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| On March 13, 2003 the Board of Directors of
the Surplus Lines Stamping Office of Texas (Stamping Office) unanimously
approved a motion requesting that the Commissioner of Insurance reduce the
stamping fee rate to .1% (.0010) from its current rate of .15% (.0015). This
motion was passed after a report and recommendation from a special Stamping
Fee Committee, which was appointed by the Chairman in December 2002. The
Board asked the General Manager and legal counsel to work with the Texas
Department of Insurance (TDI) to accomplish the rate decrease. With the assistance and agreement of Senior Associate Commissioner Betty Patterson, Staff Attorney Jimmy Atkins and Kathy Wilcox, Notice of Application to Decrease the Stamping Fee appeared in the Texas Register on April 4, 2003. The notice as well as our April Bulletin SO-2003-04.1 indicates a proposed effective date of July 1, 2003. The Stamping Office's long-standing goal is to maintain a stable stamping fee rate that allows us to perform the functions required in our Plan of Operation while at the same time not accumulating excess funds. Due to the volatility of the surplus lines market, precise estimates of premium volume and revenue for the Stamping Office are difficult to determine with accuracy. In an effort to maintain a stable rate, the Board of Directors made the Stamping Fee Committee permanent. The Board also agreed with the committee's recommendation to change the Plan of Operation by providing flexibility in the maximum accumulation of excess funds. The TDI now has this request under consideration. If regulatory approval proceeds as expected, the lower rate will apply to each new or renewal surplus lines policy with an effective date on or after July 1, 2003. |
From the Lone Star Lines -
April - June Issue 2003
Surplus Lines Stamping Office of Texas
78th Texas
Legislature Update
| Widespread concerns over the affordability and availability
of homeowners insurance resulted in Governor Perry declaring insurance to be
an emergency matter for the 78th Legislature. In fact, the first bill passed
by both houses and signed by the governor was SB 310, which required an
immediate rate filing with the Commissioner by insurers writing residential
property insurance. The Commissioner then issued a summary report to the
Legislature, estimating the rates were up to 25% excessive. Prior to the
bill's passage, there was some question as to whether surplus lines insurers
were to be included in the rate filing. Ultimately, only licensed insurers
were required to file. Currently, the following bills, if passed would affect the surplus lines industry: SB 14 by Jackson et al. Passed by the Senate April 2. Makes major revisions to the regulation of residential property and personal auto insurance. Revises both rate and form regulation for these lines of insurance to a prior approval system. Brings county mutuals and Texas Lloyd's plans under rate regulation. Two articles in the bill specifically apply to surplus lines insurers: Article 3, Use of Credit Scoring. Adds Article 21.21-10 to the Insurance Code. Restricts the use of credit scoring when used in underwriting. Identifies improper uses of credit scoring. Requires an insurer to explain to an insured when use of a credit score results in an adverse result. Requires an insurer to file its credit score model with the Commissioner. The filing then becomes public information. Provides that the insured may appeal the use of credit scoring under certain instances and the insurer must reconsider the matter. Makes the insurer subject to sanctions from TDI if it violates provisions of the article. Article 5, Regulation of Underwriting Guidelines. Requires an insurer to file its underwriting guidelines with TDI and update the filing whenever it changes the guidelines. OPIC may obtain a copy of the filing. The filing is public information. Also, TDI and OPIC may obtain a copy of an insurer's underwriting guidelines for lines of insurance other than residential property and personal auto. These guidelines remain confidential. Changes to SB 14 in the House Insurance Committee Substitute (CSSB 14): Requirements to file credit scoring models and underwriting guidelines filings are restricted to authorized (licensed) insurers. However, for residential property insurance a provision requires that an insurer affiliated with an eligible surplus lines insurer must add all surplus lines coverage written by the affiliate to the insurer's total writings to determine if the insurer's market share is 5% or more. If that threshold is reached, all residential property insurance rates, including those of the SL insurer, are subject to filing and approval. SB 1468 by West Revises current law regarding regulation of rates for professional liability insurance coverage written by authorized insurers for physicians and other health care providers. Section 6 of the bill amends Section 981.004(a) of the Insurance Code by including the Joint Underwriting Association (JUA) and the Texas Medical Liability Trust (TMLT) in the diligent effort search by a surplus lines agent before the risk could be exported to the surplus lines market. HB 119 by Burnam Adds Article 21.56A to the Insurance Code. Provides that in a suit for recovery of damages against an insured, the insurance company that issued the policy is a proper party to the suit. Specifically includes surplus lines insurers. HB 747 by Smithee Adds Article 21.55A to the Insurance Code. Requires insurers to implement numerous procedures in the adjusting and payment of water damage claims. Specifically includes surplus lines insurers. HB 750 by Smithee Amends the Unfair Competition and Unfair Practices statute (Article 21.21). Prohibits the use of an underwriting guideline based solely upon a single previous claim for water damage, either by the applicant or on the covered property, in determining whether to decline to write a residential property insurance policy. Permits an insurer to cancel a residential property policy falling under the above circumstances if a water damage claim is filed during the first 90 days the policy is in effect. HB 1085 by Smithee Provides