2012 Indiana Code
TITLE 27. INSURANCE
ARTICLE 18. SURPLUS LINES INSURANCE COMPACT
CHAPTER 3. AUTHORITY OF COMMISSION

IC 27-18-3
Chapter 3. Authority of Commission

IC 27-18-3-1
Mandatory rules
Sec. 1. The commission shall adopt mandatory rules to establish the following:
(1) Allocation formulas for each type of nonadmitted insurance coverage, which must be used by each compacting state and contracting state in acquiring premium tax and clearinghouse transaction data from surplus lines licensees and insureds to report to the clearinghouse. The rules described in this subdivision must be adopted with input from surplus lines licensees and must be based on readily available data, with simplicity and uniformity for the surplus lines licensee as a material consideration.
(2) Uniform clearinghouse transaction data reporting requirements for all information reported to the clearinghouse.
(3) Methods by which compacting states and contracting states will require surplus lines licensees and insureds to pay premium tax and report clearinghouse transaction data to the clearinghouse, including processing clearinghouse transaction data through state stamping and service offices, state insurance departments, or other state designated agencies or entities.
(4) That nonadmitted insurance of multistate risks is subject to all regulatory compliance requirements of the home state exclusively. The regulatory compliance requirements that will be applicable to surplus lines insurance under the rules described in this subdivision include the following:
(A) Licensure requirements for persons to sell, solicit, or negotiate surplus lines insurance.
(B) Insurer eligibility requirements or other approved nonadmitted insurer requirements.
(C) Diligent search requirements.
(D) Providing state transaction documentation and clearinghouse transaction data regarding the payment of premium tax under this compact.
The regulatory compliance requirements that will be applicable to independently procured insurance placements under the rules described in this subdivision include providing state transaction documentation and clearinghouse transaction data regarding the payment of premium tax under this compact.
(5) That each compacting state and each contracting state may charge its own rate of taxation on the premium allocated to the compacting state or contracting state based on the applicable allocation formula. However:
(A) the state shall establish a single rate of taxation applicable to all nonadmitted insurance transactions; and
(B) no other tax, fee assessment, or other charge by a governmental or quasi-governmental agency is permitted,

except that stamping office fees may be charged as a separate, additional cost unless the fees are incorporated into a state's single rate of taxation.
(6) That a change in the rate of taxation by a compacting state or contracting state is restricted to changes made prospectively with at least ninety (90) days advance notice to the commission.
(7) That each compacting state and each contracting state shall require premium tax payments annually, semiannually, or quarterly, using only one (1) or more of the following dates:
(A) March 1.
(B) June 1.
(C) September 1.
(D) December 1.
(8) That each compacting state and each contracting state shall prohibit any state agency or political subdivision from requiring surplus lines licensees to provide clearinghouse transaction data and state transaction documentation other than to:
(A) the insurance department or tax official; or
(B) a single designated agent of the insurance department or tax official;
of the home state.
(9) The obligation of the home state:
(A) itself; or
(B) through a:
(i) designated agent; or
(ii) surplus lines stamping or service office;
to collect clearinghouse transaction data from surplus lines licensees and from insureds (for independently procured insurance), for reporting to the clearinghouse.
(10) A method for the clearinghouse to periodically report to compacting states, contracting states, surplus lines licensees, and insureds who independently procure insurance:
(A) all premium taxes owed to each of the compacting states and contracting states;
(B) the dates upon which payment of the premium taxes are due; and
(C) a method for paying the premium taxes through the clearinghouse.
(11) That each surplus lines licensee is required to be licensed only in the home state of each insured for whom the licensee has procured surplus lines insurance.
(12) That:
(A) a policy considered to be surplus lines insurance in the insured's home state shall be:
(i) considered to be surplus lines insurance in all compacting states and contracting states; and
(ii) taxed as a surplus lines transaction in all states to which a portion of the risk is allocated;
(B) each compacting state and each contracting state shall require each surplus lines licensee to pay to every other

compacting state and contracting state premium taxes on each multistate risk through the clearinghouse at the tax rate charged on surplus lines transactions in the other compacting state or contracting state on the portion of the risk in the compacting state or contracting state, as determined by the applicable uniform allocation formula adopted by the commission;
(C) a policy considered to be independently procured insurance in the insured's home state is considered to be independently procured insurance in all compacting states and contracting states; and
(D) each compacting state and each contracting state shall require the insured to pay every other compacting state and contracting state the independently procured insurance premium tax on each multistate risk through the clearinghouse, as determined by the uniform allocation formula adopted by the commission.
(13) Uniform foreign insurer eligibility requirements, as authorized by the NRRA.
(14) A uniform policyholder notice.
(15) Uniform treatment of purchasing group surplus lines insurance placements.
As added by P.L.111-2011, SEC.1. Amended by P.L.6-2012, SEC.188.

