Procedural Updates

Updated Complaint Notice Takes Effect

The Texas Department of Insurance (TDI) has adopted amendments to the Texas Administrative Code regarding required complaint notices included in insurance policies. These changes were effective on November 4, 2019, and must be implemented no later than May 1, 2020.

The updated complaint notice can be found as an attachment to the rule (28 TAC §1.601) on the Texas Register website. It can also be viewed or downloaded from the TDI Policy Disclosures page on the SLTX website.

Agents must ensure that the notice meets the following requirements:

  • The notice must be included with all policies, binders, certificates, or evidence of coverage, and:
    • Be on a separate page
    • Be on the first, second, or third page of the set of documents
    • Be in the same format and layout as the document provided
    • Have at least one blank line between each paragraph
    • Have font no smaller than 10 point
  • The following fields must be included:
    • Name of the insurance company (in bold)
    • Title and phone number of the insuring company (in bold)
      • The insuring company may choose to list the agent, agency, or MGA and their phone number instead.
    • Toll-free phone number of the insuring company (in bold)
      • The number is not required to be toll-free for surplus lines insurers.
    • Email address of the insuring company
    • Mailing address of the insuring company
  • A Spanish version of the notice must be included for personal automobile, homeowners, and accident and health policies, binders, certificates, and evidences of coverage.

 

The following fields are optional to include:

  • Agent, agency, or MGA contact name, address, and phone number
    • If provided, this information must be below the required insuring company paragraph and above the Texas Department of Insurance paragraph.
  • The notice may be on insuring company letterhead
  • A toll-free phone number for surplus lines insurers
  • The URL of the insuring company

Please contact the SLTX Tech Support team by phone at (800) 681-5848 or by email with any additional questions.

Herrera Joins SLTX as Director of Operations

SLTX has welcomed back Cheyenne Herrera as Director of Operations, effective November 7, 2019. Herrera originally joined SLTX in 1998 as a Data Entry Clerk. She oversaw the implementation of the Electronic Filing System (EFS) beginning in 2003 and was a Help Desk Specialist and Help Desk Supervisor before she served as Business Analyst from September 2016 through August 2018.

In this newly created position, Herrera will oversee the SLTX Operations Team to ensure adherence to compliance and procedural standards, as well as contributing to the new SMART system. She will report to the SLTX Executive Director.

Don Meyer Named SLTX Interim Executive Director

The SLTX Board of Directors has appointed Don Meyer as SLTX Interim Executive Director, effective Tuesday, October 22, 2019.

Meyer has more than 37 years of experience in the excess and surplus lines insurance industry. He previously served as a member the SLTX Board of Directors and was board chair in 2001. He is also a past president of the Texas Surplus Lines Association.

He is a current trustee of the Texas A&M 12th Man Foundation, where he chairs the Insurance Task Force. He and his wife have served as co-chairs of the Archdiocese of San Antonio’s “On the Way ¡Andale!” capital campaign, and he is a current member of the Archdiocese’s Stewardship Task Force. Meyer graduated from Texas A&M University in 1978.

NFIP Extended Through November 21

The US Congress has passed a bill that will extend the National Flood Insurance Program (NFIP) through November 21, 2019. The program was originally set to expire at midnight on September 30, 2019.

The NFIP extension was included as part of a temporary government funding bill. The US House of Representatives and US Senate both passed the measure last week, and it was signed by President Trump on September 27, 2019.

“NFIP reauthorization is an opportunity for Congress to take bold steps to reduce the complexity of the program and strengthen the NFIP’s financial framework so that the program can continue helping individuals and communities take the critical step of securing flood insurance,” says a statement on the Federal Emergency Management Agency (FEMA) website.

Long-term NFIP reform and reauthorization bills have been introduced in the House and Senate, but so far have not been adopted. The NFIP must retain authorization to continue operation, and any lapse means that FEMA would stop selling and renewing NFIP policies for millions of properties in the US.

TDI Issues Call for Rule Updates

The Texas Department of Insurance (TDI) is accepting submissions to identify Texas rules that should be changed or modernized. The initiative was announced earlier this year.

As part of the review, stakeholders are asked to submit a brief statement on each rule they’re requesting to change or update. TDI will review the submissions and announce the selection of a limited number of rule proposals for detailed review and comment. TDI will request additional information for these submissions, such as suggested text revisions. After review, TDI will determine which submissions will move forward to formal rule projects. These rules will progress through TDI’s normal rule process, which allows opportunity for public comment.

Submissions should include the specific rule being commented upon, why the rule should be reviewed or revised, the issue the rule causes and why it should be a priority for TDI, and a brief description of how the rule could be improved. Submissions must be received by October 1, 2019.

More information can be found on the TDI website.

Embracing Texas Technology

With the advent of technology affecting nearly every aspect of daily life, new digital processes and products have also been introduced in the insurance arena. The adoption of such technology across the industry will serve to enhance customer interactions and business efficiencies for insurance carriers, agents/brokers, and service providers alike.

