On June 10, 2019, Governor Phil Scott of Vermont signed Senate Bill 131 (the “Bill”) into law, permitting domestic surplus line insurers to offer and sell surplus lines insurance under a surplus lines certificate of authority in the state. Imitation is the sincerest form of flattery, and as mentioned in our previous post found here, Nevada passed similar legislation earlier this month. Before the adoption of domestic surplus lines insurance legislation, insurance carriers intending to write surplus lines insurance countrywide had to establish dual insurance companies. Vermont is now the 21st state to adopt domestic surplus lines legislation.
The Bill also amends Vt. Stat. Ann. tit. 8, § 5035, by establishing a three percent premium tax on all surplus lines insurance regardless of where the risk is located. Such change clearly brings Vermont into compliance with the standards set forth in the Nonadmitted and Reinsurance Reform Act of 2010 granting the “home state” of the insured exclusive authority to levy premium taxes on nonadmitted insurance.
In concert with the standardization of the premium tax rate for multi-state risks, the Bill also, among other things, repeals Vt. Stat. Ann. tit. 8, Chapter 138A, the Surplus Lines Insurance Multi-state Compliance Compact (SLIMPACT), a principal tax compact model that never went into effect as an insufficient number of states enacted the legislation.
The provisions of the Bill go into effect July 1, 2019. A copy of the Bill can be found here.