The Stamping Office publishes a Procedures Manual that gives you step-by-step instructions on how to submit your policy filings to
our office.
The procedures are found in Section 2 of the manual in the "How to
File" section.
 Click
here to jump to the "How to File" section and other FAQs on filing
procedures.
Surplus lines insurance is specialized coverage available from certain
unlicensed insurers when the licensed market rejects the risk.
The typical risks
written in the surplus lines market are distressed, complex, unique, or
high-capacity. More than 95% of all Texas
surplus lines premium is for
commercial coverages.
Surplus lines insurance can only be procured by specially licensed surplus
lines agents and only from eligible surplus lines insurance companies.
An eligible surplus lines insurer is an unlicensed insurer that has been
placed on the Surplus Lines Insurers List maintained by the
Texas Department of
Insurance. The insurer must show that it meets numerous requirements established
by law regarding capitalization,
other financial standards, and operating
history to be listed.
2008
Eligibility Requirements
An insurer must file a variety of documents with both the Texas Department of
Insurance and the Surplus Lines Stamping Office by
March 31st each year.
Required information includes financial statements, an examination report, a
copy of the license or certificate of
authority, a business plan, an actuarial
opinion, and biographical affidavits, along with any other evidence which will
allow for a complete evaluation.
The law requires a surplus lines agent to detemine that a risk will not be
accepted by licensed companies before placing that risk in the
surplus lines
market. This exercise is known as "diligent effort" or "diligent search". Proof
of diligent effort is solely the responsibility of the
surplus lines agent.
Texas does not require any particular format evidencing diligent effort (i.e.,
no formal affidavits or other documents),
nor is any defined number of
declinations from licensed insurers required. The agent is not required to
report proof of diligent effort to the
Texas Department of Insurance. However,
the surplus lines agent must keep proof of diligent effort for each risk on file
in the agency.
7.What is the premium tax rate on surplus lines insurance?
The rate is 4.85% of gross premiums, effective 9/1/89.
Click here for Tax
and Stamping Fee table
8. When and to whom are surplus lines taxes
paid?
Surplus lines premium taxes are due by March 1 and are paid to the Texas
Comptroller of Public Accounts. However, a tax prepayment
is required when
accrued taxes due equal or exceed $70,000. This prepayment is due on the 15th
day of the month following the
month in which accrued taxes total $70,000.
The stamping fee is a charge on each surplus lines policy written in Texas,
supporting the cost of processing the policy at the
Surplus Lines Stamping
Office.
Click here for Tax
and Stamping Fee table
10. What is a courtesy
filing?
A courtesy filing is payment of the premium taxes to the
Comptroller's Office and reporting of the policy to the Stamping Office by a
surplus lines agent not involved in the original procurement of the policy.
Courtesy filings are not legal in Texas.
11. Why are courtesy filings not legal in Texas?
The Texas Insurance Code stipulates that surplus lines
insurance must be placed through a licensed Texas surplus lines agent, denoting
that this agent must actively procure the coverage. (Section 981.004) The
surplus lines agent can be either a resident or nonresident.
Also, the agent is responsible for first determining that the
coverage is unavailable in the admitted market ("diligent effort") before
writing
the risk in the surplus lines market. This responsibility cannot be
delegated to another. Coverage written without the participation of a
surplus
lines agent occurs without the requisite diligent effort and is not legally
procured surplus lines insurance.
12. If you held a surplus lines
license at any time during a year and wrote no business for that year,
do
you still have to file a tax report with the Comptroller?
As long as you held a license for one day during
the year, and even if you wrote no business, you are required to file a surplus
lines tax return.
Please call the Comptroller's office at (512) 463-4074 if you
have additional questions or comments about this issue.
13. Does Texas publish an "export list"?
No, Texas does not presently publish an export list. The
Stamping Office has expressed its support for the concept of an export list to
both the Texas Department of Insurance and the Texas Surplus Lines Association.
(An export list is a compilation of coverages or risks
that can be exported
directly to the surplus lines market, because regulators have established
through hearings that the state's admitted
insurers will not write these coverages.)
|
