Procedural Updates

On June 23, 2021, the Surplus Lines Stamping Office of Texas held their Audit & Finance Committee meeting pursuance to code 2(c)(10) of SLTX’s Plan of Operation. The committee discussed agenda topics including approval of the previous meeting minutes and discussion over the Year-to-Date Financial Update.

The following day, the Stamping Office Board of Directors held their second meeting of the year. The meeting was held via teleconference and most members were in attendance. The board discussed various topics on the agenda including the welcome of their Newest Board Member, Jeff Klein, approval of previous board minutes, the F&A Committee report, Company business Updates, Executive Director Travel Approval, and discussion on the remaining 2021 Meeting Dates.

The Board of Directors also discussed and passed motions regarding the approval of previous meeting minutes as well as Executive Director travel approvals.

This is a broad summary of the meeting and not intended to reflect official meeting minutes or detail the scope of any actions taken by the board. Once minutes are reviewed and approved by the Board, they will be added to the website under board minutes.

The dates for the next Audit & Finance Committee meeting and Board of Directors meeting are to be announced. As always, board meetings are available to the public, and information will be posted as they are announced.

SLTX recently conducted numerous focus group sessions that gave external user stakeholders the opportunity to provide feedback to the SMART system design and development teams. Interested external users were categorized into 4 types of user groups to provide insight on the broker landing page, conducting basic entries, and most importantly a refreshed “correction process”. Over a 4-day period, 81% of interested external users participated in one of twelve sessions hosted by SLTX.

The sessions proved to be productive with users providing feedback on user experience, processes, and updated workflows. The design and development teams noted several minor improvements which will enrich the overall manual entry process (e.g., warning the user if a submission appears to be a late filing) to ensure users will review and double-check entries.

Overall, stakeholders greatly appreciated the process improvements SLTX presented including enhanced search, export capabilities, and an updated correction process. User feedback from these groups include, “Solved about 95% of the angst from filings”, and “Will greatly reduce need for training since issues are addressed with expanded guidance and context”. The design team can break-down feedback requests and prioritize them before handing off to the development team to prepare specific requirements for each improvement. Each advancement may be incorporated into the existing External Filing development tasks or held as enhancements appropriate to the core functionality delivery.

Note that all current EFS processes and procedures will continue to be available and both systems will remain functional and work concurrently until the entire suite of features in SMART are fully delivered throughout 2022. With each new release or significant deployment, additional notifications will be sent to existing users of SLTX’s Electronic Filing System (EFS). These notifications may also be found directly on our website under News>Procedural Updates.

Please contact the SLTX Tech Support team by email or phone at (512) 531-1880 or (800) 681-5848 with any questions.

The screen shown represents the Broker Landing Page which users will see once logged into SMART. Here users are able to access features utilizing the left side navigation panel. Click here to view additional focus group progress and content.

The following market report of the surplus lines industry in Texas is an analysis using data from AM Best and SLTX. All data obtained from AM Best originates from 2020 NAIC Annual Financial Statements and supplementary documents filed for all active P&C writers. As such, all AM Best data represented is applicable for companies domiciled in the US only.

Over the past few years, premium increases in the Texas E&S market have been a well-documented trend. That trend has continued for every month in 2021 thus far. Simultaneously, SLTX has seen policy counts increase at a much slower rate, indicating the amount of premium per policies have driven the premium increase.

This chart breaks down the premium reported to SLTX by month and year from 2018 through April 2021. All data collected is Texas premium as reported to SLTX during the given period.

In June 2019, SLTX documented how the market data reported suggested that a hardening E&S market nationwide was on the horizon. In the successive two years, market data validated that premonition. In 2020, the Texas E&S market was marked by increasing premiums and conservative underwriting.

While 2019 E&S submissions to SLTX increased with premium, this volume coincided with a nationwide decrease in E&S submissions in 2020. Therefore, the current E&S premium growth may not necessarily be due to lower risk appetites in the admitted market, as was the case in 2019.

On average in 2020, the 10 largest writers of E&S premium in Texas increased their direct written premium (DWP) by 10.5% over 2019. Berkshire Hathaway Insurance Group experienced the largest increase at 46.3%, followed by Alleghany Corporation Group at 27.0% and Liberty Mutual Insurance Group at 16.6%.

