OHIO
Legislation: HB 122 NOTE: Effective June 17, 2011
Bulletins/Regulations/Rules:
September 20, 2011 - Bulletin 2011-08 Nonadmitted Insurance Reform
Compact, NIMA, other: Commissioner has authority to enter SLIMPACT
NOTE: New material in bold:
Sec. 3905.33…(D) For the purpose of carrying out the "Nonadmitted
and reinsurance Reform Act of 2010," 124 Stat. 1589, 15 U.S.C. 8201 et
seq., or any
successor or replacement law, the superintendent shall conduct a
fiscal analysis of the impact of entering into a multi-state agreement
or compact for determining eligibility for placement of unauthorized
insurance and for payment, reporting, collection, and allocation of the
tax on unauthorized insurance. If the fiscal analysis indicates that
entering into a multi-state agreement or compact is advantageous to this
state, the superintendent may enter into the surplus lines insurance
multi-state compliance compact adopted by the national conference of
insurance legislators and known as
"SLIMPACT," as amended on December 21, 2010, and including any subsequent amendment; or, if it is in this state's financial best interest, the superintendent
shall request that the general assembly authorize the superintendent to
enter into a different multi-state agreement or compact.
(E) The superintendent may adopt rules in accordance
with Chapter 119 of the Revised Code to carry out the purposes of
sections 3905.30 to 3905.38 of the Revised Code.Home State Definition:
Ohio is the Home State if the insured maintains its principal place of
business or, in the case of an individual, the individual’s principal
residence here. Ohio’s requirements regarding the placement of such
business will apply to all policies where Ohio is the “home state” of
the insured. If this state is the Home State, but 100% of the
insured risk is located outside of Ohio, then the Home State is the
State to which the greatest percentage of the insured’s taxable premium
for that insurance contract is allocated. For an “affiliated group” of
insured entities, the “home state” is the “principal place of business
of the group member to which the largest percentage of premium is
allocated.
Ohio further defines the principal place of business as the state where
the insured maintains its headquarters and where the insured’s
high-level officers direct, control, and coordinate the business’s
activities. Principal residence is however is not defined nor is it in
NRRA.
Home State Definition: Ohio is the
Home State if the insured maintains its principal place of business or,
in the case of an individual, the individual’s principal residence here.
Ohio’s requirements regarding the placement of such business will apply
to all policies where Ohio is the “home state” of the insured. If this
state is the Home State, but 100% of the insured risk is located outside
of Ohio, then the Home State is the State to which the greatest
percentage of the insured’s taxable premium for that insurance contract
is allocated. For an “affiliated group” of insured entities, the “home
state” is the “principal place of business of the group member to which
the largest percentage of premium is allocated.
Ohio further defines the principal place of business as the state where
the insured maintains its headquarters and where the insured’s
high-level officers direct, control, and coordinate the business’s
activities. Principal residence is however is not defined nor is it in
NRRA.
Exempt Commercial Purchaser: Surplus
lines brokers seeking to procure or place nonadmitted insurance on
behalf of an “exempt commercial purchaser” are not required to perform a
diligent search if: 1) the broker has disclosed to the exempt
commercial purchaser that insurance may or may not be available from the
admitted market that may provide greater protection with more
regulatory oversight; and 2) the exempt commercial purchaser has
subsequently requested in writing for the broker to procure or place
such insurance from a nonadmitted insurer.
“Exempt commercial purchaser” is defined in HB122 as is “Qualified risk
manager.”
Eligibility: Brokers are permitted to
place nonadmitted insurance with U.S. domestic insurers that are
eligible in Ohio provided they are authorized to write such business in
their State of Domicile and maintain minimum capital and surplus of $15
million or the minimum capital and surplus amount required in Ohio,
whichever is greater. Ohio allows brokers to place business with
non-U.S. carriers that are included on the NAIC’s Quarterly Listing of
Alien Insurers.
It is possible in the future that Ohio would adhere to
alternative nationwide uniform eligibility requirements adopted by this
state through participation in a compact or other nationwide system
pursuant to NRRA. Ohio does not currently so participate.