For those in the excess & surplus lines (E&S) industry, SLTX initiated a formal Technology Strategy in 2016 to ensure the existing legacy system would be replaced. The goal was and continues to be the creation of an enterprise-wide platform with an automated focus for agents/brokers to incorporate filing of policy information that provides an intuitive and simplistic interface, while at the same time providing real-time information for brokers to quickly assess their Texas book of business and information, in an exportable reporting manner. In designing an enterprise model, the core strength is to ensure the development has an integration and functionality across legacy functions while being equipped with current tools, language, and ease of database infrastructure. Over the last three years, other processes became evident to SLTX, as does other organizations who initiate a technology endeavor, in light of the fact that there is movement towards elimination of other dated business processes.

SLTX’s technology objectives certainly coincide with carriers, agents/brokers, third party administrators, and hosts of other industry partners in the throes of embracing technology and innovation. For example, recently, Lloyd’s of London announced their path to evolve digitally by mandating syndicates to write 70% of their risks electronically by the end of the year. Likewise, AIG will begin a three plus year program to overhaul its current infrastructure and processes, while a Japan-based insurer has set up tech hubs in Tokyo and Singapore for the purpose of developing new strategies with Insurtech startups. Obviously, these are only a few examples of what will eventually be a daily expectation across all lines of insurance.

Within its technology modernization initiative, SLTX branded its future system as Texas’ SMART system, wherein Texas will offer the broker their own personalized dashboard along with ease of graphs for better visualization.

Additionally, rather than design one interface given the varied marketplace technology platforms, SLTX is developing the appropriate application programming interfaces (API). The interfaces will be termed as a “SMART Connector.”

With a forward-thinking Board of Directors and management team, SLTX embraced an initiative plan early on for modernization and, as a result, when introduced in 2020, SMART will be the newest E&S filing platform in the nation. Notwithstanding, as future advances learned from more providers and newer Insurtech innovations evolve, this, too, will benefit the entire insurance value chain as new tools will merely serve as foundations for others.

TDI Issues Bulletin Regarding Unauthorized Insurers

The Texas Department of Insurance (TDI) has issued a bulletin to remind insurance agents and third-party administrators (TPA) that they may be held responsible for assisting a company engaging in the unauthorized business of insurance under the Texas Insurance Code, Chapter 101.

TDI’s bulletin specifically notes that unlicensed and unauthorized companies are marketing new health insurance products to Texas consumers by claiming to be exempt from state regulation. Agents and TPAs are encouraged to carefully review all new products and companies. The National Association of Insurance Commissioners (NAIC) Consumer Insurance Search tool is available as a resource to verify a company’s license, and TDI can answer questions about a company or product at (512) 676-6500.

Those who assist in the procurement of unauthorized insurance could be held liable to the insured for the full amount of a claim or loss, if the insurer fails to pay the claim. Additionally, an agent or TPA’s license may be revoked or suspended in the event that he or she engages in the unauthorized business of insurance.

In the event that a company may be unauthorized or distributing an unauthorized product, notify TDI by phone at (800) 252-3439 or by email at  EnforcementInfo@tdi.texas.gov.

Policy Limit Requirements Remain in Effect

The Texas Department of Insurance (TDI) reiterated its goals of market capacity, uniform reporting, and market comparison to industry stakeholders with respect to a new policy limit requirement, adopted in December 2018. The regulatory requirement remains in effect, for all policies with an effective date on or after 12/30/18.

While SLTX simplified the policy limit filing to the ‘highest aggregate limit” per policy, the Department has provided additional clarifications for the agent community to include:

  • Property Policies – Total Insurable Value (TIV) for all properties on the policy (both in and outside of the state)
  • Liability Policies – Aggregate Limit
  • Package policies (property & liability) – TIV for all properties on the policy (both in and outside of the state)
  • Other – Accident & Health – Maximum Benefit, aka Total Sum (excluding occupational A&H, which are not required to report)

While only (1) loss limit per policy is still required, regardless of policy type, it does require agent staff to be observant of “property TIV, in/outside the state.”

The expectation from TDI is that the new definitions be followed moving forward. Agents may work with carriers to obtain policy limits in order to comply but are ultimately, responsible for the accuracy of these submissions. For the few agents who decide to provide a carrier’s bordereaux of policy limits, SLTX will create a separate outreach/process for those agencies’ reconciliations.

Also remaining in place for all industry agents/brokers:

  • SLTX will continue to not report any policy limit errors on the monthly or annual late filing report to TDI
  • No change in submission/filing methods SLTX already allows, to include:
    • File upload via temporary portal (SLTX website)
    • EFS policy limit field
    • Programmatic filing
    • Mailed submissions

From the inception, filed policy information to SLTX has been extremely positive.  Additionally, the overwhelming support from a widespread insurance & risk management industry base has been poised, with consistent emphasis on the value of strategy and innovation as the digital era is already before us. Thus, another reason to thank the hundreds of brokers who are reporting information to our office, as well as the growing interest as “SLTX beta testers” for our future SMART system.

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