By: Hancock  S.B. No. 562
         (In the Senate - Filed January 20, 2017; February 8, 2017,
  read first time and referred to Committee on Business & Commerce;
  April 5, 2017, reported favorably by the following vote:  Yeas 9,
  Nays 0; April 5, 2017, sent to printer.)
Click here to see the committee vote
 
 
A BILL TO BE ENTITLED
 
AN ACT
 
  relating to the provision of surplus lines insurance to certain
  commercial insureds.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Subchapter A, Chapter 981, Insurance Code, is
  amended by adding Section 981.0033 to read as follows:
         Sec. 981.0033.  INDUSTRIAL INSURED DEFINED. For purposes of
  this chapter, "industrial insured" means a person who purchases
  commercial insurance and, at the time of placement:
               (1)  employs or retains a qualified risk manager to
  negotiate insurance coverage;
               (2)  has paid aggregate nationwide commercial property
  and casualty insurance premiums of more than $25,000 in the
  immediately preceding 12 months; and
               (3)  has at least 25 full-time employees.
         SECTION 2.  Section 981.004, Insurance Code, is amended by
  adding Subsection (d) to read as follows:
         (d)  Subsection (a)(1) does not apply to insurance procured
  for an industrial insured if:
               (1)  the agent procuring or placing the insurance
  discloses to the industrial insured that:
                     (A)  comparable insurance may be available from
  the admitted market that is subject to more regulatory oversight
  than the surplus lines market; and
                     (B)  a policy purchased in the admitted market may
  provide greater protection than the surplus lines insurance policy;
               (2)  the surplus lines company offering the coverage
  has a financial strength rating of A- or better from the A. M. Best
  Company; and
               (3)  after receiving the notice described by
  Subdivision (1), the industrial insured requests in writing that
  the agent procure the insurance from or place the insurance with an
  eligible surplus lines insurer.
         SECTION 3.  Section 981.215(a), Insurance Code, is amended
  to read as follows:
         (a)  A surplus lines agent shall maintain a complete record
  of each surplus lines contract obtained by the agent, including any
  of the following, if applicable:
               (1)  a copy of the daily report;
               (2)  the amount of the insurance and risks insured
  against;
               (3)  a brief general description of the property
  insured and the location of that property;
               (4)  the gross premium charged;
               (5)  the return premium paid;
               (6)  the rate of premium charged on the different items
  of property;
               (7)  the contract terms, including the effective date;
               (8)  the insured's name and post office address;
               (9)  the insurer's name and home office address;
               (10)  the amount collected from the insured;
               (11)  an agreement under Section 225.006(c);
               (12)  evidence establishing that:
                     (A)  the insured qualified as an exempt commercial
  purchaser and that the surplus lines agent complied with the
  requirements of Section 981.004(c) if a diligent effort to obtain
  insurance in the admitted market was not made pursuant to Section
  981.004(a)(1); or
                     (B)  the insured qualified as an industrial
  insured and that the surplus lines agent complied with the
  requirements of Section 981.004(d) if a diligent effort to obtain
  insurance in the admitted market was not made pursuant to Section
  981.004(a)(1); and
               (13)  any other information required by the department.
         SECTION 4.  The changes in law made by this Act apply only to
  an insurance policy delivered, issued for delivery, or renewed on
  or after January 1, 2018. A policy delivered, issued for delivery,
  or renewed before January 1, 2018, is governed by the law as it
  existed immediately before the effective date of this Act, and that
  law is continued in effect for that purpose.
         SECTION 5.  This Act takes effect September 1, 2017.
 
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