| 1 | 1 | | By: Hancock S.B. No. 562 |
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| 2 | 2 | | (In the Senate - Filed January 20, 2017; February 8, 2017, |
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| 3 | 3 | | read first time and referred to Committee on Business & Commerce; |
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| 4 | 4 | | April 5, 2017, reported favorably by the following vote: Yeas 9, |
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| 5 | 5 | | Nays 0; April 5, 2017, sent to printer.) |
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| 6 | 6 | | Click here to see the committee vote |
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| 7 | 7 | | |
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| 8 | 8 | | |
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| 9 | 9 | | A BILL TO BE ENTITLED |
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| 10 | 10 | | AN ACT |
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| 11 | 11 | | relating to the provision of surplus lines insurance to certain |
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| 12 | 12 | | commercial insureds. |
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| 13 | 13 | | BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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| 14 | 14 | | SECTION 1. Subchapter A, Chapter 981, Insurance Code, is |
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| 15 | 15 | | amended by adding Section 981.0033 to read as follows: |
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| 16 | 16 | | Sec. 981.0033. INDUSTRIAL INSURED DEFINED. For purposes of |
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| 17 | 17 | | this chapter, "industrial insured" means a person who purchases |
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| 18 | 18 | | commercial insurance and, at the time of placement: |
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| 19 | 19 | | (1) employs or retains a qualified risk manager to |
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| 20 | 20 | | negotiate insurance coverage; |
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| 21 | 21 | | (2) has paid aggregate nationwide commercial property |
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| 22 | 22 | | and casualty insurance premiums of more than $25,000 in the |
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| 23 | 23 | | immediately preceding 12 months; and |
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| 24 | 24 | | (3) has at least 25 full-time employees. |
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| 25 | 25 | | SECTION 2. Section 981.004, Insurance Code, is amended by |
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| 26 | 26 | | adding Subsection (d) to read as follows: |
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| 27 | 27 | | (d) Subsection (a)(1) does not apply to insurance procured |
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| 28 | 28 | | for an industrial insured if: |
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| 29 | 29 | | (1) the agent procuring or placing the insurance |
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| 30 | 30 | | discloses to the industrial insured that: |
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| 31 | 31 | | (A) comparable insurance may be available from |
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| 32 | 32 | | the admitted market that is subject to more regulatory oversight |
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| 33 | 33 | | than the surplus lines market; and |
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| 34 | 34 | | (B) a policy purchased in the admitted market may |
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| 35 | 35 | | provide greater protection than the surplus lines insurance policy; |
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| 36 | 36 | | (2) the surplus lines company offering the coverage |
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| 37 | 37 | | has a financial strength rating of A- or better from the A. M. Best |
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| 38 | 38 | | Company; and |
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| 39 | 39 | | (3) after receiving the notice described by |
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| 40 | 40 | | Subdivision (1), the industrial insured requests in writing that |
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| 41 | 41 | | the agent procure the insurance from or place the insurance with an |
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| 42 | 42 | | eligible surplus lines insurer. |
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| 43 | 43 | | SECTION 3. Section 981.215(a), Insurance Code, is amended |
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| 44 | 44 | | to read as follows: |
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| 45 | 45 | | (a) A surplus lines agent shall maintain a complete record |
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| 46 | 46 | | of each surplus lines contract obtained by the agent, including any |
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| 47 | 47 | | of the following, if applicable: |
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| 48 | 48 | | (1) a copy of the daily report; |
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| 49 | 49 | | (2) the amount of the insurance and risks insured |
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| 50 | 50 | | against; |
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| 51 | 51 | | (3) a brief general description of the property |
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| 52 | 52 | | insured and the location of that property; |
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| 53 | 53 | | (4) the gross premium charged; |
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| 54 | 54 | | (5) the return premium paid; |
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| 55 | 55 | | (6) the rate of premium charged on the different items |
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| 56 | 56 | | of property; |
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| 57 | 57 | | (7) the contract terms, including the effective date; |
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| 58 | 58 | | (8) the insured's name and post office address; |
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| 59 | 59 | | (9) the insurer's name and home office address; |
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| 60 | 60 | | (10) the amount collected from the insured; |
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| 61 | 61 | | (11) an agreement under Section 225.006(c); |
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| 62 | 62 | | (12) evidence establishing that: |
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| 63 | 63 | | (A) the insured qualified as an exempt commercial |
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| 64 | 64 | | purchaser and that the surplus lines agent complied with the |
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| 65 | 65 | | requirements of Section 981.004(c) if a diligent effort to obtain |
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| 66 | 66 | | insurance in the admitted market was not made pursuant to Section |
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| 67 | 67 | | 981.004(a)(1); or |
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| 68 | 68 | | (B) the insured qualified as an industrial |
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| 69 | 69 | | insured and that the surplus lines agent complied with the |
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| 70 | 70 | | requirements of Section 981.004(d) if a diligent effort to obtain |
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| 71 | 71 | | insurance in the admitted market was not made pursuant to Section |
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| 72 | 72 | | 981.004(a)(1); and |
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| 73 | 73 | | (13) any other information required by the department. |
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| 74 | 74 | | SECTION 4. The changes in law made by this Act apply only to |
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| 75 | 75 | | an insurance policy delivered, issued for delivery, or renewed on |
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| 76 | 76 | | or after January 1, 2018. A policy delivered, issued for delivery, |
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| 77 | 77 | | or renewed before January 1, 2018, is governed by the law as it |
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| 78 | 78 | | existed immediately before the effective date of this Act, and that |
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| 79 | 79 | | law is continued in effect for that purpose. |
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| 80 | 80 | | SECTION 5. This Act takes effect September 1, 2017. |
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| 81 | 81 | | * * * * * |
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