Procedural Updates
Gov. Abbott Signs DSLI Bill
House Bill 2492, which authorizes domestic surplus lines insurers (DSLI) in Texas, was signed into law by Texas Governor Greg Abbott on Thursday, June 15, 2017.
The bill, effective January 1, 2018, will allow surplus lines insurers domiciled in other states to apply for a DSLI certificate from the Texas Department of Insurance (TDI). If approved, the insurer will be designated as a DSLI, which means that it may be domiciled in Texas and write surplus lines policies in Texas. Before the law was introduced, eligible surplus lines insurers were required to be domiciled outside of Texas to write business in the state.
The passage of the law may increase jobs and revenue in Texas, as well as improve regulatory oversight by TDI. New procedures and policies for DSLIs may also be introduced as the law takes effect.
DSLI Bill Passes Senate
A bill that will introduce a new designation for insurers has been passed by the Texas Senate. Senate Bill 1491, sponsored by Sen. Judith Zaffirini, would allow surplus lines insurers to be domiciled in the state of Texas. Currently, surplus lines insurers must be domiciled outside the state to write surplus lines coverage.
The Senate voted 30-1 in favor of the bill on Thursday, April 27, 2017. The Senate Business and Commerce Committee passed the bill on Wednesday, April 19, 2017, with a vote of 8-1.
The House of Representatives companion to the bill, House Bill 2492, sponsored by Rep. John Frullo, has made it out of the House Insurance Committee, but has not yet been voted on by the House.
NFIP Reforms Have Support from Both Sides of Aisle
A recent survey shows that proposed reforms of the National Flood Insurance Program (NFIP) has bipartisan support.
According to Business Insurance, the survey, conducted by Public Opinion Strategies and the Pew Charitable Trusts, consisted of 1,000 respondents, and revealed that 74 percent supported three or more proposed reforms to the program. However, 82 percent could not say whether NFIP was in a deficit or surplus, even though the program has a debt of $24.6 billion.
The proposed reforms include the following:
- A plan that would require infrastructure in flood-prone areas to better withstand the impact of flooding
- Conservation buyouts, which means that homeowners could be compensated at pre-flood rates for their property so they can move to a safer location, if they so choose
- Requiring communities that have more than 50 homes that have been classified as having repeatedly flooded to invest in the future risk of flood
The survey proves that support and agreement over an NFIP overhaul exists regardless of region. Results were positive across the country, with a majority of respondents in favor of reform and proposed improvements to prevent future damage.
Understanding Domestic Surplus Lines Insurers (DSLI)
Housing and Insurance Subcommittee to Hold Hearing on NFIP
Jeb Hensarling (R-TX), Chairman of the US House of Representatives Financial Services Committee, has announced that the Housing and Insurance Subcommittee will hold a hearing titled, “Flood Insurance Reform: A Community Perspective.”
The subcommittee will discuss the National Flood Insurance Program (NFIP) from a community level, and it will examine any needed reforms that would increase transparency in claims and payments. The subcommittee will also discuss how a private flood insurance market could compliment or exceed the current NFIP plan.
The hearing will be held on Thursday, March 16, at 2:00 p.m. local time in Washington D.C.
Exempt Commercial Purchasers (ECP)
Notice of Proposed Stamping Fee Increase
The Board of Directors of the Surplus Lines Stamping Office of Texas approved a resolution in June 2015 requesting that the Commissioner of Insurance authorize an increase in the stamping fee rate up to 0.15% (0.0015) from its current rate of 0.06% (0.0006), as required under the Plan of Operation. The Plan of Operation can be referenced in 28 TAC §15.101.
As of this date, the formal request is before the Commissioner and under consideration. Commentary period will be through August 20, 2015.
The proposed effective date for the increase to 0.15% will be January 1, 2016.
EFS Access for Late Filing Report
It’s finally here – Late Filing Reports will be available online to agents/agencies filing through the Electronic Filing System (EFS) beginning with the September 2014 report. If we identified any late filings for you for the month, both the primary and secondary EFS contacts will be notified by email and they will be provided with a link to the report as well as a link to additional information concerning the report. The Late Filing Reports will no longer be mailed to you if you file electronically. The reports will only be available beginning with September, going forward. No reports prior to September will be available on the EFS website.
It is important that you keep the EFS contact information current. However, if you do not receive an email, you can still access the report(s) or check to see if you received one by going to Reporting, selecting EOM/EOY Reports, and then selecting Late Filing Reports. Any users, including agency principals, can access these reports as long as they have a valid user id and password.
If you require assistance accessing the reports, please contact the EFS Help Desk at (512) 531-1880.
Texas Mandatory Data Call Includes Surplus Lines Insurers
Texas has issued a data call requiring each insurer to report the “current average credit for excluding windstorm and hail coverage in the catastrophe area.” This requirement includes surplus lines carriers. The deadline for submitting completed data is December 31, 2013. Instructions and other details from the Commissioner’s Bulletin can be found here.
Mandatory Zip Code 01-01-2014
All policies, binders, cover notes, and date extensions filed with the Stamping Office on or after January 1, 2014 must include the zip code of the risk location, if the effective date of the policy is post NRRA (on or after 07/21/11). This requirement now applies to all lines of business, not just property. If the policy is covering multiple locations, you should enter the single Texas zip code that reflects the highest limit or greatest Texas exposure. It is not necessary to provide the zip code on endorsements, unless the risk location/exposure is changing. All zip codes must be valid Texas zip codes.
For questions, please call SLTX at (512) 531-1880.