Texas 2009 - 81st Regular

Texas Senate Bill SB2136 Compare Versions

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1	1	By: Eltife S.B. No. 2136
2	2
3	3
4	4	A BILL TO BE ENTITLED
5	5	AN ACT
6	6	relating to provision of surplus lines insurance.
7	7	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
8	8	SECTION 1. Section 981.004, Insurance Code, is amended by
9	9	amending Subsection (a) and adding Subsections (c), (d), (e), (f),
10	10	(g), and (h) to read as follows:
11	11	(a) An eligible surplus lines insurer may provide surplus
12	12	lines insurance only if:
13	13	(1) the full amount of required insurance cannot be
14	14	obtained, after a diligent effort, from an insurer authorized to
15	15	write and actually writing that kind and class of insurance in this
16	16	state;
17	17	(2) the insurance is placed through a surplus lines
18	18	agent in accordance with this chapter; and
19	19	(3) the insurer meets the eligibility requirements of
20	20	Subchapter B as of the inception date and annual anniversary date of
21	21	each insurance contract, cover note, or other confirmation of
22	22	insurance.
23	23	(c) The commissioner may by order declare eligible for
24	24	placement with a surplus lines insurer and exempt from the
25	25	requirements of Subsections (a)(1) and (b) any kind of commercial
26	26	insurance coverage or any commercial insurance risk for which the
27	27	commissioner finds, after a public hearing, that there is an
28	28	inadequate market among authorized insurers. In making a finding
29	29	under this subsection, the commissioner has the discretion to
30	30	determine what constitutes a "kind of commercial insurance
31	31	coverage," a "commercial insurance risk," or an "inadequate market
32	32	among authorized insurers" for the purposes of this subsection.
33	33	(d) The commissioner or the commissioner's designee shall
34	34	maintain an export list showing the coverages and risks that are
35	35	subject to a declaration under Subsection (c). The commissioner's
36	36	determination under Subsection (c) that there is an inadequate
37	37	market for a kind of commercial insurance coverage or a commercial
38	38	insurance risk and the placement of the kind of commercial
39	39	insurance coverage or commercial insurance risk on the export list
40	40	continues in effect until the commissioner by order, after a public
41	41	hearing, removes the kind of commercial insurance coverage or the
42	42	commercial insurance risk from the list.
43	43	(e) A public hearing on the issuance of an order under this
44	44	section shall be held only at the commissioner's discretion. Any
45	45	interested party may petition the commissioner to consider the
46	46	exercise of the commissioner's discretion to hold a hearing under
47	47	this section. Reasonable notice of a hearing under this section
48	48	shall be provided to all interested parties by publication in the
49	49	Texas Register at least 30 days before the hearing. The notice must
50	50	include the kind of commercial insurance coverage or the commercial
51	51	insurance risk to be considered by the commissioner for inclusion
52	52	on or removal from the export list. No kind of commercial insurance
53	53	coverage or commercial insurance risk may be considered by the
54	54	commissioner that is not specified in the published hearing notice.
55	55	The notice may include a deadline by which interested parties are
56	56	required to submit any written comments before the hearing. If the
57	57	commissioner declines to hold a hearing in response to a petition
58	58	under this subsection, the commissioner shall publish notice in the
59	59	Texas Register of the commissioner's declination to hold the
60	60	hearing not later than the 45th day after the date the commissioner
61	61	receives the petition.
62	62	(f) As an alternative to a public hearing regarding the
63	63	removal of a kind of commercial insurance coverage or a commercial
64	64	insurance risk from the export list, the commissioner may, at the
65	65	commissioner's discretion, issue an order removing the kind of
66	66	coverage or the risk from the export list without a hearing. If the
67	67	commissioner issues an order under this subsection, the order may
68	68	not take effect before the 90th day after the date the order is
69	69	issued.
70	70	(g) The commissioner or the commissioner's designee shall
71	71	notify all interested parties of any removal of a line of insurance
72	72	from the list by publication in the Texas Register not later than
73	73	the 30th day after the date of the entry of the order.
74	74	(h) The export list:
75	75	(1) is not designed to generate competition between
76	76	the surplus lines market and the admitted market;
77	77	(2) may only consist of commercial lines of insurance;
78	78	(3) is not intended to enable circumvention of state
79	79	law, including the requirement that insurance procured through a
80	80	surplus lines insurer may only be placed through a surplus lines
81	81	agent; and
82	82	(4) is intended to express the commissioner's
83	83	acknowledgment that the lines of insurance included on the export
84	84	list may not be readily available in the admitted market.
85	85	SECTION 2. Subsection (b), Section 981.101, Insurance Code,
86	86	is amended to read as follows:
87	87	(b) A surplus lines document must state, in 11-point type,
88	88	the following:
89	89	This insurance contract is with an insurer not licensed to transact
90	90	insurance in this state and is issued and delivered as surplus line
91	91	coverage under the Texas insurance statutes. The Texas Department
92	92	of Insurance does not review or approve policy forms or rates used
93	93	by the insurer providing this coverage, nor does it audit the
94	94	finances or review the solvency of the surplus lines insurer
95	95	providing this coverage, and the insurer is not a member of the
96	96	property and casualty insurance guaranty association created under
97	97	Chapter 462, Insurance Code. Chapter 225, Insurance Code, requires
98	98	payment of a __________ (insert appropriate tax rate) percent tax
99	99	on gross premium.
100	100	SECTION 3. The change in law made by this Act applies only
101	101	to surplus lines insurance coverage delivered, issued for delivery,
102	102	or renewed on or after January 1, 2010. Surplus lines insurance
103	103	coverage delivered, issued for delivery, or renewed before January
104	104	1, 2010, is governed by the law in effect immediately before the
105	105	effective date of this Act, and that law is continued in effect for
106	106	that purpose.
107	107	SECTION 4. This Act takes effect September 1, 2009.