Surplus Lines Specialty Coverages on the Upswing in Texas

The Surplus Lines Stamping Office of Texas, which recently changed its acronym from SLSOT to SLTX, reported at the end of 2016 that the number of surplus lines policy filings had surpassed the numbers recorded in 2014 or 2015.

SLTX Executive Director Norma Essary said the office has seen a growth in surplus lines specialty coverages. For example, the amount of flood policies in the state have increased by 159 percent since 2010, data from the office shows.

“We truly wanted to look at Texas flood and be able to assess what’s happening there, because there’s been a 51 percent increase from 2014 to 2015,” Essary said in a statement.

According to data from the Federal Emergency Management Agency, there were six disaster declarations in Texas between May 2015 and June 2016. By comparison, there were five disaster declarations in the state between 2007 and 2010. The increase in flood events across Texas and the impact of these events led to an increase in policies in both the primary and surplus lines market, according to SLTX.

In addition to an uptick in flood policies, SLTX data shows that terrorism policies have increased by 122 percent since 2010 and cyber liability policies have increased by 747 percent in the same time period.

SLTX received a request from the Federal Insurance Office regarding data it collected on cyber liability policies, and Essary expects the office will receive more requests of this type as interest in these policies grows.

The stamping office also reported that the overwhelming majority of surplus lines policies in Texas are filed on time.

SLTX is required by statute to file an Annual Late Filers report with the Texas Department of Insurance, which details every late policy filing in the previous calendar year. After evaluating the data on policies filed in 2015, SLTX found that a mere 1.72 percent of surplus lines policies were filed late.

Surplus lines policies are considered late if they are filed more than 60 days after the effective date or issue date of the policy, whichever is later. Once the Annual Late Filers report is submitted, TDI may assess fees and penalties upon agents.

Brokers who have received notification that a policy has been filed late can request an adjustment if they believe the notification was made in error.

Adjustments are considered until March of the following year and are granted based on evidence provided to SLTX. After the Annual Late Filers report is published in March, TDI handles these disputes directly with recommendations from SLTX based on evidence submitted by the agents.

Agents who file their policies online can view the status of those policies digitally through the Electronic Filing System, while those who file policies through standard postal mail will receive a monthly notice of any late policies.

SLTX found that 1,018 agents filed 367,370 policies in 2015, and of these, 6,304 of the policies were filed late. Further, 335 of the 522 agents who submitted a policy after the 60-day deadline had submitted a policy late in the past.

The stamping office also found that 383 of the agents who filed policies late in 2015 were non-residents, which means their home office is outside the state of Texas.

The information on late policies filed in 2016 will not be available until March 2017, when SLTX submits its annual report to TDI. In the event of any discrepancies, agents are encouraged to handle disputes promptly with SLTX directly to avoid appearing on the Annual Late Filers report.

The office unveiled its new logo at the Texas Surplus Lines Association (TSLA) annual meeting in November 2016. The rebranding is part of a communications initiative to modernize and establish a consistent brand identity across platforms involving the excess and surplus lines industry.

SLTX said it strives to serve as a resource for those involved in the surplus lines market, and the goal of the communications initiative is to establish consistency and improve ease of use and understanding for all users.

Topics Texas Agencies Excess Surplus Flood