Procedural Updates

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.

Long-Term NFIP Extension Introduced in Congress

Congresswoman Maxine Waters, Chair of the House Financial Services Committee, has introduced a bill that would extend the National Flood Insurance Program (NFIP) for five years. The bill would put an end to the cycle of short-term extensions that the program has been operating under since its last lengthy authorization expired in September 2017.

The program was most recently reauthorized on June 4, 2019, and now runs through September 30, 2019. Waters’s proposed legislation, the National Flood Insurance Program Reauthorization Act of 2019, would extend the program through September 30, 2024.

Under the resolution, national flood mapping efforts would be expanded, and increased funding would be allocated for a five-year pre-disaster hazard mitigation program. The bill also benefits low-income policyholders by creating discounts and repealing mandated surcharges put in place by the Homeowner Flood Insurance Affordability Act of 2014. Additionally, policyholders who choose to leave the NFIP in favor of private coverage will not be penalized if they decide to return to the program.

The House Financial Services Committee discussed the bill on June 11, 2019. Further discussion is expected before a vote is taken in committee.

NFIP Reauthorized Until September 30, 2019

Congress has approved legislation to extend the National Flood Insurance Program (NFIP) for the 12th time since September 2017.  The extension comes as part of an aid package that includes $19.1 billion in emergency funding for disaster recovery in the United States.

The bill was voted on by the U.S. House of Representatives on Monday, June 3, 2019, after being approved by the Senate in May. It does not include any reforms to the program but extends the NFIP until September 30, 2019.

Last week, the NFIP was extended for two weeks on the eve of its expiration, a move that ensured the program would not be impacted while Congress was in recess. Now that Congress has resumed, the disaster aid bill has been passed. Once signed by President Donald Trump, funds will be sent to help communities hit by hurricanes, flooding, wildfires, drought, and other disasters. Additionally, funding has been allocated for Puerto Rico, which is still recovering after it was hit by hurricanes in 2017.

Congress Approves Two-Week NFIP Extension

The U.S. Congress has passed a measure to extend the National Flood Insurance Program (NFIP), which was set to expire at midnight on Friday, May 31, 2019, for two weeks while members continue discussions on program reforms. The measure was approved by the House of Representatives in a fast-track procedure during Congress’s recess after first being passed by the Senate last week.

A bill to grant $19 billion in disaster aid would include a further extension through September 30, 2019, but the bill has not yet been passed by the House. The current extension will allow the NFIP to operate through Friday, June 14, 2019.

Members of the National Association of Mutual Insurance Companies and the Independent Insurance Agents & Brokers of America (the Big “I”) have expressed disappointment that the program was not renewed for a longer time period.

“The Big ‘I’ is relieved that Congress was finally able to extend the NFIP before the program expires on May 31. However, we are disappointed that the extension is only for two weeks,” said Charles Symington, Big “I” Senior Vice President of External, Industry & Government Affairs. “With historic flooding in the Midwest and hurricane season upon us, it is vital that Congress passes a longer-term extension of the program when it returns to session next week to provide more certainty for consumers.”

Congress will resume on Monday, June 3, 2019, and discussion will continue on the aid bill, along with a lengthier NFIP extension.

SLTX Reports Year Over Year Changes

Approximately 1.6% of all Texas surplus lines policies filed during 2018 were reported after the statutory 60-day filing deadline. This represents a small percentage of 10,359 policies filed late, out of a total 656,744 policies.

One positive outcome of the report is that the number of agency firms who have been reported repeatedly for late filings has decreased by 15.8% to 294 (as compared to 349 in 2017). The reduction can partly be attributed to the SLTX monthly outreach program, where Tech Support Team staff provide resources, best practices, and personal service to brokers who have filed a policy late in the prior month.

SLTX is required to file an Annual Late Filer’s report with the Texas Department of Insurance (TDI) each year, documenting all late policy filings from the previous calendar year. Surplus lines insurance policies must be filed with SLTX no later than the 60th day after the effective date or issue date of the policy, whichever is later.

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