their state of domicile."

The NRRA also establishes minimum capital and surplus requirements: $15 million or the minimum capital and surplus requirements of the insured's home state.

The GAO says some industry associations have reported that states are acting in apparent violation of this part of the NRRA, Section 524, by requesting additional information such as business plans, disaster plans and policy forms, as well as asking for fees or other charges not specified in Section 524.

"According to associations," GAO says, "in some cases, states are applying different standards for single and multistate risks, a particular issue for alien insurers."

The study says the National Association of Insurance Commissioners (NAIC) has formed a subgroup to improve access to information by regulators, brokers and the insured to help reduce the requesting of additional information.

Regarding the NRRA's impact on the pricing and market capacity, the study says, "Market participants said that NRRA has had little, if any, effect on the prices or availability of coverage, as this was not an intent of the act."