By Madla S.B. No. 1336
76R6463 DB-F
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the licensing and regulation of surplus lines insurance
1-3 agents.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Section 2(a)(1), Article 1.14-2, Insurance Code,
1-6 is amended to read as follows:
1-7 (1) "Surplus lines agent" means:
1-8 (A) [(i) is] an agent authorized under Article
1-9 21.14 who is granted a surplus lines license in accordance with
1-10 this Article; or
1-11 (B) [, (ii) is] a managing general agent who is
1-12 [(authorized to be licensed and] licensed under the Managing
1-13 General Agents' Licensing Act [, Acts, 1967, 60th Legislature,
1-14 Chapter 727, codified by Vernon as] (Article 21.07-3, Vernon's
1-15 Texas Insurance Code) who is granted a surplus lines license in
1-16 accordance with this Article and who complies with the provisions
1-17 of this Article, except it is not necessary that the managing
1-18 general agent be licensed as a recording agent [, or (iii) is a
1-19 nonresident insurance agent authorized under Article 21.11 and who
1-20 is granted a surplus lines license for the limited purpose of
1-21 acting on behalf of a purchasing group operating in this state in
1-22 the placement of liability insurance for risks located in this
1-23 state].
1-24 SECTION 2. Section 2(a)(2), Article 1.14-2, Insurance Code,
2-1 is amended to read as follows:
2-2 (2) A [Each "] surplus lines agent, ["] as a condition
2-3 of being licensed as a surplus lines agent and as a condition of
2-4 continuing to be licensed as a surplus lines agent, shall offer the
2-5 proof of financial responsibility [solvency and demonstrate
2-6 capacity in respect of responsibility to insureds under policies of
2-7 surplus lines insurance, or in the alternative show proof of
2-8 adequate bond and surety] in respect of [his] transactions with
2-9 insureds under policies of surplus lines insurance [and] as
2-10 required by [the] reasonable rules [and regulations] of the
2-11 department [State Board of Insurance shall provide].
2-12 SECTION 3. Section 2(a)(3), Article 1.14-2, Insurance Code,
2-13 is amended to read as follows:
2-14 (3) Any surplus lines license granted to an agency
2-15 authorized under the Managing General Agents' Licensing Act
2-16 (Article 21.07-3, Vernon's Texas Insurance Code), but [, Acts,
2-17 1967, 60th Legislature, Chapter 727, that is] not [also] licensed
2-18 under Article 21.14 of this code, [the Insurance Code] shall be
2-19 limited to authorize only the acceptance of business originating
2-20 through a regularly licensed general property and casualty
2-21 [recording] agent and does [shall] not authorize the [such]
2-22 surplus lines agency to transact business directly with the
2-23 applicant for insurance.
2-24 SECTION 4. Section 4(b), Article 1.14-2, Insurance Code, is
2-25 amended to read as follows:
2-26 (b) The department [Texas Department of Insurance] may issue
2-27 a surplus lines license to an applicant if the applicant submits a
3-1 properly completed license application and an application fee as
3-2 determined by the department and the department determines that the
3-3 applicant [an agent as defined by Subdivision (1) of Subsection (a)
3-4 of Section 2 of this article after the agent has]:
3-5 (1) is an individual who:
3-6 (A) is a resident of this state;
3-7 (B) is licensed as a general property and
3-8 casualty agent under Article 21.14 of this code or as a managing
3-9 general agent under the Managing General Agents' Licensing Act
3-10 (Article 21.07-3, Vernon's Texas Insurance Code);
3-11 (C) has passed the surplus lines license
3-12 examination administered under Article 21.01-1 of this code and
3-13 department rules; and
3-14 (D) provides proof of financial responsibility
3-15 as required under Section 2 of this article [remitted the
3-16 application fee set by the Texas Department of Insurance in an
3-17 amount not to exceed $50];
3-18 (2) is a corporation or partnership that:
3-19 (A) has at least one officer or director or at
3-20 least one active partner who:
3-21 (i) is a resident of this state; and
3-22 (ii) has passed the surplus lines license
3-23 examination required under this article;
3-24 (B) requires a person who performs the acts of a
3-25 surplus lines agent under this article on behalf of the
3-26 corporation or partnership in this state to be licensed as a
3-27 resident agent under this subsection;
4-1 (C) is licensed as a general property and
4-2 casualty agent under Article 21.14 of this code or as a managing
4-3 general agent under the Managing General Agents' Licensing Act
4-4 (Article 21.07-3, Vernon's Texas Insurance Code); and
4-5 (D) provides proof of financial responsibility
4-6 as required under Section 2 of this article [submitted a completed
4-7 license application on a form approved by the Texas Department of
4-8 Insurance]; or
4-9 (3) is a nonresident insurance agent authorized under
4-10 Article 21.11 of this code who holds a general property and
4-11 casualty license from the department and whose authority as a
4-12 surplus lines agent is limited to acting on behalf of a purchasing
4-13 group operating in this state in the placement of liability
4-14 insurance for risks located in this state [passed a qualifying
4-15 examination approved by the Texas Department of Insurance. If the
4-16 agent is a general partnership or a registered limited liability
4-17 partnership, this examination must be met by each natural person
4-18 acting as a partner in that partnership. If the agent is a
4-19 corporation, this examination requirement must be met by each
4-20 natural person acting as an officer, director, or shareholder of
4-21 that corporation. If the agent is a limited liability company,
4-22 this examination requirement must be met by each natural person
4-23 acting as an officer, manager, and member of that limited liability
4-24 company].
4-25 SECTION 5. Section 4(c), Article 1.14-2, Insurance Code, is
4-26 amended to read as follows:
4-27 (c) In addition to the requirements of this article, the
5-1 administration and regulation of a surplus lines agent's license
5-2 is governed by Subchapter A, Chapter 21, of this code [Unless the
5-3 State Board of Insurance adopts a system for staggered renewal of
5-4 licenses, as provided by Article 21.01-2 of this code, each license
5-5 issued under this section is for a two-year term that expires on
5-6 December 31; however, the term of the initial licensing period
5-7 shall expire on December 31 of the year following the year in which
5-8 the license is issued. A license may be renewed for periods of two
5-9 years].
5-10 SECTION 6. Section 4(d), Article 1.14-2, Insurance Code, is
5-11 amended to read as follows:
5-12 (d) If a license holder does not maintain the qualifications
5-13 necessary to obtain the license, the department may revoke or
5-14 suspend the license or deny the renewal of that license in
5-15 accordance with Article 21.01-2 of this code [By filing a
5-16 completed written application in the form prescribed by the State
5-17 Board of Insurance and paying the nonrefundable renewal fee set by
5-18 the board in an amount not to exceed $50, an unexpired license may
5-19 be renewed on or before the expiration date of the license].
5-20 SECTION 7. Sections 4(f), (g), and (h), Article 1.14-2,
5-21 Insurance Code, are repealed.
5-22 SECTION 8. This Act takes effect September 1, 1999.
5-23 SECTION 9. The importance of this legislation and the
5-24 crowded condition of the calendars in both houses create an
5-25 emergency and an imperative public necessity that the
5-26 constitutional rule requiring bills to be read on three several
5-27 days in each house be suspended, and this rule is hereby suspended.