An Act To Implement the Requirements of the Federal Nonadmitted and Reinsurance Reform Act of 2010
Maine Legislature, Session 125, LD 1352
Committee Amendment CA_A_H543 (House)
Amends: 24-A MRSA §2001-A, 24-A MRSA §2002-A, 24-A MRSA §2003, 36 MRSA §2532

COMMITTEE AMENDMENT "A" to H.P. 993, L.D. 1352, Bill, "An Act To 
Implement the Requirements of the Federal Nonadmitted and Reinsurance Reform Act of 
2010" 
Amend the bill by striking out all of sections 1 to 4 and inserting the following: 
'Sec. 1. 24-A MRSA §2001-A is enacted to read: 
§2001-A. Scope 
This chapter applies exclusively to transactions when this State is the home state of 
the applicant or insured. 
Nothing in this chapter applies to the sale, solicitation, 
negotiation, placement or writing of contracts of insurance for any applicant· or insured 
whose home state is in a jurisdiction other than in this State. 
Sec. 2. 24-A MRSA §2002-A, sub-§3, as amended by PL 1997, c. 592, §48, is 
further amended to read: 
3. 
Producers with surplus lines authority may procure the following kinds of 
insurance from eligible surplus lines insurers without adherence to the procedures set 
forth in section 2004 or any other requirement to determine whether the full amount or 
type of insurance sought can be obtained from admitted insurers: 
A. Wet marine and transportation insurance; 
B. Insurance on subjects located, resident or to be performed wholly outside of this 
State, or on vehicles or aircraft owned and principally garaged outside this State; 
C. 
Insurance on operations of railroads engaged in transportation in interstate 
commerce and their property used in such operations; eF 
D. Insurance on aircraft owned or operated by manufacturers of aircraft or of aircraft 
operated in commercial interstate flight, or cargo of such aircraft, or against liability 
other than workers' compensation and employer's liability arising out of the 
ownership, maintenance or use of such aircraft";"~ 
COMMITTEE AMENDMENT 
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COMMITIEE AMENDMENT" 0 
.. to H.P. 993, L.D. 1352 
E. 
Insurance placed by a producer with surplus lines authority for an exempt 
commercial purchaser if: 
(1) The producer has disclosed to the exempt commercial purchaser that such 
insurance mayor may not be available from the admitted market that provides 
greater protection with more regulatory oversight: and 
(2) The exempt commercial purchaser has subsequently requested in writing for 
the producer to procure or place such insurance from a nonadmitted insurer. 
Sec. 3. 24-A MRSA §2003, as amended by PL 1997, c. 592, §49, is further 
amended to read: 
§2003. Definitions 
As used in this chapter, unless the context otherwise indicates, the following terms 
have the following meanings. 
1. 
"Producer" as lised in this 6Hapter and liHless eonteKt otHerwise reql-lires, means a 
producer with surplus lines authority duly licensed as such under this chapter. 
2. 
To "export" means to place insurance in an liHalitHorized a nonadmitted insurer 
under this Surplus Lines Law insliran6e 60vering a slibjeet of inslifanee resident, loeated 
or to be performed in Maine. 
3. 
"Admitted insurer" means an insurer licensed to engage in the business of 
insurance in this State. 
4. "Affiliate" means, with respect to an insured, any entity that controls, is controlled 
by or is under common control with the insured. 
5. "Affiliated group" means any grOUp of affiliates. 
6. 
"Exempt commercial purchaser" means an exempt commercial purchaser as 
defined by the federal Nonadmitted and Reinsurance Reform Act of 2010, Public Law 
111-203, Section 527. 
7. "Home state" means: 
A. With respect to an insured: 
(1) The state in which an insured maintains its principal place of business or, in 
the case of an individual. the individual's principal residence: or 
(2) 
If 100% of the insured risk is located out of the state referred to in 
subparagraph 1, the state to which the greatest percentage of the insured's taxable 
premium for that insurance contract is allocated: or 
B. With respect to an affiliated group, if more than one of the insureds from an 
affiliated grOUp are named insureds on a single nonadmitted insurance contract, the 
home state, as determined pursuant to paragraph A, of the member of the affiliated 
group that has the largest percentage of premium attributed to it under that insurance 
contract. 
