The state of Florida is dropping out of a clearinghouse system created to allow each state to collect its own premiums on multistate surplus lines placements, moving the industry closer to its goal of uniform taxation of the strong and growing surplus lines market.

The Washington, D.C.-based Council of Insurance Agents and Brokers, in a note to its members obtained by the National Underwriter Property & Casualty, went so far as to call the decision by Florida a “death blow” to efforts by some state regulators to demand that they receive surplus lines premiums at their own rates on multistate surplus line placements.

Officials of the Kansas City, Mo.-based National Association of Professional Surplus Lines Offices Ltd., said the decision by Florida means that the industry is “one huge step closer” to achieving uniformity among all states on the regulation and taxation of surplus lines premiums. Both the CIAB and NAPSLO want home state taxation, whereby surplus lines taxes are calculated at the home state's tax rate on 100% of the premium and retained 100% by the home state.

Home state taxation

According to NAPSLO, 46 states and the District of Columbia, representing 86% of nationwide surplus lines premium, collect and retain 100% of the surplus lines premium tax paid to them as the “home state” of the insured.