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| Some nonresident agents are mistakenly reporting all policies to the
Stamping Office as surplus lines transactions whenever the policy has
insured risk in Texas. Often, such transactions are “independently
procured” (IP) insurance under Texas law (Insurance Code, Sec.
101.053(b)(4)). While IP transactions may be subject to payment of
premium taxes to Texas, the policies themselves should not be filed with
the Stamping Office. Also, there is no stamping fee charged on the Texas
exposure. Consider the following example. A New York agent that holds a Texas nonresident surplus lines license procures a surplus lines policy for a corporation headquartered in New York. The insured property is located primarily in New York, but there are exposures in other states, including Texas. In New York, this transaction is surplus lines insurance. A regulatory filing would be made to the Excess Line Association of New York (ELANY). However, in those states where there was covered property, but in which no “business of insurance” occurred, the transaction is deemed to be independently procured. For Texas, there would be no regulatory filing; that is, the New York agent would not report the Texas portion to the Stamping Office. The premium tax on the policy would be IP and the insured or any person designated by the insured would follow the instructions on the tax form when reporting the premium tax to the Texas Comptroller’s Office. (Sections 226.051-226.056 of the Insurance Code apply to premium taxes on IP insurance. The appropriate tax form is #25-103, Texas Annual Insurance Tax Report – Independently Procured Insurance, available from the Comptroller’s website at http://window.state.tx.us/taxinfo/ taxforms/25-103.pdf.) If the Stamping Office identifies a transaction that appears to be IP insurance based on the location of the insured and non-resident surplus lines agent, rather than process the policy as surplus lines, we will notify the agent by “tag” that we have entered the policy as a “pending” item. The pending status will remain until the agent verifies that the policy is in fact a Texas surplus lines transaction. The agent can then resubmit the policy and we will complete processing it. If the agent determines it is truly an IP transaction, it need not be returned to the Stamping Office. Differentiating between surplus lines and IP can be confusing. Ultimately, it depends on whether the policy has been negotiated in Texas. Typically, a policy is a surplus lines policy in the state in which the policy is negotiated. In other states, the policy may be considered under state law to be IP (although some states do not have IP laws). Tax questions should be directed to the Comptroller’s Office at 800-252-1387. Please call our staff (512-346-3274) if we can assist you in understanding this issue. |
From the Lone Star Lines
- January - March Issue 2007
Surplus Lines Stamping Office of Texas
Kester, Koch & Roeder Join SLSOT Board of Directors
| Commissioner Mike Geeslin has named David Kester, Harris County, Bart Koch, Tejas American General Agency, LLC, and Carl Roeder, Western Surplus Lines Agency, Inc. to the Surplus Lines Stamping Office of Texas Board of Directors. Each director will serve 3-year terms. We congratulate them on their appointments and look forward to their participation on our Board. |
From the Lone Star Lines -
January - March Issue 2007
Surplus Lines Stamping Office of Texas
Stamping Fee Reduction Proposed
| In December, the Stamping Office Board of Directors approved a recommendation that the Commissioner of Insurance authorize a decrease in the stamping fee rate. Based upon a review by the Texas Department of Insurance staff, the rate is recommended to decrease from .1% (.001) to .06% (.0006) Following notice in the Texas Register, a change in the rate would be accomplished through a Commissioner’s Order. SLSOT would then give agents approximately 90 days advance notice of the new rate, to ensure binding of business and necessary systems changes are not a problem. |
From the Lone Star Lines -
January - March Issue 2007
Surplus Lines Stamping Office of Texas
Insurance Regulation Reform
| A successor bill to HR 5637, the Nonadmitted and Reinsurance Reform Act of 2006, is being prepared for introduction in the US House Financial Services Committee. As with the NRRA, the goal of any legislation is to clarify and simplify how agents make regulatory and tax filings on policies insuring multi-state risks. Also, the initial draft of a Surplus Lines Interstate Compact is anticipated to be ready by the NAIC March meeting in New York City. The compact likewise attempts to solve problems arising out of writing multi-state business. The draft will be made available to regulators, tax officials, brokers, attorneys, and others for review and comment. |
From the Lone Star Lines -
January - March Issue 2007
Surplus Lines Stamping Office of Texas
Premium Taxes Due March 1st
| Premium taxes for all 2006 surplus lines business are due to the Texas Comptroller of Public Accounts by March 1, 2007. If you held a surplus lines agent's license at any point during 2006, you are required to file a tax report, even if no tax is due. Tax forms were mailed to each surplus lines agent by the Comptroller's Office at the end of January. If you did not receive a form, please call (800) 252-1387. |
From the Lone Star Lines -
January - March Issue 2007
Surplus Lines Stamping Office of Texas
SL
Company Filing Requirements Released
|
The Texas Department of Insurance (TDI) has released the annual Evidence
Filing Requirements Letter for surplus lines insurers for 2007. The Stamping
Office distributed the letter in a Bulletin published January 23, 2007.
