Rule Development And Clarification
Over the past two weeks, we have been asked to provide guidance regarding enforcement actions that could result from the new rule changes, adopted by TDI in mid-December 2018. Unfortunately, what became misunderstood during this time was that SLTX was given authority over enforcement. Enforcement action remains with the TDI and has never been delegated to SLTX. This is expressed in Texas Insurance Code (TIC), Section 981.160. SLTX is a governing body created to facilitate compliance and act as the aggregator of information. This role has been SLTX’s for the greater part of the last 30 years.
Understanding that the new rule change would require new data elements for policy limits and purchasing group policies, the industry should be aware that their policy file data is protected under TIC, Section 981.158 EXEMPTION FROM PUBLIC INFORMATION LAW, which has been effective since June 1, 2003.
As such, once we were apprised of the adoption, we assimilated with a three-prong approach to include:
- A distributed communication notice on 12/14/2018 as we felt many stakeholders were unaware;
- Contact with the Department regarding the “effective date” of 12/30/2018;
- Creation of a survey directed to system filers regarding purchasing groups, current processes, and internal method of capturing policy limits within their company platforms.
At the same time, we also developed a “temporary portal” to capture policy limits. This temporary portal is a separate and secure site, apart from the existing EFS system. The elements currently being requested are policy #, effective date, and highest aggregate limit. Sub-limits and coverage code are not required.
The results of the survey and use of the temporary portal are positive. In the first three weeks alone, 49% of reporting brokers have begun submitting the new policy limit information. This corresponds with the survey which indicated that 63% capture policy limits and 41% indicated that implementation changes could be made within 1-3 months.
This morning, it was brought to our attention that Mr. Jeff Hunt, Assistant Deputy Commissioner, TDI, was quoted in a TSLA Newsflash. While the sentence was correct, please be advised the intent to users is to continue using the methods of compliance that are on our website, including both EFS and the temporary policy limit upload portal.
Going forward, both the EFS and temporary portal will remain the same until our development progresses. However, for the 51% who have not reported limits or are unable to do so, please know that SLTX will not (nor cannot) report those brokers on the monthly late filers report, nor will they receive system errors for not including such limit data, if they have been unable to do so to date, but the expectation of compliance will remain the same.
Additionally, on Wednesday, our Board created a working committee to assess any other future short-term solutions with the goal of long-term compliance. It is also important to note that we went back to see if there had been any effect on total monthly filings during this period and found that there has been no effect, as the total number remains flat when comparing the same policy filings period of last year.
And, lastly, we want to thank the brokers who have made the effort towards meeting the new compliance requirements. Please continue to do so as the temporary portal will remain open. And, as we work towards a pathway for rule compliance, SLTX will provide necessary communication to alleviate concerns of enforcement action remedies, given that no future compliance deadline dates have been issued.
If your firm has other circumstances or concerns, anticipated or not, please do not hesitate to reach out so that we can work with your compliance and IT staff, timelines, and/or future technology changes. And, as the working group confers, new information will be provided to all stakeholders.