Difference Between 1 State Compliance and Independent Procurement
In the example given for 1 state compliance, Alice is seeking insurance in Alaska and is domiciled in HI. Due to 1 State compliance, Alaska cannot require the HI surplus broker to have a license (regulating placement). In the context of Independent Procurement and the State board of Insurance v Todd Shipyards Corp, would the insurance transaction be regulated by Alaska? Can you explain the difference between placement and transaction? And where does the premium tax referred to in 1-state compliance come from?
Comments
Could you send me a link to this example for "1 state compliance"?
Taken from the Wiki Article: "Alice the Actuary's home state is Hawaii. (Hate her!) But her favorite surplus lines insurer, Cold & Frozen, is domiciled in Alaska. For Alice, Cold & Frozen is an out-of-state U.S. insurer so we refer to them as a foreign insurer. That sounds wrong. You would think a foreign insurer would be one that's domiciled outside of the U.S., but that's called an alien insurer. The provision of 1-state compliance means that if HI doesn't require surplus lines brokers to have a license (maybe because they're actually more chill than AK!) then AK wouldn't be able to do anything about it. Although it might not be something they'd care about anyway."
From this example, HI regulates the placement of insurance. I'm wondering what state regulates the insurance transaction. I'm referencing the decision of State Board of Insurance v Todd Shipyards corp, wherein the buyer purchased coverage out of state and the ruling was that the home state could not regulate the transaction. I thought that it was applicable to this situation too, even though this specific example is talking about one state compliance.
I'm trying to identify the difference between independent procurement and one state compliance.
The Todds Shipyards case is given as an example to the fact that there are limits to what a state can regulate.
In the Alice example, HI gets to regulate everything.
In Todds Shipyards, the Supreme Court said that the mere location of the risk in the state does not justify regulating an insurance contract that was completely negotiated and executed elsewhere with no in-state presence of the insurer.