Unlike other several other states as we reported here, New York has enacted legislation as part of its budget bill that does not authorize the state to enter into the Surplus Lines Insurance Multi-State Compliance Compact (“SLIMPACT”), or any other surplus lines tax allocation compact.  SLIMPACT is an interstate compact that is designed to, among other things, allow for the adoption of uniform standards across participating compact states and uniform tax allocation formulas on multi-state risks. Instead, New York’s legislation allows the state to tax 100% of each surplus line policy’s written premium when New York is the “Home State” of the insured and retain the entire amount, rather than allocate the tax among the various states where the policy insures risk exposures. According to Richard Bouhan, Executive Director of the National Association of Professional Surplus Lines Offices (NAPSLO), it is expected that California will follow suit and “without the large states a compact [such as SLIMPACT] might not be practical.”

The Excess Lines Association of New York (ELANY) is developing detailed guidance for the implementation of the new legislation. We will continue to monitor this issues and post further developments on InsureReinsure.com.