By: Eltife S.B. No. 2136
(In the Senate - Filed March 13, 2009; March 31, 2009, read
first time and referred to Committee on Business and Commerce;
May 5, 2009, reported adversely, with favorable Committee
Substitute by the following vote: Yeas 7, Nays 0; May 5, 2009, sent
to printer.)
COMMITTEE SUBSTITUTE FOR S.B. No. 2136 By: Eltife
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 by
amending Subsection (a) and adding Subsections (c), (d), (e), (f),
(g), and (h) to read as follows:
(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 in accordance with this chapter; 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.
(c) The commissioner may by order declare eligible for
placement with a surplus lines insurer and exempt from the
requirements of Subsections (a)(1) and (b) any kind of commercial
insurance coverage or any commercial insurance risk for which the
commissioner finds, after a public hearing, that there is an
inadequate market among authorized insurers. In making a finding
under this subsection, the commissioner has the discretion to
determine what constitutes a "kind of commercial insurance
coverage," a "commercial insurance risk," or an "inadequate market
among authorized insurers" for the purposes of this subsection.
(d) The commissioner or the commissioner's designee shall
maintain an export list showing the coverages and risks that are
subject to a declaration under Subsection (c). The commissioner's
determination under Subsection (c) that there is an inadequate
market for a kind of commercial insurance coverage or a commercial
insurance risk and the placement of the kind of commercial
insurance coverage or commercial insurance risk on the export list
continues in effect until the commissioner by order, after a public
hearing, removes the kind of commercial insurance coverage or the
commercial insurance risk from the list.
(e) A public hearing on the issuance of an order under this
section shall be held only at the commissioner's discretion. Any
interested party may petition the commissioner to consider the
exercise of the commissioner's discretion to hold a hearing under
this section. Reasonable notice of a hearing under this section
shall be provided to all interested parties by publication in the
Texas Register at least 30 days before the hearing. The notice must
include the kind of commercial insurance coverage or the commercial
insurance risk to be considered by the commissioner for inclusion
on or removal from the export list. No kind of commercial insurance
coverage or commercial insurance risk may be considered by the
commissioner that is not specified in the published hearing notice.
The notice may include a deadline by which interested parties are
required to submit any written comments before the hearing. If the
commissioner declines to hold a hearing in response to a petition
under this subsection, the commissioner shall publish notice in the
Texas Register of the commissioner's declination to hold the
hearing not later than the 45th day after the date the commissioner
receives the petition.
(f) As an alternative to a public hearing regarding the
removal of a kind of commercial insurance coverage or a commercial
insurance risk from the export list, the commissioner may, at the
commissioner's discretion, issue an order removing the kind of
coverage or the risk from the export list without a hearing. If the
commissioner issues an order under this subsection, the order may
not take effect before the 90th day after the date the order is
issued.
(g) The commissioner or the commissioner's designee shall
notify all interested parties of any removal of a line of insurance
from the list by publication in the Texas Register not later than
the 30th day after the date of the entry of the order.
(h) The export list:
(1) is not designed to generate competition between
the surplus lines market and the admitted market;
(2) may only consist of commercial lines of insurance;
(3) is not intended to enable circumvention of state
law, including the requirement that insurance procured through a
surplus lines insurer may only be placed through a surplus lines
agent; and
(4) is intended to express the commissioner's
acknowledgment that the lines of insurance included on the export
list may not be readily available in the admitted market.
SECTION 2. Subsection (b), Section 981.101, Insurance Code,
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 or rates 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.
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