Bill Text: TX SB951 | 2013-2014 | 83rd Legislature | Enrolled
Bill Title: Relating to surplus lines insurance.
Spectrum: Bipartisan Bill
Status: (Passed) 2013-06-14 - Effective immediately [SB951 Detail]
Download: Texas-2013-SB951-Enrolled.html
S.B. No. 951 |
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relating to surplus lines insurance. | ||
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: | ||
SECTION 1. Subsection (c), Section 981.001, Insurance Code, | ||
is amended to read as follows: | ||
(c) To regulate and tax surplus lines insurance placed in | ||
accordance with this chapter within the meaning and intent of 15 | ||
U.S.C. Section 1011 and 15 U.S.C. Chapter 108, this chapter | ||
provides an orderly method for each person whose home state is this | ||
state for a particular transaction [ |
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effect insurance with eligible surplus lines insurers through | ||
qualified, licensed, and supervised surplus lines agents in this | ||
state, if coverage is not available from authorized and regulated | ||
insurers engaged in business in this state, under reasonable and | ||
practical safeguards. | ||
SECTION 2. Section 981.002, Insurance Code, is amended to | ||
read as follows: | ||
Sec. 981.002. DEFINITIONS. In this chapter: | ||
(1) "Affiliate" means, with respect to determining the | ||
home state of an insured, and solely for the purpose of determining | ||
whether an entity is another entity's affiliate, a person or entity | ||
that controls, is controlled by, or is under common control with the | ||
insured. | ||
(2) "Affiliated group" means a group of entities whose | ||
members are all affiliated. | ||
(3) "Control" means, with respect to determining the | ||
home state of an insured, and solely for the purpose of determining | ||
whether an entity is another entity's affiliate: | ||
(A) to directly or indirectly, acting through one | ||
or more persons, own, control, or hold the power to vote at least 25 | ||
percent of any class of voting security of the other entity; or | ||
(B) to control in any manner the election of the | ||
majority of directors or trustees of the other entity. | ||
(4) "Eligible surplus lines insurer" means an insurer | ||
that is not an authorized insurer, but that is eligible under | ||
Subchapter B, in which surplus lines insurance is placed or may be | ||
placed under this chapter. | ||
(5) "Home state" means, with respect to an insured: | ||
(A) the state in which the insured maintains the | ||
insured's principal residence, if the insured is an individual; | ||
(B) the state in which the insured maintains the | ||
insured's principal place of business, if the insured is not an | ||
individual; | ||
(C) if 100 percent of the insured risk is located | ||
outside of the state in which the insured maintains the insured's | ||
principal residence or principal place of business, as applicable, | ||
the state to which the greatest percentage of the insured's taxable | ||
premium for the insurance contract that covers the risk is | ||
allocated; or | ||
(D) for an affiliated group, the home state of | ||
the member, as determined under Paragraphs (A)-(C), that has the | ||
largest percentage of premium attributed to it under the insurance | ||
contract. | ||
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lines agent or agency that exercises, pursuant to a written | ||
agreement with an eligible surplus lines insurer, underwriting | ||
authority for the eligible surplus lines insurer and that derives | ||
the agent or agency's business from a surplus lines agent. | ||
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Stamping Office of Texas. | ||
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licensed under Subchapter E to procure an insurance contract from a | ||
surplus lines insurer. | ||
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coverage[ |
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chapter, with an eligible surplus lines insurer or the insurer's | ||
managing underwriter. | ||
SECTION 3. Section 981.003, Insurance Code, is amended to | ||
read as follows: | ||
Sec. 981.003. APPLICABILITY OF CHAPTER. This chapter | ||
applies to surplus lines insurance if the home state of the insured | ||
is this state[ |
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SECTION 4. Subchapter A, Chapter 981, Insurance Code, is | ||
amended by adding Sections 981.0031 and 981.0032 to read as | ||
follows: | ||
Sec. 981.0031. EXEMPT COMMERCIAL PURCHASER DEFINED. | ||
(a) For purposes of this chapter, "exempt commercial purchaser" | ||