the Commissioner of Insurance authority to issue an emergency order against an insurer that has a record of unreasonable delays in claims handling. The emergency order would impose claim response requirements in addition to those existing under Article 21.55. HB 3390 by Burnam Requires an insurer, within two business days after receiving notice of a mold or water damage claim on a residential property policy, to acknowledge the claim, commence an investigation, and request from the claimant all information and forms the insurer reasonably believes at that time is necessary to settle the claim. Two final notes: HB 2922 by Marchant recodifies the surplus lines premium tax statute to Title 3, Section 225. A major tort reform bill, HB 4 by Nixon et al., passed the House March 31. It includes a cap of $250,000 on the awarding of non-economic damages and a rate rollback provision for authorized insurers writing medical liability insurance. Updates to legislative information are available on the SLSOT website at www.slsot.org. |
From the Lone Star Lines -
April - June Issue 2003
Surplus Lines Stamping Office of Texas
SLSOT
Electronic Filing System Update
| We are fast approaching the implementation of the Electronic Filing System. Currently, surplus lines agencies that volunteered to perform beta testing are working with the specifications for constructing file packages for programmatic submission of policy data. The EFS incorporates the latest information technology advances for both web-based data entry and programmatic file uploads to help agents file transactions with the Stamping Office more efficiently. Users will be able to reduce paper handling and mailing costs, receive real-time notifications regarding submission status, and be able to access reports and statistical information online. All policy data submitted to the Stamping Office is secured through the Secured Sockets Layer (SSL) and review and update access is restricted to the agent originating the submission. We believe the EFS offers a comprehensive, user-friendly approach to submitting surplus lines policy data. An additional benefit is provided by the flexibility to file some items through the EFS while continuing to file others manually, by submitting the paper batches. You may "pick and choose" the best mechanism for filing different types of policies. For further updates, please visit our website at www.slsot.org. |
From the Lone Star Lines -
April - June Issue 2003
Surplus Lines Stamping Office of Texas
Texas Surplus Lines Insurance Regulation 2003 Seminars
| The Surplus Lines Stamping Office of Texas
will host seminars in Houston, Dallas, and San Antonio in September. These
seminars will feature speakers from the SLSOT, Texas Department of
Insurance, and the Comptroller of Public Accounts. Topics will focus on the
78th Texas Legislature and issues pertaining to the surplus lines industry,
tax filing problems, and the new SLSOT Electronic Filing System. A seminar
brochure and registration form will be distributed to Texas surplus lines
agents and companies in June. More information and on-line registration can
be found on our web site at www.slsot.org.
September 5 ,16, & 25 |
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Who should attend? Agency staff involved with: - Regulatory compliance - Tax filings - Stamping Office filings What will be covered? Texas Department of Insurance: - Insurance legislation passed by the 78th Texas Legislature that affects the surplus lines market - Disciplinary actions against agents Texas Comptroller - Audits of surplus lines agencies - Tax filing problems & issues SLSOT - Electronic Filing System
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From the Lone Star Lines -
April - June Issue 2003
Surplus Lines Stamping Office of Texas
| ●
Have you moved? If so, did you notify the Texas Department of
Insurance? The Insurance Code requires every surplus lines agent to notify
TDI of any change of address. Also, please remember to include the Stamping
Office in this notification. ● If the premium on a binder was allocated, remember to include the Other States/Exempt premium allocation form again when submitting the policy replacing the binder. ● If a policy includes fees that are specific to other states, please be sure you include those amounts on the Other States/Exempt premium allocation form. |
From the Lone Star Lines -
April - June Issue 2003
Surplus Lines Stamping Office of Texas
Comparison of SLSOT Premium Processed
by Line of Business
|
Annual Statement Line of Business |
Premium through 3/31/03 |
Premium through 3/31/2002 |
Percent Change |
| 1 Fire (incl. allied lines) | $181,190,402 | $122,495,275 | 47.9% |
| 2 Allied lines | $6,451,364 | $5,483,978 | 17.6% |
| 3 Farmowners multiple peril | $343,261 | $229,979 | 49.3% |
| 4 Homeowners multiple peril | $39,179,095 | $14,559,469 | 169.1% |
| 5 Commercial multiple peril | $19,624,389 | $3,317,093 | 491.6% |
| 8 Ocean marine | $1,542,991 | $1,048,502 | 47.2% |
| 9 Inland marine | $12,205,003 | $10,299,375 | 18.5% |
| 11 Medical malpractice | $8,778,128 | $11,509,191 | -23.7% |
| 12 Earthquake | $100 | $37,176 | -99.7% |
| 13 Group accident & health | $30,965,850 | $34,455,844 | -10.1% |
| 15 All other A&H | $7,666 | $4,550 | 68.5% |
| 17 Other liability | $294,938,757 | $229,448,115 | 28.5% |
| 18 Products liability | $10,041,419 | $8,083,816 | 24.2% |
| 19.2 Other priv pass auto lia | $2,252 | $791 | 184.7% |
| 19.4 Other comm. auto liab | $23,218,744 | $16,938,032 | 37.1% |
| 21.1 Priv pass auto physical | $230,398 | $230,077 | 0.1% |
| 21.2 Comm auto phys.damage | $18,853,626 | $17,340,819 | 8.7% |
| 22 Aircraft (all perils) | $1,153,793 | $113,898 | 913.0% |
| 23 Fidelity | $535,465 | ($5,128) | 10542.0% |
| 24 Surety | $0 | $15,750 | -100.0% |
| 26 Burglary & theft | $116,546 | $431,612 | -73.0% |
| 27 Boiler & machinery | $8,542 | $45,884 | -81.4% |
| 28 Credit | $14,326,257 | $13,399,045 | 6.9% |
| 31 Aggregate/other business | $74,124 | $489,790 | -84.9% |
| TOTAL | $663,788,172 | $489,972,933 | 35.5% |
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Note: Due to rounding figures may not total |
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