These filing requirements are in accordance with the Texas Insurance Code
(Code) and related provisions of the Texas Administrative Code (Rules). The
Code and Rules require the TDI maintain a "Surplus Lines Insurers List"
compiled from the information submitted by insurers that meet the
eligibility requirements. The minimum capital and surplus requirement
remains at $15 million. All surplus lines insurers wishing to retain or gain
Texas surplus lines eligibility must file complete and legible evidence by
the due dates contained in the TDI letter. The first filing deadline for
foreign (US) insurers is March 31, 2006. Please note that certain evidence
can be transmitted electronically. Refer to the letter for instructions. You can locate a copy of these requirements on our web site at www.slsot.org. |
From the Lone Star Lines -
January - March Issue 2007
Surplus Lines Stamping Office of Texas
Texas Legislative Session
| In the 80th Texas legislative session, funding for the Texas Windstorm Insurance Association (TWIA) remains a key issue. Representative Craig Eiland has filed HB 635, which would provide TWIA the authority to request the issuance of bonds by the Texas Public Finance Authority for this purpose. (By the end of 2007, total TWIA exposure for policies it has issued is expected to reach $55 billion.) In addition, Mr. Eiland has filed HB 698, which would add commercial property insurance as coverage available from the Texas FAIR Plan to applicants in “underserved areas.” Updates regarding these bills and others potentially affecting the surplus lines market can be found on SLSOT’s website under “Legislation.” |
From the Lone Star Lines -
January - March Issue 2007
Surplus Lines Stamping Office of Texas
TDI Issues
Data Call
| The Stamping Office is again responding on behalf of surplus lines insurers to a data call from TDI requiring all carriers to provide a count of policies in force in Texas as of December 31, 2006. SLSOT’s involvement has been at the request of both NAPSLO and PCI. |
From the Lone Star Lines -
January - March Issue 2007
Surplus Lines Stamping Office of Texas
Stamping Office
Web Seminar "Filing Strategies - A Road Map to
Success"
| The SLSOT Web Seminar “Filing Strategies – A Road Map for Success” is now available for review! If you missed the original presentation in October, or you would like to review it a second time, the recorded web seminar in its entirety is now available. (We are in the process of having the presentation edited and broken into topic categories and will post those sessions as they become available.) We have published the recorded seminar on our website as well as a printable pdf file of the slides that accompanied the session. Please visit the SLSOT Seminars & Workshops link under Publication and Education at www.slsot.org for further details. |
From the Lone Star Lines -
January - March Issue 2007
Surplus Lines Stamping Office of Texas
Electronic Filings vs. Paper Filings in 2006
| Electronic filings through the Stamping Office EFS system continue to grow during 2006, with EFS filing totaling more than 50% of total filings for the year. If you have not made the transition to paperless filing, our EFS Department will be happy to assist you in setting up this service to start enjoying the benefits of EFS. Contact the EFS team at (800) 681-5848 or efsinfo@slsot.org for more information. |
From the Lone Star Lines -
January - March Issue 2007
Surplus Lines Stamping Office of Texas
SLSOT
Bulletins & Newsletters Go Paperless!
|
In January, SLSOT ended its practice of sending out paper copies of the
Procedures Manual to new agents and insurers, as well as monthly bulletins
and quarterly newsletters going to each. Instead, SLSOT now sends an e-mail
notification when a new publication becomes available on our website. If you
ignored our repeated requests to provide us your e-mail address, obviously
we will not be able to send you a notification and you are responsible for
monitoring the website to learn of changes to the insurer eligibility lists
and other important updates. For more information on how to subscribe to e-mail notifications, please contact Dalén Harris, Communication Coordinator, at (800) 449-6394 ext. 226, or info@slsot.org. |
From the Lone Star Lines -
January - March Issue 2007
Surplus Lines Stamping Office of Texas
EFS
Quick Tips
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From the Lone Star Lines -
January - March Issue 2007
Surplus Lines Stamping Office of Texas
Helpful Hints -
Paper Filing of Policies
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From the Lone Star Lines
- January - March Issue 2007
Surplus Lines Stamping Office of Texas
Comparison of SLSOT Premium Processed
by Line of Business
|
Annual Statement Line of Business |
Premium through 1/31/2007 |
Premium through 1/31/2006 |
Percent Change |
| 1 Fire (incl. allied lines) | $71,490,455 | $51,979,256 | 37.54% |
| 2 Allied lines | $3,779,155 | $1,514,147 | 149.59% |
| 3 Farmowners multiple peril | $110,849 | $163,459 | -32.19% |
| 4 Homeowners multiple peril | $5,433,436 | $7,766,186 | -30.04% |
| 5 Commercial multiple peril | $5,606,436 | $6,324,585 | -11.35% |
| 8 Ocean marine | $504,741 | $180,639 | 179.42% |
| 9 Inland marine | $5,100,923 | $4,751,433 | 7.36% |
| 11 Medical malpractice | $3,718,258 | $8,023,204 | -53.66% |
| 12 Earthquake | $0 | $898 | -100.00% |
| 13 Group accident & health | $7,358,840 | $7,034,392 | 4.61% |
| 15 All other A&H | ($9,629) | $102,406 | -109.40% |
| 17 Other liability | $134,904,753 | $144,524,241 | -6.66% |
| 18 Products liability | $3,120,406 | $3,709,026 | -15.87% |
| 19.2 Other priv pass auto lia | $2,002 | $400 | 400.60% |
| 19.4 Other comm. auto liab | $9,116,087 | $11,018,071 | -17.26% |
| 21.1 Priv pass auto physical | $95,792 | $101,001 | -5.16% |
| 21.2 Comm auto phys.damage | $4,528,529 | $4,153,398 | 9.03% |
| 22 Aircraft (all perils) | $2,011,498 | $1,317,029 | 52.73% |
| 23 Fidelity | $22,325 | $121,242 | -81.59% |
| 24 Surety | $5,200 | $0 | 0.00% |
| 26 Burglary & theft | $220,916 | $169,236 | 30.54% |
| 27 Boiler & machinery | $211,572 | $13,132 | 1511.12% |
| 28 Credit | $28,315,152 | $19,931,220 | 42.06% |
| 31 Aggregate/other business | $4,662 | $43,207 | -89.21% |
| TOTAL | $285,652,358 | $272,941,808 | 4.66% |
| Note: Due to rounding figures may not total | |||
Lone Star Lines Special Report
February 1, 2007
Top Surplus Lines Groups in Texas
Policies Processed
& Average Premium Per Policy
# of policies
Average Premium
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