BILL ANALYSIS H.B. 1987 By: Duncan (Lucio) Economic Development 5-22-95 Senate Committee Report (Unamended) BACKGROUND The Surplus Lines Stamping Office of Texas (SLSOT), in an effort to facilitate and encourage compliance with state surplus lines laws, must receive, review, and record all surplus lines contracts which surplus lines agents are required to report to and file in accordance with rules promulgated by the Texas Department of Insurance. Surplus lines agents must file with the SLSOT every surplus lines contract procured in this state. PURPOSE As proposed, H.B. 1987 provides for the regulation of surplus lines insurance; clarifies the status of the Surplus Lines Stamping Office of Texas as exempt from the filing requirements of the state library; and provides for the confidentiality of certain personal information about consumers. RULEMAKING AUTHORITY It is the committee's opinion that this bill does not grant any additional rulemaking authority to a state officer, institution, or agency. SECTION BY SECTION ANALYSIS SECTION 1. Amends Section 6, Article 1.14-2, Insurance Code, as follows: Sec. 6. PROCEDURE FOR EFFECTING SURPLUS LINES CONTRACTS. (a) Deletes existing Subsection (a) relating to the requirement that an agent, before any new or renewal insurance is procured in an unlicensed insurer, to make an affidavit including certain information. Redesignates existing Subsection (b). (b) Deletes the requirement of the surplus lines agent, within a specified time after the effective date of any new or renewal surplus lines insurance contract, to file with the Surplus Lines Stamping Office of Texas evidence that a diligent effort has been performed. (c)-(e) Make no changes. SECTION 2. Amends Section 6A, Article 1.14-2, Insurance Code, by adding Subsections (g) and (h), as follows: (g) Provides that the stamping office and the records of the stamping office are not subject to Chapter 441, Government Code. (h) Provides that an individual surplus lines insurance contract filed with the stamping office is confidential and is not a public record under Chapter 552, Government Code. Provides that nothing in this subsection shall prevent access by a state agency to an individual surplus lines insurance contract filed with the stamping office. SECTION 3. Amends Section 8(b), Article 1.14-2, Insurance Code, to prohibit an insurer from being an eligible surplus lines insurer unless in the case of an insurance exchange created by the laws of another state: (A) the syndicates of the exchange must maintain under terms acceptable to the commissioner capital and surplus, or its equivalent under the laws of its domiciliary jurisdiction, or not less than $75 million in the aggregate; (B) the exchange must maintain under terms acceptable to the commissioner at least 50 percent of the policy holder surplus of each syndicate in a custodial account accessible to the exchange or its domiciliary commissioner in the event of insolvency or impairment of the individual syndicate; and (C) each individual syndicate, to be eligible to accept surplus lines insurance placements from this state as a member of the exchange must meet certain qualifications. SECTION 4. Effective date: September 1, 1995. Makes application of this Act prospective. SECTION 5. Emergency clause.