Texas Surplus Lines Industry Sees Rule Changes at Year’s End

New rules for the Texas surplus lines insurance industry are coming into effect at the end of 2018 and beginning of 2019.

According to the Surplus Lines Stamping Office of Texas (SLTX), one of the most pressing changes concerns the untimely filing of policies.

Rule §15.114, which takes effect on Jan. 1, 2019, clarifies that the agent waives the right to dispute the timeliness of any filing if he or she does not follow the procedures listed within the prescribed timeframe (§15.114(c)).

SLTX currently distributes a monthly report to agents/brokers listing all late filed policies and will continue to do so. The adopted rule lays out a new timeline:

Each year, SLTX produces an annual report listing all policies that were untimely filed in the previous calendar year.

Surplus lines policies must be filed within 60 days of issuance OR the effective date, whichever is later.

According to 15.106(b), this policy must include: A declarations page; A listing of all participating insurers on the policy; All coverage parts and schedules, including limits; Extended coverage exclusions; All premium-bearing documents; Risk ZIP code location; and any other parts as may be required by the stamping office to review and record the policy.

SLTX acknowledges that the addition of policy limit may currently not be feasible. As such, the stamping office will obtain copies electronically for EFS and programmatic filers through a form on the SLTX website, which will be published in the near future.

For purchasing group insurance through a surplus lines agent, agents must submit filings and stamping fees to SLTX.

§15,301 requires that surplus lines insurers provide information to SLTX regarding their eligibility to write surplus lines insurance.

The original Subchapter B, containing the SLTX Plan of Operation, has been repealed so that the plan can be more efficiently amended. In the event that the SLTX board of directors suggests revising the plan of operation or determines a need to change the stamping fee, such final board resolution will be submitted to the commissioner for review. If a new stamping fee is proposed, there will be a 20-day comment period.

According to the Texas Insurance Code §981.153, the commissioner of insurance must approve by order the plan of operation, but the text of the plan does not have to be a rule.

Under the newly adopted §15.201 of the Administrative Code, the SLTX plan of operation and any amendments to it become effective on written approval by a commissioner order. SLTX will continue to maintain the most current plan of operation on its website.

Source: SLTX