What did the Federal Nonadmitted and Reinsurance Reform Act (NRRA) change?

The Federal Nonadmitted and Reinsurance Reform Act (NRRA) primarily changed the payment structure for surplus lines taxes, which is central to how surplus lines insurance operates. Under this act, the states gained the authority to regulate their own taxes on surplus lines insurance, allowing producers to collect and remit the surplus lines tax to the state in which the insured is located, rather than the state in which the surplus lines insurer is domiciled. This streamlined the process, making it easier for producers and consumers and facilitating more efficient enforcement of tax collection.

The NRRA was designed to enhance the effectiveness of the surplus lines market by eliminating unnecessary duplication and ensuring that taxes are properly allocated based on the location of the insured, rather than the insurer. This reform was crucial for responding to the increasing complexity of insurance transactions that cross state lines, ultimately promoting market stability and ensuring compliance with state tax obligations.