Coverage by Admitted and Surplus Lines Insurers on Same Policy, Certificate, or Covernote

The Stamping Office continues to receive agent filings indicating coverage on a single policy through both surplus lines insurers and admitted insurers. Please note that insurers authorized to write business on an admitted basis in Texas are precluded from writing surplus lines business as only unauthorized insurers may be eligible pursuant to Sec. 2(b) of Art. 1.14-2 of the Texas Insurance Code and 28 TAC 15.10.

Beyond the matter of not complying with Texas law, there are several practical problems with combining insurers on a single policy. The surplus lines premium tax cannot be applied to admitted insurers (tax rates and mode of remittance to the state differ,) nor can the surplus lines stamp regarding nonparticipation in the guaranty fund. In addition, admitted insurers are generally subject to rate and form regulation by the Texas Department of Insurance. The failure of an admitted insurer to comply with these rate and forth regulations may subject the insurer to disciplinary action including monetary forfeiture among other sanctions.

Please ensure that any coverage provided by admitted insurers is written under a policy separate from the policy written by surplus lines insurers. Again, this is required by law.