81R13845 AJA-D
By: Hunter H.B. No. 3978
A BILL TO BE ENTITLED
AN ACT
relating to provision of surplus lines insurance.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 981.004, Insurance Code, is amended to
read as follows:
Sec. 981.004. SURPLUS LINES INSURANCE AUTHORIZED. (a) An
eligible surplus lines insurer may provide surplus lines insurance
only if:
(1) the full amount of required insurance cannot be
obtained, after a diligent effort, from an insurer authorized to
write and actually writing that kind and class of insurance in this
state;
(2) the insurance is placed through a surplus lines
agent licensed in accordance with Section 981.203; and
(3) the insurer meets the eligibility requirements of
Subchapter B as of the inception date and annual anniversary date of
each insurance contract, cover note, or other confirmation of
insurance.
(b) The commissioner shall by order declare eligible for
placement with a surplus lines insurer and exempt from all
requirements any kind of insurance coverage or risk for which the
commissioner finds, after a public hearing, that there is not a
reasonable or adequate market among authorized insurers. The
commissioner or the commissioner's designee shall maintain an
export list showing the exempt coverages and risks.
(c) A public hearing under Subsection (b) must be held at
least annually, and may be held more frequently at the
commissioner's discretion. Reasonable notice of each hearing shall
be given to all interested parties, including agents, authorized
insurers, trade associations representing authorized and
unauthorized insurers, and consumer groups.
(d) An order by the commissioner under this section shall
continue in effect until terminated by the commissioner.
(e) If, before a hearing under Subsection (b), the
commissioner receives written comments or testimony or otherwise
determines that a kind of insurance on the export list is more
available in the admitted market, the commissioner may remove that
kind of insurance from the list. The eligibility of any kind of
insurance to remain on the list is subject to an annual affirmative
finding by the commissioner, except that if written comments or
testimony regarding the eligibility of a kind of insurance to be on
the list are received before a hearing, the eligibility of that kind
of insurance to remain on the export list shall be reviewed at the
next hearing and that kind of insurance may not remain on the export
list unless the commissioner or the commissioner's designee makes
an affirmative determination that there is not a reasonable or
adequate market among authorized insurers.
(f) The commissioner or the commissioner's designee shall
notify all surplus lines agents of any removal of a kind of
insurance from the list [An eligible surplus lines insurer may
provide surplus lines insurance only in the amount that exceeds the
amount of insurance obtainable from authorized insurers].
SECTION 2. Section 981.101(b), Insurance Code, as effective
April 1, 2009, is amended to read as follows:
(b) A surplus lines document must state, in 11-point type,
the following:
This insurance contract is with an insurer not
licensed to transact insurance in this state and is
issued and delivered as surplus line coverage under
the Texas insurance statutes. The Texas Department of
Insurance does not review or approve policy forms used
by the insurer providing this coverage, nor does it
audit the finances or review the solvency of the
[surplus lines] insurer [providing this coverage], and
the insurer is not a member of the property and
casualty insurance guaranty association created under
Chapter 462, Insurance Code. Chapter 225, Insurance
Code, requires payment of a __________ (insert
appropriate tax rate) percent tax on gross premium.
SECTION 3. The change in law made by this Act applies only
to surplus lines insurance coverage delivered, issued for delivery,
or renewed on or after January 1, 2010. Surplus lines insurance
coverage delivered, issued for delivery, or renewed before January
1, 2010, is governed by the law in effect immediately before the
effective date of this Act, and that law is continued in effect for
that purpose.
SECTION 4. This Act takes effect September 1, 2009.