Agent of Record

Regulations passed during the past year by both the Texas Department of Insurance and the Texas Comptroller’s Office now define which agent in a surplus lines transaction involving more than one Texas surplus lines agent is the “agent of record”. This is the agent legally responsible for filing the policy with the Stamping Office and paying the premium taxes to the Comptroller.

Both 28 TAC §15.2(8) and 34 TAC §3.822(a)(8) are substantially similar:

Surplus lines agent of record – The Texas licensed surplus lines agent who places a policy with an eligible surplus lines insurer, or the Texas licensed surplus lines agent who transacts business directly with an out-of-state agent not licensed by Texas as a surplus lines agent to obtain coverage with an eligible surplus lines insurer.

These rules now specify what was previously regulatory interpretation — the Texas surplus lines agent “closest to the insurer” is the agent of record. Note that this might be a non-resident agent holding a Texas surplus lines license. The Comptroller indicates its auditors will hold the agent of record liable for taxes due on surplus lines insurance policies written.

If your agency acts as a program administrator but also holds a surplus lines license, the underlying agencies that are obtaining insurance through your program should not be filing the policies or paying the taxes, as they are not the agents of record. Simply put, if your agency procures the policy either directly from the insurer or through a nonresident agent that does not hold a Texas surplus lines license, you are the agent of record. When our office can identify from a review of the dec page that another agent should be reporting the policy, we will return it unprocessed to the submitting agent.

Please review your internal office procedures to ensure you are in compliance with these state regulations.