COMMITTEE AMENDMENT 
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COMMITTEE AMENDMENT "A" to H.P. 993, L.D. 1352 
8. "Nonadmitted insurance" means any property and casualty insurance permitted to 
be placed through a surplus lines broker with a nonadmitted insurer eligible to accept that 
insurance. 
9. "Nonadmitted insurer" means an insurer not licensed to engage in the business of 
insurance in this State. "Nonadmitted insurer" does not include a risk retention group, as 
that term is defined in section 6093, subsection 13. 
8ec. 4. 24-A MR8A §2007, as amended by PL 1997, c. 592, §54, is further 
amended to read: 
§2007. Eligible surplus lines insurers 
1. 
A producer may not knowingly place surplus lines insurance with an insurer that 
is unsound financially or that is ineligible under this section. 
2. 
The superintendent shall from time to time publish a list of all surplus lines 
insurers determined by the superintendent to be eligible currently, and shall mail a copy 
of such list to each producer at the producer's office last of record with the 
superintendent. This subsection may not be construed to cast upon the superintendent the 
duty of determining the actual financial condition or claims practices of any unauthorized 
insurer; and the status of eligibility, if granted by the superintendent, may indicate only 
that the insurer appears to be sound financially and to have satisfactory claims practices, 
and that the superintendent has no credible evidence to the contrary. While any such list 
is in effect, the producer shall restrict to the insurers so listed all surplus lines business 
placed by the producer. 
3. 
The superintendent shall approve a United States insurer's request for eligibility 
if the insurer: 
A. Is authorized to write such insurance in its domiciliary jurisdiction; 
B. Has established satisfactory evidence of good repute and financial integrity; and 
C. Maintains capital and surplus, or its equivalent under the laws of its state of 
domicile, in an amount at least equal to the greater of: 
(1) The minimum capital and surplus that would be required if the insurer were 
licensed in this State; and 
(2) $15,000,000. 
4. 
The superintendent may list an insurer as eligible if it does not meet the 
minimum capital and surplus requirements of subsection 3 upon an affirmative finding of 
acceptability by the superintendent. The finding must be based upon such factors as 
quality of management, capital and surplus of. any parent company. company 
underwriting profit and investment income trends, market availability and company 
record and reputation within the industry. The superintendent may not make an 
affirmative finding of acceptability if the nonadmitted insurer's capital and surplus is less 
than $4,500,000. 
5. 
A non-United States insurer is considered eligible to write insurance on an 
unauthorized basis in this State if it is listed on the quarterly listing of alien insurers 
maintained by the National Association of Insurance Commissioners.' 
COMMITTEE AMENDMENT 
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COMMITTEE AMENDMENT "~,, to H.P. 993, L.D. 1352 
Amend the bill in section 14 in §2531 in subsection 1 by striking out all of the first 
sentence (page 3, lines 32 to 37 in L.D.) and inserting the following: 'All gross direct 
insurance premiums and annuity considerations paid to insurers that do not have 
certificates of authority to do business in this State issued by the Superintendent of 
Insurance pursuant to Title 24-A are subject to taxation in accordance with this section if 
this State is the insured's home state, as defined in the federal Nonadmitted and 
Reinsurance Reform Act of2010, Public Law 111-203, Section 527.' 
Amend the bill by striking out all of section 15 and inserting the following: 
'Sec. 15. 36 MRSA §2532 is enacted to read: 
§2532, Authority to enter into multistate agreement 
1. 
Authority; multistate agreement. 
The State Tax Assessor may, after 
consultation 'with the Denartinent of Professional and Financial Regulation, Bureau of 
Insurance, enter into a multi state agreement, in accordance with the federal Nonadmitted 
and Reinsurance Reform Act of 2010, Public Law 111-203, Section 521, for the reporting 
of nonadmitted insurance premiums and the collection and allocation of nonadmitted 
insurance taxes. For any nonadmitted insurance premiums that are subject to taxation by 
this State and interstate allocation of taxes in accordance with the federal Nonadmitted 
and Reinsurance Reform Act of 2010, Public Law 111-203, Section 521, the rate of 
taxation on each participating state's share of the premium must be that state's applicable 
nonadmitted insurance premium tax rate. 
