Enrolled Bill Summary

Senate Bill 796	Senate Author:  Middleton et al.
Effective:  Vetoed	House Sponsor:  Johnson, Ann

            Senate Bill 796 amends the Insurance Code to require an arbitration under a surplus lines insurance contract that is related to a risk located entirely in Texas to be conducted in Texas and to require the insurance contract, including the arbitration agreement, to be interpreted in accordance with Texas law. The bill prohibits those requirements from being construed as a defense to the enforcement of an arbitration agreement that complies with or has been reformed to comply with the bill or an award made under such an agreement.

Governor's Reason for Veto: "Surplus lines insurance is a product for sophisticated parties who know how to bargain over the terms of an arbitration agreement. Senate Bill No. 796's interference with freedom of contract in this market could inadvertently increase premiums and drive out insurers who want to do business in Texas."