New Texas Surplus Lines Rules Drafted by Texas Department of Insurance

The Texas Department of Insurance (“TDI”) has posted a 48-page working draft of new surplus lines rules. Specifically, TDI issued an informal notice on July 22, 2016 reflecting several modifications to Title 28, Texas Administrative Code Chapter 15—the regulations which implement Texas’s surplus lines insurance laws found in Texas Insurance Code Chapters 981 and 225. Rather than simply amending the existing surplus lines rules, TDI is planning to repeal the current rules and implement the changes through a slate of new rules.

According to TDI’s posting, the new rules are intended to “address statutory changes to the Insurance Code and to reflect general changes in the industry’s business practices”. Some of the provisions contained in the draft rules include (1) clarification of the party responsible for paying premium taxes under Insurance Code Section 225.006 when a transaction involves a managing underwriter, (2) clarification of permitted activities by unlicensed staff of licensed surplus lines agents, (3) language permitting a surplus lines agent to contract with a third-party to meet stamping office filing requirements, (4) changes to surplus lines agent recordkeeping requirements, (5) requirements for documentation supporting exempt commercial purchaser status, and (6) provisions concerning untimely filed policies.

TDI has invited comments on the informal draft rules, which are due on August 22, 2016.

A copy of TDI’s informal draft posting can be found here, and a copy of the red-lined version of the new rules can be found here.