Members of a surplus lines industry group unveiled a draftproposal for an interstate compact to regulators at the NationalAssociation of Insurance Commissioners meeting this week.

The compact proposes a mechanism for states to work outdistribution of surplus lines premium taxes for those risks thatcover more than one state.

Surplus lines brokers currently retain the responsibility forapportioning out premium taxes from multistate risks, and have longconsidered the task burdensome and unwieldy.

Meanwhile, there is legislation in the House, introduced earlierthis year, which would complement the proposed compact by allowingthe broker to pay the premium to the home state of the insured andleave it up the states to distribute it.

HR 1065 suggests that the states could set up an interstatecompact to distribute the funds but does not mandate it.

Dick Bouhan, executive director of the National Association ofProfessional Surplus Lines Offices, Kansas City, Mo., said heexpects the House to approve the bill this session with Senateapproval likely but not as soon since hearings will berequired.

While passage of the bill will in a sense solve the brokers'concern, Mr. Bouhan said a compact will tie up all of the relevantissues.

The industry compact group is seeking backing for its proposalfrom the NAIC and the National Conference of Insurance Legislators,he added.

But unlike the Interstate Compact now in operation for review oflife products, the surplus lines compact is not an NAIC-driveneffort.

Once a consensus draft is achieved with approval fromlegislative and regulatory groups, Mr. Bouhan said draft compactlegislation will be introduced in the states.