While much of the legal spotlight this week has been cast on the confirmation hearings of Supreme Court nominee Ketanji Brown Jackson, our aim today is to shed some focus on the recently announced policy changes in the state of Texas which concern many of our readers in the insurance sector.
The Texas Department Insurance (TDI) has introduced a new order, issued by Commissioner Cassie Brown, which affects the surplus lines stamping fee. Until now, this fee has been set at a rate of .075% of the gross premium, but it has been announced that this figure will be reduced to .04% with effect from January 1, 2024.
The lower stamping fee will be applicable to both newly issued and renewal surplus lines policies. This development introduces a significant regulatory change in the Texas insurance market, which is one of the largest and most influential in the United States.
This announcement has significant implications for carriers, brokers, and insureds who operate in the surplus lines insurance space. The decrease in stamping fees means these entities will benefit from lower costs when filing their surplus lines insurance contracts.
It’s worth noting that this fee, which is assessed on each surplus lines policy filed with the Surplus Lines Stamping Office of Texas (SLTX), goes towards funding the operations of SLTX.
While those within the insurance industry are welcoming this policy adjustment, some are eager to know how this reduction will affect the functioning of SLTX. Will this measure impact the future cost efficiency and performance duration of processing surplus line policies?
The decision remains an important regulatory development that should not be ignored. As we head towards 2024, only time will reveal the full impact of this policy change and whether it will create a trend among other States.
For more information on the Texas Department Insurance reduction of the surplus lines stamping fee, please click here.