Minor changes to the wording in the mandatory guaranty fund non-participation notice become effective as of April 1, 2009. This notice is required on all Texas surplus lines insurance policies, as stipulated in Sec. 981.101(b) of the Texas Insurance Code. The law also requires that the notice be printed in 11-point type. The revisions are necessary because the current language makes reference to certain sections of the Insurance Code that no longer exist, having been supplanted by updated versions of the laws.
For your information, the amended language of the notice is below, with the new wording underlined and the deleted wording lined out.
This insurance contract is with an insurer not licensed to transact insurance in this state and is issued and delivered as surplus line coverage under the Texas insurance statutes. The Texas Department of Insurance does not audit the finances or review the solvency of the surplus lines insurer providing this coverage, and the insurer is not a member of the property and casualty insurance guaranty association created under Chapter 462
Article 21.28-C, Insurance Code. Section 12, Article 1.14-2 Chapter 225, Insurance Code, requires payment of a __________ (insert appropriate tax rate) percent tax on gross premium.
In December 2006 the Board of Directors of the Surplus Lines Stamping Office of Texas recommended to the Commissioner of Insurance a decrease in the stamping fee rate charged on Texas surplus lines policies. In March 2007 the Commissioner ordered that the rate be lowered from .1% (.001) to .06% (.0006), effective July 1, 2007.
The lower stamping fee rate will apply to each new or renewal surplus lines policy with an effective date on or after July 1, 2007. The new rate will apply also to policy date extensions if effective on or after this date. Policies effective on or before June 30, 2007 will run to expiration, cancellation, or next annual anniversary date (for multi-year policies) at the old rate of .1% This includes any subsequent endorsements, audits, cancellations, reinstatements, installments, and monthly or quarterly reports.
In 2005, Texas legislators passed Senate Bill 1564. This law repealed Section 981.206 of the Insurance Code, eliminating the requirement that a surplus lines agent provide proof of financial responsibility to the Texas Department of Insurance. Agents typically met this requirement through a $50,000 surety bond. Effective January 1, 2006 agents are no longer required to carry that surplus lines bond. Questions regarding the surplus lines agent bond should be directed to the Texas Department of Insurance, Agent License Division (512) 322-3503. Please make the following changes regarding this repeal to your Procedures Manual.
Chapter 981, TIC
Revised September 2003
Chapter 981, TIC
Revised January 2006