Texas ‘Industrial Insureds’ Surplus Lines Bill Signed into Law

On May 11, the Texas Senate passed a bill exempting certain policyholders from the requirement that agents to make a “diligent effort” to find insurance in the admitted commercial insurance market. Gov. Greg Abbott has signed the measure, which becomes effective on Sept. 1.

HB 1559, an initiative of the Texas Surplus Lines Association Inc. and Independent Insurance Agents of Texas, will dramatically expand the number of entities exempt from the obligation to meet diligent effort requirements.

The bill creates a new exemption from the diligent effort requirement for “industrial insureds” who are defined as an entity which:

“(1) employs or retains a qualified risk manager to negotiate insurance coverage; and (2) either:

(A) has paid aggregate nationwide commercial property and casualty insurance premiums of more than $25,000 in the immediately preceding 12 months; or

(B) employs at least 25 full-time employees.”

The bill was promoted by TSLA and IIAT to ensure that purchasers of commercial insurance have access to the best available products in the surplus lines market to fit their coverage needs.

During the legislative process, the TSLA executive and legislative committees elected to support an amendment offered by Representative Dade Phelan that modified the original language to allow an entity to qualify for the exemption if they met either the premium or employee threshold and no longer requires that the entity meet both thresholds.

As a result of the amendment, the bill will likely exempt the vast majority of purchasers of commercial insurance in the Texas marketplace from the diligent effort requirement.

Source: TSLA

Related:

• Texas Stamping Office: ‘Industrial Insured’ Bill Passed by House
• Surplus Lines Insurance Bills Advance in Texas Legislature