| Most insurance in Texas is written by insurance companies
licensed by the Texas Department of Insurance. These companies are regulated
by the state in a variety of ways, including oversight amount of premium
charged and policy forms used. However, licensed companies will not provide
all the insurance coverage needed by Texas citizens. Only when a coverage
need is rejected by licensed companies can it be written in the surplus
lines market, and then only by the unlicensed companies on the Texas
Surplus Lines
Insurers List.
The rates and policy forms used by surplus lines insurers are not
directly regulated by the Texas Department of Insurance. This provides the
flexibility needed to write the hard-to-place risks found in the surplus
lines market. Approximately 95% of all surplus lines insurance is written
for Texas businesses. The typical risks written surplus lines include those
that are:
- distressed (e.g., fire coverage for a business with high incidence of
prior fire loss),
- complex (e.g., property and liability coverage for an offshore oil
platform),
- unique (e.g., insurance on a professional football quarterback's
throwing arm),
- capacity (e.g., exposure needing very high limits).
Only licensed surplus lines agents can place insurance with surplus lines
insurers for Texas insureds. An agent must pass a special examination and
meet other legal requirements to be issued a surplus lines license. A
surplus lines agent can be either a resident or nonresident.
Texas is currently the fourth largest surplus lines insurance market in the US, with
premiums totaling more than $3.7 billion in 2007. |