This chart breaks down the largest surplus lines writers by group in Texas, where the group has at least one (1) E&S writer. All data was collected from A.M. Best as reflected on the companies’ Exhibit of Premium and Losses form and only represents companies domiciled in the US.

Liability lines of coverage accounted for the largest premium growth for the Top 10, with a 13.9% increase over 2019. A combination of stricter underwriting standards and an increased concentration in long-tailed lines of business may explain vastly improved underwriting performances for E&S carriers in 2020. More specifically, the top 10 in Texas, as well as the entire E&S industry, experienced a more favorable loss ratio in 2020 than in recent years.

This chart provides the 2020 Loss Ratio in Texas and the 3-year Loss Ratio by Group for the top 15 premium writers in Texas. This information was collected from A. M. Best loss information, as reflected on companies’ Schedule T form, and only represents companies domiciled in the US.

While the entire E&S industry experienced a larger increase in liability coverages than property, SLTX noted that the trend is not necessarily applicable to all individual groups. Of the five groups with an E&S carrier actively writing in Texas which accounted for the largest premium increases, three saw the largest increases in property coverages. On the other hand, three of the five groups which accounted for the largest premium decreases saw the largest decreases in property coverages.

This chart shows the groups with the greatest increase or decrease in Texas premium from 2019 to 2020, broken down by coverage category. All data was collected from A.M. Best as reflected on the companies’ Exhibit of Premium and Losses form and only represents companies domiciled in the US.

As the complexity of risks grows, the surplus lines industry will continue to be a haven for business that does not fit the risk appetite for admitted carriers. Even as the COVID-19 pandemic impacted the entire insurance industry, the E&S market sustained a positive underwriting performance in 2020. Conversely, the full impact of COVID-19 on the E&S industry is still uncertain. It is anticipated that premium growth will remain a trend for the remainder of 2021, as such, SLTX will continue to monitor the Texas surplus lines industry  and report any changes.

The Texas Department of Insurance (TDI) issues a special data call, which is authorized by Insurance Code Section 2210.052.  Please review the Commissioner’s Bulletin # B-0013-21 directly for data call instructions and related information.

The data call is necessary to supplement TDI’s statistical information and to enable the Texas Windstorm Insurance Association (TWIA) to calculate participation shares for assessments, should they be required in 2021. The data may also be used in 2022 before data for 2021 is available. This data call is due no later than June 30, 2021.

TDI will email this data call only to companies reporting 2020 Commercial Property or Businessowners statistical data to ISO as well as Farm Mutual Insurance Companies acting as fronting insurers (Insurance Code Section 221.001(c)). Companies subject to this data call must submit the data call form and affidavit to TDI even if the company does not write any applicable business in the Texas catastrophe area.

Please submit data utilizing the TWIA Data Call Form. Additionally, complete and email or fax the TWIA Data Call Affidavit separately from the Data Call Form. This form requires Adobe Acrobat Standard 9.0, Adobe Professional 9.0, Adobe Reader 9.0, or a more recent version. If you have questions about this data call or need more information, see the TWIA Data Call Instructions or contact TDI’s Data Services team at DataCall@tdi.texas.gov or 512-676-6690.

The Texas Department of Insurance (TDI) adopted a rule change for 28 TAC 1.1301 & 1.1302 which requires individuals, agencies, and companies regulated by TDI to designate an email address for official communications from TDI. The rule also allows electronic submissions to TDI in most cases where a paper method was previously required.

The text of §1.1302 has been changed by adding subsection (f). Subsection (f) makes the requirement under subsection (c) that all regulated persons provide to TDI an email address designated for receipt of official communications applicable beginning January 1, 2022. This is intended to give regulated persons time to prepare for the shift to receiving electronic communications from TDI.

(c) Except as provided by Subsection (e) of this section, all regulated persons must provide an email address that is designated for receipt of official department communications. Regulated persons should provide the email address as specified on the department’s website. If communications may no longer be received at the designated email address, the regulated person must notify the department and designate a new email address within 10 business days.

(d) Notice or service sent by email under this section satisfies any notice or service requirements unless a different method of notice or service is required by statute or §1.90 of this title.

