Bill Text: TX HB1559 | 2017-2018 | 85th Legislature | Engrossed

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Relating to the provision of surplus lines insurance to certain commercial insureds.

Spectrum: Partisan Bill (Republican 2-0)

Status: (Passed) 2017-05-23 - Effective on 9/1/17 [HB1559 Detail]

Download: Texas-2017-HB1559-Engrossed.html

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By: Frullo H.B. No. 1559

A BILL TO BE ENTITLED
AN ACT
relating to the provision of surplus lines insurance to certain
commercial insureds.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subchapter A, Chapter 981, Insurance Code, is
amended by adding Section 981.0033 to read as follows:
Sec. 981.0033. INDUSTRIAL INSURED DEFINED. For purposes of
this chapter, "industrial insured" 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; and
(2) either:
(A) has paid aggregate nationwide commercial
property and casualty insurance premiums of more than $25,000 in
the immediately preceding 12 months; or
(B) employs at least 25 full-time employees.
SECTION 2. Section 981.004, Insurance Code, is amended by
adding Subsection (d) to read as follows:
(d) Subsection (a)(1) does not apply to insurance procured
for an industrial insured if:
(1) the agent procuring or placing the insurance
discloses to the industrial insured 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;
(2) the surplus lines company offering the coverage
has a financial strength rating of A- or better from the A. M. Best
Company; and
(3) after receiving the notice described by
Subdivision (1), the industrial insured requests in writing that
the agent procure the insurance from or place the insurance with an
eligible surplus lines insurer.
SECTION 3. Section 981.215(a), 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;
(11) an agreement under Section 225.006(c);
(12) evidence establishing that:
(A) 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); or
(B) the insured qualified as an industrial
insured and that the surplus lines agent complied with the
requirements of Section 981.004(d) if a diligent effort to obtain
insurance in the admitted market was not made pursuant to Section
981.004(a)(1); and
(13) any other information required by the department.
SECTION 4. The changes in law made by this Act apply only to
an insurance policy delivered, issued for delivery, or renewed on
or after January 1, 2018. A policy delivered, issued for delivery,
or renewed before January 1, 2018, is governed by the law as it
existed immediately before the effective date of this Act, and that
law is continued in effect for that purpose.
SECTION 5. This Act takes effect September 1, 2017.