What does the Nonadmitted and Reinsurance Reform Act (NRRA) state about premium tax payments?

The Nonadmitted and Reinsurance Reform Act (NRRA) establishes that only an insured's home state has the authority to require the payment of premium tax for surplus lines insurance. This legislation was enacted to streamline the regulation of surplus lines insurance and to create a uniform approach to premium taxation. By stipulating that only the home state can impose this tax, the NRRA aims to eliminate the confusion and complexity that arises when multiple states assert authority over premium tax collection in cross-state transactions.

This focus on the insured’s home state helps to simplify compliance for insurers and enforcement for regulators, ensuring that surplus lines insurance is easier to purchase and more accessible to consumers. In other words, only one state, specifically the insured's home state, has jurisdiction over the premium tax associated with surplus lines, reinforcing the idea of local regulatory control while promoting a national standard in certain respects.