 (e) If a regulated person does not have the technological capability to maintain an email address designated for official department communications, or for good reason does not wish to receive communications by email from the department, the regulated person should notify the department as specified on the department’s website regarding address changes.

Please utilize the Agents, adjusters, and agencies link to update or change names, addresses, or emails through the Texas Department of Insurance (TDI). Contact TDI for further questions or concerns regarding this rule change.

The Surplus Lines Stamping Office of Texas (SLTX) has embarked on a new education strategy to enhance our ability to provide continuing education via our website.

This change will provide additional continuing education content to our education webpage. The pandemic has created the need to provide continuing education without the utilization of a classroom environment. While SLTX will continue to provide courses in person once conditions have improved, we will also provide additional resources on our website in the fourth quarter of 2021. We will provide updates via e-news as content is added to the education page. Please keep in mind as updates are continuous, the education page will undergo numerous changes. Stay tuned!

SLTX is here to serve our industry while continuing to provide excellent customer service and educational opportunities through our new communication strategy. For more information or additional questions regarding this update, please utilize the “Submit your Questions“ form on our website under “News”. Questions will be answered when they are received and may also be included in future newsletters.

Because of the nearly week-long power outage in mid-February, SLTX did not have a SMART release during that month. The March 2021 SMART release primarily includes a Report Landing page which will be available for all External Filers through the SMART application. This will allow those users to directly obtain the following monthly reports: Monthly Invoice, Detail Policy Activity Report, Policy Transaction Activity Report, and when appropriate, the Outstanding Ineligible Report, and Duplicate Policy Report. You will also be able to pay invoices, via credit card or ACH payments, through the SMART application. Online filers will continue to receive their reports via the existing Electronic Filing System (EFS) portal in the original format. Please note that all current EFS processes and procedures will continue to be available and both systems will remain functional and work concurrently until the entire suite of features in SMART are fully delivered which is expected to be in 2022.

Additionally, improvements were made to various reports to reduce overall spacing and to better handle specific data-related scenarios. The March 2021 release also includes features which are specific to SLTX’s Internal Filing (work assignments relating to and the processing of mailed transactions), additional search capabilities, as well as various bug fixes relating to previously released features.

As work continues on the Internal Filing features, SLTX is looking forward to the release schedule which will include External Filing (or the ability to manually input transactions within SMART). As we enter the planning stages, SLTX will resume round table or focus group discussions with current users of SLTX’s Electronic Filing System (EFS). Please stay tuned and be on the look-out for additional communications within the next few weeks regarding this schedule and feature sets to be discussed.

As a reminder, SLTX has already released portions of its new online filing system, SMART. This includes filing features that are specific to automated or “programmatic” filers as these filing methods make up the largest majority of the transactions filed with SLTX. Beta testing is ongoing and feedback by automated filing broker users is strongly encouraged as broker testing is the primary mechanism to ensure data-related scenarios are handled effectively and efficiently. If you, as an automated filer, have not requested the updated Technical Reference and User Guides or are ready to resume beta testing, please contact the SLTX Tech Support team by email.

With each new release or significant deployment, additional notifications will be sent to existing users of SLTX’s Electronic Filing System (EFS). These notifications may also be found directly on our website under News>Procedural Updates.

Please contact the SLTX Tech Support team by email or phone at (512) 531-1880 or (800) 681-5848 with any questions.

SLTX does not automatically apply open credit balances to any balance due.

If there is a balance due that includes one or more credits, you must contact SLTX’s Accounting department to request that the credit(s) be applied. Once that is complete, you will be able to pay your net amount due.

If there is a credit balance with no balance due, you must contact SLTX’s accounting department to request a refund check be issued.  Once issued, the check will be mailed to the address on file for the corresponding agency.

To contact SLTX’s Accounting Department, you may use SLTX’s “Contact Accounting” form. Please be certain to include your surplus lines license number with your request.

As a reminder, SLTX accepts payments via credit card or Automated Clearing House (ACH) through its Electronic Filing System (EFS). Once logged in to EFS, the “Pay Invoices” button will be visible on the left navigation menu. The payment portal will then open a new, secure tab in the browser. For step-by-step instructions, SLTX has created a how-to guide on the online invoice payment process. This guide is located on the SLTX Broker Forms page of the SLTX website.