IC 27-18-3-2
Commission powers
Sec. 2. The commission has the following powers:
(1) To adopt rules and operating procedures under IC 27-18-8 that:
(A) have the force and effect of law; and
(B) are binding;
in the compacting states to the extent and in the manner provided in this compact.
(2) To bring and prosecute legal actions in the name of the commission. This subdivision does not affect the standing of a state insurance department to sue or be sued under applicable law.
(3) To issue subpoenas requiring the attendance and testimony of witnesses and the production of evidence. This subdivision does not empower the commission to demand or subpoena records or data from nonadmitted insurers.
(4) To establish and maintain offices, including the creation of a clearinghouse for the receipt of premium tax and clearinghouse transaction data regarding:
(A) nonadmitted insurance of multistate risks;
(B) single state risks for states that elect to require surplus lines licensees to pay premium tax on single state risks through the clearinghouse; and
(C) tax reporting forms. (5) To purchase and maintain insurance and bonds.
(6) To borrow, accept, or contract for services of personnel, including employees of a compacting state or stamping office, under an open, objective, competitive process and procedure adopted by the commission.
(7) To:
(A) hire employees, professionals, or specialists;
(B) elect or appoint officers;
(C) fix the compensation of individuals described in clauses (A) and (B);
(D) define the duties of individuals described in clauses (A) and (B);
(E) give the individuals described in clauses (A) and (B) appropriate authority to carry out the purposes of this compact; and
(F) determine the qualifications of individuals described in clauses (A) and (B);
under an open, objective, competitive process and procedure adopted by the commission, and to establish the commission's personnel policies and programs relating to conflicts of interest, rates of compensation and qualifications of personnel, and other related personnel matters.
(8) To:
(A) accept;
(B) receive;
(C) use; and
(D) dispose of;
appropriate donations and grants of money, equipment, supplies, materials, and services, avoiding at all times any appearance of impropriety or conflict of interest.
(9) To:
(A) lease;
(B) purchase;
(C) accept appropriate gifts or donations of; or
(D) otherwise own, hold, improve, or use;
real, personal, or real and personal property, avoiding at all times any appearance of impropriety or conflict of interest.
(10) To sell, convey, mortgage, pledge, lease, exchange, abandon, or otherwise dispose of real, personal, or real and personal property.
(11) To provide for tax audit rules and procedures for the compacting states with respect to the allocation of premium taxes, including the following:
(A) Minimum audit standards, including sampling methods.
(B) Review of internal controls.
(C) Cooperation and sharing of audit responsibilities among compacting states.
(D) Handling of refunds or credits due to overpayments or improper allocation of premium taxes.
(E) Taxpayer records to be reviewed, including a minimum

retention period.
(F) Authority of compacting states to review, challenge, or re-audit taxpayer records.
(12) To enforce compliance by compacting states and contracting states with rules and bylaws under the authority set forth in IC 27-18-9.
(13) To provide for dispute resolution among compacting states and contracting states.
(14) To advise compacting states and contracting states on tax issues relating to insurers, insureds, surplus lines licensees, agents, or brokers domiciled or doing business in noncompacting states, consistent with the purposes of this compact.
(15) To:
(A) make available advice and training to personnel in state stamping offices, state insurance departments, or other state departments for record keeping, tax compliance, and tax allocations; and
(B) serve as a resource for state insurance departments and other state departments.
(16) To establish a budget and make expenditures.
(17) To borrow money.
(18) To appoint and oversee committees, including advisory committees comprised of members, state insurance regulators, state legislators or their representatives, insurance industry and consumer representatives, and other interested persons designated in this compact and the bylaws.
(19) To establish an executive committee under IC 27-18-4-4 that:
(A) is comprised of at least seven (7) and not more than fifteen (15) representatives, including officers elected by the commission and such other representatives as are provided for in this article or determined by the bylaws, who:
(i) serve a one (1) year term; and
(ii) are each entitled to one (1) vote;
(B) has the power to act on behalf of the commission, except for rulemaking, when the commission is not in session;
(C) oversees the day to day activities of the administration of this compact, including the activities of the operations committee established under subdivision (20) and IC 27-18-4-5, and compliance and enforcement of the provisions of this compact and the bylaws and rules; and
(D) has other duties as provided in this article and as considered necessary.
(20) To establish an operations committee under IC 27-18-4-5 consisting of at least seven (7) and not more than fifteen (15) representatives to provide analysis, advice, determinations, and recommendations regarding:
(A) technology, software, and systems integration to be acquired by the commission; and (B) the establishment of mandatory rules to be adopted by the commission.
(21) To enter into contracts with contracting states to enable contracting states to use the services of and fully participate in the clearinghouse under the terms and conditions set forth in the contracts.
(22) To adopt and use a corporate seal.
(23) To perform other functions that are necessary or appropriate to the achievement of the purposes of this compact, consistent with state regulation of the business of insurance.
As added by P.L.111-2011, SEC.1. Amended by P.L.6-2012, SEC.189.