2. Fiscal analysis; consultation. The State Tax Assessor may not enter into a 
multi state agreement pursuant to subsection 1 unless the assessor has: 
A. Completed a fiscal analysis of the impact of the agreement that examines the 
expected effects on the State's gross receipt of premium tax: and 
B. 
Concluded, after consultation with representatives of surplus lines insurers, 
admitted insurers and surplus lines producers, that entering into the agreement: 
(1) Is in this State's financial best interest: 
(2) Does not significantly increase administrative burden and cost to the State, 
surplus lines insurers and insureds: and 
(3) 
Is consistent with the requirements of the federal Nonadmitted and 
Reinsurance Reform Act of 20 1 0, Public Law 111-203.' 
SUMMARY 
The amendment clarifies provisions in the bill by adopting explicit language from 
federal law rather than incorporating the federal law through cross-reference. The 
amendment clarifies that, in accordance with the federal Nonadmitted and Reinsurance 
Reform Act of2010, Maine's surplus lines law pertains to those transactions when Maine 
is the home state of the applicant or the insured. The amendment clarifies that diligent 
search requirements generally required before coverage can be placed in the nonadmitted 
market do not apply to commercial purchasers defmed as exempt from those 
requirements under federal law. The amendment adds definitions of several terms used 
COMMITTEE AMENDMENT 
COMMITTEE AMENDMENT" A " 
to H.P. 993, L.D. 1352 
within the surplus lines law. The amendment clarifies how United States insurers and 
non-United States insurers may become eligible surplus lines insurers. 
The amendment also requires that the Department of Administrative and Financial 
Services, Maine Revenue Services consult with the Department of Professional and 
Financial Regulation, Bureau of Insurance and complete a fiscal analysis of the impact on 
the State's gross receipt of premium tax before entering into any multi state agreement 
with respect to the reporting, allocation and collection of surplus lines premium taxes on 
multistate risks. The amendment also requires that Maine Revenue Services consult with 
representatives of surplus lines insurers, admitted insurers and surplus lines producers 
when making a determination that entering into a multi state agreement is in the State's 
financial best interest and consistent with the federal Nonadmitted and Reinsurance 
Reform Act of20IO. 
FISCAL NOTE REQUIRED 
(See attached) 
COMMITTEE AMENDMENT 
Approved: OS/24111 
~ac 
LD 1352 
LR588(02) 
An Act To Implement the Requirements of the Federal Nonadmitted and Reinsurance Reform Act of 
2010 
Net Cost (Savings) 
General Fund 
Revenue 
General Fund 
Fiscal Detail and Notes 
Fiscal Note for Bill as Amended by Committee Amendment Iff, 
Committee: Insurance and Financial Services 
Fiscal Note Required: Yes 
Fiscal Note 
FY2011-12 
FY 2012-13 
($200,000) 
($200,000) 
$200,000 
$200,000 
Projections 
FY2013-14 
($200,000) 
$200,000 
Projections 
FY 2014-15 
($200,000\ 
$200,000 
Amending surplus lines eligibility standards and nonadmitted insurance premium tax laws to conform to the federal 
Nonadmitted and Reinsurance Reform Act (NRRA) of2010 will increase General Fund revenue by approximately 
$200,000 each fiscal year starting in fiscal year 2011-12. Any costs associated with requiring Maine Revenue 
Services (MRS) to consult with the Bureau ofInsurance and complete a fiscal analysis of the gross receipts of the 
premium tax before entering into a multistate agreement in accordance with the NRRA for the reporting of 
" ''''''iionadmitted insurance premiums and the collection and allocation of nonadmitted insurance taxes can be absorbed 
within existing. budgeted resources. Any entry into such a multistate agreement is anticipated to increase surplus lin~s 
tax revenue. The amount of the increase will depend upon the timing and terms of the multi state agreement and on 
which states participate. The increase in revenue resulting from the multi state agreement could be up to $940,000 per 
fiscal year. 
LR0588(02) - Fiscal Note - Page 1 of 1