Tax Reporting Status: Note: new material is in bold, deleted material in strikethru
Sec. 3905.36. (A) Except as provided in divisions (B) and (C) of this section, every Every insured association, company, corporation, or other person that enters, directly or indirectly, into any agreements independent procurement or direct placement
agreement with any insurance company, association, individual, firm,
underwriter, or Lloyd's, not authorized to do business in this state,
whereby the insured shall procure, continue, or renew contracts of
insurance covering subjects of insurance resident, located, or to be performed within this state, with
such unauthorized insurance company,
association, individual, firm, underwriter, or Lloyd's, for which insurance there is a gross premium, membership fee, assessment, dues, or other consideration charged or collected, shall file the details of the transaction annually, on or before the thirty-first day of March, return
to the superintendent of insurance a statement under oath showing the
name and address of the insured, name and address of the insurer,
subject of the insurance, general description of the coverage, and
amount of gross premium, fee, assessment, dues, or other consideration
for such insurance for
the preceding calendar year and shall at the same time pay to the treasurer of state a tax of five per cent of such gross premium, fee, assessment, dues, or other consideration, after a deduction for return
premium, if any, as calculated on a form in the prescribed by the treasurer of state. All format
or in compliance with any requirements of the compact entered into by
the superintendent pursuant to division (D) of section 3905.33 of the
Revised Code. An insurer may submit the required details of the
transaction and remit the tax payment on behalf of an insured. All taxes collected under this section by the treasurer of state
shall be paid into the general revenue fund. If the tax is not paid
when due, the tax shall be increased by a penalty of twenty-five
per cent. An interest charge computed as set forth in section 5725.221
of the Revised Code shall be made on the entire sum of the tax plus
penalty, which interest shall be computed from the date the tax is due
until it is paid. For purposes of this section, payment is considered
made when it is received by the treasurer of state, irrespective of any United States postal service marking or other stamp or mark indicating the date on which the payment may have been mailed. The
superintendent of insurance, in the
superintendent's sole discretion, may waive the twenty-five per cent
penalty and interest charge thereon for a first-time, inadvertent
nonpayment of the tax when due if the nonpayment is reported immediately
upon discovery and the outstanding tax is thereafter immediately paid
to the superintendent…
From Bulletin 2011-08:
HB 122 became effective June 17, 2011 and NRRA became effective
July 21, 2011. Similar to Ohio, laws of other states may have become
effective prior to NRAA's effective date of July 21, 2011. For policies
effective June 17, 2011 through July 21, 2011, where Ohio is the home
state for a multi-state risk, it is not the intent for an insured to be
taxed on an amount greater than 100% of the premium. If another state
required premium to be allocated and taxes remitted to it for those
policies written during the time period of June 17, 2011 through July
21, 2011, the allocated premium may
be subtracted from the Ohio taxable premium.
It is the intent of the Department to issue additional bulletins if and
when Ohio begins participating in a tax sharing arrangement. Until
additional bulletins are issued, the Ohio tax rate should be applied to
new and renewal policies with an effective date on or after June 17,
2011, when Ohio is the insured's Home State.
Tax Processing Fee: Silent
Policyholder Notice:
Note: new material is in bold, deleted material in strikethru
Sec. 3905.33…
(C) An Except when exempt from due diligence requirements under division (B) of this section, an insurance agent who procures or places insurance through a surplus line lines
broker shall obtain an affidavit from the insured acknowledging that
the insurance policy is to be placed with a company or insurer not
authorized to do business in this state and acknowledging that, in the
event of the insolvency of the insurer, the insured is not entitled to
any benefits or proceeds from the Ohio insurance guaranty association.
The affidavit must be on a form prescribed by
the superintendent. The agent shall submit the original originally executed affidavit to the surplus line lines broker within thirty days after the effective date of the policy. If no other agent is involved, the surplus line lines broker shall obtain the affidavit from the insured. The surplus line lines broker shall keep maintain the original originally executed affidavit or a copy of the affidavit,
and the originating agent shall keep a copy of the affidavit, for at
least five years after the
effective date of the policy to which the affidavit pertains. A copy of
the affidavit shall be given to the insured at the time the insurance is
bound or a policy is delivered.
Department Contact: The Ohio Department of Insurance - Felisa Brown, 614.664.2635, [email protected] 50 W. Town Street - Third Floor - Suite 300 - Columbus, Ohio 43215 - 614.644.2658
Ohio Governor Signs Surplus Lines Legislation
March 24, 2011 - Ohio Gov. John R. Kasich signed House Bill
122, legislation continuing Ohio’s involvement in the “surplus lines”
insurance market. HB 122 permits the Director of the Ohio Department of
Insurance to join a compact if deemed advantageous to the state and
harmonizes Ohio insurance law with federal requirements imposed through
the Non-Admitted and Reinsurance Reform Act (NRRA), a provision included
in the Dodd-Frank legislative package passed by Congress in 2010.