means a person who purchases commercial insurance and, at the time | ||
of placement: | ||
(1) employs or retains a qualified risk manager to | ||
negotiate insurance coverage; | ||
(2) has paid aggregate nationwide commercial property | ||
and casualty insurance premiums of more than $100,000 in the | ||
immediately preceding 12 months; and | ||
(3) meets at least one of the following criteria: | ||
(A) has a net worth of more than $20 million; | ||
(B) generates annual revenue of more than $50 | ||
million; | ||
(C) employs more than 500 full-time or full-time | ||
equivalent employees per individual insured, or is a member of an | ||
affiliated group that employs more than 1,000 employees in | ||
aggregate; | ||
(D) is a nonprofit organization or public entity | ||
generating annual budgeted expenditures of at least $30 million; or | ||
(E) is a municipality with a population of more | ||
than 50,000. | ||
(b) Effective on January 1, 2015, and on every fifth January | ||
1 thereafter, the commissioner shall by order adjust the amounts | ||
provided by Subsections (a)(3)(A), (B), and (D) to reflect the | ||
percentage change in the Consumer Price Index for All Urban | ||
Consumers published by the Bureau of Labor Statistics of the United | ||
States Department of Labor for the five-year period immediately | ||
preceding January 1 of the year of the adjustment. | ||
Sec. 981.0032. QUALIFIED RISK MANAGER DEFINED. For | ||
purposes of this chapter, "qualified risk manager" means, with | ||
respect to a policyholder of commercial insurance, a person who: | ||
(1) is an employee of, or third-party consultant | ||
retained by, a commercial policyholder; | ||
(2) provides skilled services in loss prevention, loss | ||
reduction, or risk and insurance coverage analysis and the purchase | ||
of insurance; and | ||
(3) satisfies the requirements of one of the following | ||
paragraphs: | ||
(A) has: | ||
(i) a bachelor's or higher degree from an | ||
accredited college or university in risk management, business | ||
administration, finance, economics, or another field determined by | ||
a state insurance commissioner or other state regulatory official | ||
or entity to demonstrate competence in risk management; and | ||
(ii) either: | ||
(a) at least three years of experience | ||
in risk financing, claims administration, loss prevention, risk and | ||
insurance analysis, or purchasing of commercial lines of insurance; | ||
or | ||
(b) a designation, certification, or | ||
license: | ||
(1) as a chartered property | ||
casualty underwriter (CPCU), issued by the American Institute for | ||
CPCU/Insurance Institute of America; | ||
(2) as an associate in risk | ||
management (ARM) issued by the American Institute for | ||
CPCU/Insurance Institute of America; | ||
(3) as a Certified Risk Manager | ||
(CRM) issued by the National Alliance for Insurance Education and | ||
Research; | ||
(4) as a RIMS Fellow (RF) issued | ||
by the Global Risk Management Institute; or | ||
(5) that is determined by a state | ||
insurance commissioner or other state insurance regulatory | ||
official or entity to demonstrate minimum competence in risk | ||
management; | ||
(B) has at least seven years of experience in | ||
risk financing, claims administration, loss prevention, risk and | ||
insurance coverage analysis, or purchasing of commercial lines of | ||
insurance and one of the designations, certifications, or licenses | ||
described by Paragraph (A)(ii)(b); | ||
(C) has at least 10 years of experience in risk | ||
financing, claims administration, loss prevention, risk and | ||
insurance coverage analysis, or purchasing commercial lines of | ||
insurance; or | ||
(D) has a graduate degree from an accredited | ||
college or university in risk management, business administration, | ||
finance, economics, or another field determined by a state | ||
insurance commissioner or other state regulatory official or entity | ||
to demonstrate competence in risk management. | ||
SECTION 5. Section 981.004, Insurance Code, is amended by | ||
adding Subsection (c) to read as follows: | ||
(c) Subsection (a)(1) does not apply to insurance procured | ||
for an exempt commercial purchaser if: | ||
(1) the agent procuring or placing the insurance | ||
discloses to the exempt commercial purchaser that: | ||
(A) comparable insurance may be available from | ||
the admitted market that is subject to more regulatory oversight | ||
than the surplus lines market; and | ||
(B) a policy purchased in the admitted market may | ||
provide greater protection than the surplus lines insurance policy; | ||
and | ||
