By: Frullo, et al. (Senate Sponsor - Zaffirini) H.B. No. 2492
(In the Senate - Received from the House May 8, 2017;
May 19, 2017, read first time and referred to Committee on
Administration; May 23, 2017, reported favorably by the following
vote: Yeas 7, Nays 0; May 23, 2017, sent to printer.)
Click here to see the committee vote
A BILL TO BE ENTITLED
AN ACT
relating to domestic surplus lines insurers; authorizing and
imposing a tax.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. The heading to Subtitle I, Title 6, Insurance
Code, is amended to read as follows:
SUBTITLE I. SURPLUS LINES INSURERS; COMPANIES [THAT ARE] NOT
ORGANIZED IN TEXAS
SECTION 2. Section 981.002(4), Insurance Code, is amended
to read as follows:
(4) "Eligible surplus lines insurer" means an insurer
that is not an authorized insurer, but that is eligible under
Subchapter B or B-1, in which surplus lines insurance is placed or
may be placed under this chapter.
SECTION 3. Section 981.004(a), Insurance Code, is amended
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; and
(3) the insurer meets the eligibility requirements of
Subchapter B or B-1 as of the inception date and annual anniversary
date of each insurance contract, cover note, or other confirmation
of insurance.
SECTION 4. Section 981.006, Insurance Code, is amended to
read as follows:
Sec. 981.006. SANCTIONS. Chapter 82 applies to a surplus
lines agent or an eligible surplus lines insurer that violates:
(1) this chapter;
(2) Chapter 225; or
(3) a rule or order adopted under Subchapter B or B-1
or Section 981.005.
SECTION 5. Chapter 981, Insurance Code, is amended by
adding Subchapter B-1 to read as follows:
SUBCHAPTER B-1. DOMESTIC SURPLUS LINES INSURER
Sec. 981.071. DEFINITION. In this subchapter, "domestic
surplus lines insurer" means an insurance company designated as a
domestic surplus lines insurer under Section 981.072.
Sec. 981.072. DESIGNATION AS DOMESTIC SURPLUS LINES
INSURER. (a) A property and casualty insurance company organized
under Chapter 822 that has capital and surplus in an amount
described by Section 981.057 may apply to the department in a form
and manner prescribed by the commissioner for designation as a
domestic surplus lines insurer.
(b) On approval of an application under Subsection (a), the
commissioner shall designate an applicant as a domestic surplus
lines insurer and issue to the applicant a domestic surplus lines
insurer certificate.
(c) Notwithstanding Section 822.101, a domestic surplus
lines insurer is not entitled to a certificate of authority to
engage in the business of insurance in this state in the admitted
market.
Sec. 981.073. APPLICABILITY OF OTHER LAW; CONFLICTS. (a)
Except as provided by Subsection (b), a domestic surplus lines
insurer is subject to:
(1) this chapter; and
(2) all other insurance laws, including Title 4,
applicable to a property and casualty insurance company organized
under Chapter 822.
(b) A domestic surplus lines insurer is not subject to:
(1) Section 38.003;
(2) Chapter 462;
(3) Chapter 463;
(4) Chapter 501;
(5) Section 981.051;
(6) Section 981.101(b);
(7) Chapter 2007;
(8) Chapter 2301;
(9) Chapter 2251; and
(10) Article 4413(37), Revised Statutes.
(c) To the extent that this subchapter conflicts with any
other insurance law, this subchapter controls.
Sec. 981.074. AUTHORIZED BUSINESS. (a) A domestic surplus
lines insurer may only insure a risk in this state if:
(1) the insurance is procured as eligible surplus
lines insurance under this chapter; and
(2) the insurance is a kind of insurance the insurer is
authorized to write under the insurer's articles of incorporation.
(b) A domestic surplus lines insurer may not issue:
(1) a policy in the admitted market; or
(2) a policy to satisfy the financial responsibility
requirements of Chapter 601, Transportation Code, insurance
requirements of Chapter 406, Labor Code, or requirements of any
other law of this state mandating insurance coverage by an
insurance company authorized to engage in the business of insurance
in this state.
Sec. 981.075. TAXES IMPOSED. (a) The premium for a surplus
lines policy written under this subchapter is subject to the
premium tax, if applicable, imposed under Chapter 225.
(b) A domestic surplus lines insurer is subject to an
applicable maintenance tax as if the domestic surplus lines insurer
were an authorized insurer under Subtitle C, Title 3.
Sec. 981.076. REQUIREMENTS FOR DOMESTIC SURPLUS LINES
DOCUMENTS. (a) In this section, "surplus lines document" has the
meaning assigned by Section 981.101.
(b) A surplus lines document issued by a domestic surplus
lines insurer must include a statement in the form and manner
provided by commissioner rule.
Sec. 981.077. REDOMESTICATION. A foreign insurer may
redomesticate to this state as a domestic surplus lines insurer as
provided by Chapter 983 if the foreign insurer qualifies under
Section 981.072.
SECTION 6. Section 981.210, Insurance Code, is amended to
read as follows:
Sec. 981.210. PLACEMENT OF COVERAGE. A surplus lines agent
may not place surplus lines coverage with an insurer unless:
(1) the insurer meets the eligibility requirements of
Subchapter B or B-1; and
(2) the stamping office provides evidence to the
department that the insurer meets those requirements.
SECTION 7. This Act takes effect January 1, 2018.
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