Purchasing Groups Using Surplus Lines Policies

Apr 2, 2019 | Archive News

Under the newly adopted regulation, Texas surplus lines agents who procure surplus lines policies for purchasing groups must file the policies with the Surplus Lines Stamping Office of Texas (SLTX) and pay required stamping fees.

The regulation, Title 28 TAC §15.115, took effect on December 30, 2018, and states:

(a) A purchasing group is any group that:

(1) has as one of its purposes the purchase of liability insurance on a group basis;

(2) purchases liability insurance only for its group members and only to cover their similar or related liability exposure;

(3) is composed of members whose businesses or activities are similar or related with respect to the liability to which members are exposed by any related, similar, or common business, trade, product, service, premise, or operation; and

(4) is domiciled in any state.

(b) When a registered purchasing group purchases insurance through a surplus lines agent, the surplus lines agent must submit the filings required under Insurance Code §981.105 and stamping fees directly to the stamping office.

(c) A surplus lines agent must stamp or write the words “Purchasing Group” conspicuously on every policy, contract, or other detailed evidence of coverage issued to a purchasing group or its members through the surplus lines agent.

(d) A surplus lines agent may not sell insurance to a purchasing group that is not registered with TDI. Registration may be verified on TDI’s website.

Additionally, a surplus lines agent may not sell insurance to a purchasing group not registered with the Texas Department of Insurance (TDI).

Surplus lines policies for purchasing groups should be acquired through a licensed surplus lines agent. Under state law, surplus lines agents are required to file all surplus lines policies with SLTX where Texas is the home state, including purchasing group policies. Title 10 TIC §2201.252 defines the purchasing group’s home state.

Purchasing groups should contact their agents to determine if this regulation is applicable. For any other questions, please contact SLTX by email or by phone at (512) 531-1880 or (800) 681-5848.