As reported in a previous bulletin, the Texas Surplus Lines Association has reached agreement with the Texas Department of Insurance to permit the Stamping Office to stop collecting and reporting premium by individual syndicates on Underwriters at Lloyd’s policies. This means you will no longer be required to redistribute individual syndicate percentages of participation on policies with multiple Lloyd’s contracts, or on policies where Lloyd’s is not the sole insurer.
Since, as a part of this agreement, the Stamping Office must continue to verify the eligibility of each syndicate as of the effective date or annual anniversary date of the policy, you must continue to provide the Stamping Office a listing of the syndicates and their percentage of participation on each policy. We shall continue to tag any Lloyd’s security reported without a breakdown of the participating syndicates and you will still be required to correct or replace any ineligible syndicate we identify.
This change applies to all Lloyd’s policies processed by the Stamping Office on or after May 15, 1997. Please refer any questions to SLTX.
The Stamping Office continues to receive agent filings indicating coverage on a single policy through both surplus lines insurers and admitted insurers. Please note that insurers authorized to write business on an admitted basis in Texas are precluded from writing surplus lines business as only unauthorized insurers may be eligible pursuant to Sec. 2(b) of Art. 1.14-2 of the Texas Insurance Code and 28 TAC 15.10.
Beyond the matter of not complying with Texas law, there are several practical problems with combining insurers on a single policy. The surplus lines premium tax cannot be applied to admitted insurers (tax rates and mode of remittance to the state differ,) nor can the surplus lines stamp regarding nonparticipation in the guaranty fund. In addition, admitted insurers are generally subject to rate and form regulation by the Texas Department of Insurance. The failure of an admitted insurer to comply with these rate and forth regulations may subject the insurer to disciplinary action including monetary forfeiture among other sanctions.
Please ensure that any coverage provided by admitted insurers is written under a policy separate from the policy written by surplus lines insurers. Again, this is required by law.