(2) after receiving the notice described by | ||
Subdivision (1), the exempt commercial purchaser requests in | ||
writing that the agent procure the insurance from or place the | ||
insurance with an eligible surplus lines insurer. | ||
SECTION 6. Subsection (b), Section 981.057, Insurance Code, | ||
is amended to read as follows: | ||
(b) Subsection (a) does not apply to alien surplus lines | ||
insurers listed on the Quarterly Listing of Alien Insurers | ||
maintained by the International Insurers Department, National | ||
Association of Insurance Commissioners. [ |
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SECTION 7. Section 981.058, Insurance Code, is amended to | ||
read as follows: | ||
Sec. 981.058. ALIEN INSURERS[ |
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An [ |
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insurer must be listed on the Quarterly Listing of Alien Insurers | ||
maintained by the International Insurers Department, National | ||
Association of Insurance Commissioners [ |
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SECTION 8. Subchapter B, Chapter 981, Insurance Code, is | ||
amended by adding Section 981.066 to read as follows: | ||
Sec. 981.066. UNIFORM STANDARDS. To issue surplus lines | ||
insurance in this state, an insurer must comply with all applicable | ||
nationwide uniform standards adopted by this state in accordance | ||
with 15 U.S.C. Section 8204. | ||
SECTION 9. Subsection (a), Section 981.215, Insurance Code, | ||
is amended to read as follows: | ||
(a) A surplus lines agent shall maintain a complete record | ||
of each surplus lines contract obtained by the agent, including any | ||
of the following, if applicable: | ||
(1) a copy of the daily report; | ||
(2) the amount of the insurance and risks insured | ||
against; | ||
(3) a brief general description of the property | ||
insured and the location of that property; | ||
(4) the gross premium charged; | ||
(5) the return premium paid; | ||
(6) the rate of premium charged on the different items | ||
of property; | ||
(7) the contract terms, including the effective date; | ||
(8) the insured's name and post office address; | ||
(9) the insurer's name and home office address; | ||
(10) the amount collected from the insured; [ |
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(11) evidence establishing that the insured qualified | ||
as an exempt commercial purchaser and that the surplus lines agent | ||
complied with the requirements of Section 981.004(c) if a diligent | ||
effort to obtain insurance in the admitted market was not made | ||
pursuant to Section 981.004(a)(1); and | ||
(12) any other information required by the department. | ||
SECTION 10. The following sections of the Insurance Code | ||
are repealed: | ||
(1) Section 981.052; | ||
(2) Section 981.053; | ||
(3) Section 981.055; | ||
(4) Section 981.056; | ||
(5) Section 981.059; | ||
(6) Section 981.060; | ||
(7) Section 981.061; and | ||
(8) Section 981.062. | ||
SECTION 11. (a) Notwithstanding Section 981.058, | ||
Insurance Code, as amended by this Act, an alien surplus lines | ||
insurer that was an eligible surplus lines insurer under Section | ||
981.058, Insurance Code, as it existed immediately before the | ||
effective date of this Act, continues to be an eligible surplus | ||
lines insurer. | ||
(b) An alien insurer described by Subsection (a) of this | ||
section must comply with the trust fund requirements of Section | ||
981.058, Insurance Code, as that section existed immediately before | ||
the effective date of this Act, in addition to the minimum capital | ||
and surplus requirements prescribed by Section 981.057, Insurance | ||
Code. | ||
SECTION 12. This Act takes effect immediately if it | ||
receives a vote of two-thirds of all the members elected to each | ||
house, as provided by Section 39, Article III, Texas Constitution. | ||
If this Act does not receive the vote necessary for immediate | ||
effect, this Act takes effect September 1, 2013. | ||
______________________________ | ______________________________ | |
President of the Senate | Speaker of the House | |
I hereby certify that S.B. No. 951 passed the Senate on | ||
April 11, 2013, by the following vote: Yeas 31, Nays 0. | ||
______________________________ | ||
Secretary of the Senate | ||
I hereby certify that S.B. No. 951 passed the House on | ||
May 17, 2013, by the following vote: Yeas 134, Nays 0, two | ||
present not voting. | ||
______________________________ | ||
Chief Clerk of the House | ||
Approved: | ||
______________________________ | ||
Date | ||
______________________________ | ||
Governor |