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 ContactThe Ohio Department of Insurance - Felisa Brown, 614.664.2635, felisa.brown@insurance.ohio.gov  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.