Gov. Abbott Signs Flood Insurance Diligent Effort Bill

A bill passed by the Texas Legislature this session that creates a diligent effort exemption for flood insurance policies in the surplus lines market has been signed by Gov. Greg Abbott. The bill, HB 1306, will take effect September 1, 2019, for any new or renewal policies issued on or after January 1, 2020. A diligent effort will still be required of agents for flood insurance policies whose policy period begins before January 1, 2020.

Under the new law, surplus lines agents are not required to conduct a diligent effort search to obtain flood insurance through the admitted market before placing it in the surplus lines market. However, the law does require that the eligible surplus lines insurer issuing the coverage has a financial strength rating of A- or better from the A. M. Best Company.

During the 86th legislative session, the bill was passed easily by both the Texas House of Representatives and the Texas Senate. The goal of the new law is to expand access to flood insurance in the private market, which offers alternatives to the National Flood Insurance Program.