Appendix F

SAMPLE WEEKLY SURPLUS LINES UPDATE

All,

Please see below and attached for a sampling of surplus lines updates and reminders for the week.

UPDATES:

    Arkansas: On January 22, 2025, we reported that the Arkansas State Legislature introduced Senate Bill 76, “an act to amend the law concerning miscellaneous prohibited practices under the Arkansas Insurance Code; to clarify fees collected by certain brokers; and for other purposes” (the “Bill”). (Emphasis added). On February 6, 2025, Governor Huckabee Sanders approved the Bill. Accordingly, the Bill amends Ark. Code Ann. § 23-66-310, which provides that “[i]f a licensed property or casualty agent or broker refers a risk to a surplus lines broker…then subdivision (c)(1)(B)(i) of this section does not apply.” (Emphasis added). Under Ark. Code Ann. § 23-66-310(c)(1)(B)(i), a property or casualty agent or broker or surplus lines broker may charge a fee in addition to the premium provided that the “aggregate sum of the fees and all producers’ commissions or other compensation due and owing for that policy or contract does not exceed twenty percent (20%) of the total gross premium charged the insured by the insurer for that policy or contract.” Accordingly, the Bill codifies the Arkansas Insurance Department’s (the “Department”) interpretation that, if a property and casualty agent or broker refers a risk to a surplus line broker, such surplus line broker is exempt from the 20% fee cap under § 23-66-310.

    Applicability: The Bill applies to fees charged by surplus line brokers; however, all surplus lines insurers (both U.S. and alien) should be aware that the Bill codifies the Department’s interpretation regarding the applicability of the fee cap under Ark. Code Ann. § 23-66-310(c)(2) to the surplus lines market, which we have previously reported on.

    California (Voluntary Action Item for both U.S. and Alien Insurers): On February 6, 2025, the California Department of Insurance (the “Department”) issued a notice, “personal property insurance claims for 2025 Los Angeles wildfires” (the “Notice”). The Notice is addressed to “all admitted and non-admitted residential property insurance companies handling consumer claims resulting from recent Southern California wildfires”. (Emphasis added). The Notice provides that in order to assist the survivors of the 2025 wildfires in Southern California who suffered a total loss, the Department is “calling on all residential property insurance companies to follow the lead of other insurers who are providing up to 100% of Contents (Personal Property) coverage limits without requiring the policyholder to undertake the onerous task of completing a detailed personal property inventory.” (Emphasis added). Current law requires the following with respect to a covered total loss of a primary dwelling:

    “In the event of a covered total loss of a primary dwelling under a residential property insurance policy resulting from a state of emergency, as defined in Section 8558 of the Government Code, if the residence was furnished at the time of the loss, the insurer shall offer a payment under the contents (personal property) coverage in an amount no less than 30 percent of the policy limit applicable to the covered dwelling structure, up to a maximum of two hundred fifty thousand dollars ($250,000), without requiring the insured to file an itemized claim.” Cal. Ins. Code § 10103.7(b). (Emphasis added).

    Accordingly, based upon current law, the Department’s request is voluntary. However, we note that the Notice further provides that “[b]y this Notice, [the Department is] requesting that all insurers with total loss claims advise [the] Department by February 28, 2025 as to whether or not they will comply with this request and under what terms.” Insurers should send their written response to: Patrick Scott, Senior Insurance Compliance Officer, Patrick.Scott@insurance.ca.gov. A plain reading of the foregoing “request” that insurers notify the Department as to whether they will comply with the request under the Notice also appears to be voluntary.

    Applicability: The Notice is expressly addressed to all “non-admitted residential property insurance companies”, and as such, applies to all surplus lines insurers (both U.S. and alien).

    Florida (Action Item for both U.S. and Alien Insurers): On September 25, 2024, we first reported that the Florida Office of Insurance Regulation (OIR) issued “Data Call Notice: Hurricane Helene Catastrophe Reporting” (the “Data Call”). On January 30, 2025, OIR extended the Data Call, and as such, surplus lines insurers “federally authorized” and surplus lines insurers “property and casualty” are required to submit a single Enhanced 2024 Catastrophe Reporting Form, which is due on or before 12 p.m. EST on February 18, 2025. The report must be submitted via the Insurance Regulation Filing System. A surplus lines insurer with policies in force in Florida, but no claims to report, must only submit a “no data” filing for the initial reporting period. However, when a surplus lines insurer receives claims, it must begin to report such. We will continue to monitor the Data Call and, if applicable, provide an update regarding any potential extensions.

    Applicability: The Data Call applies to surplus lines insurers “federally authorized” and surplus lines insurers “property and casualty”, and as such, applies to all surplus lines insurers (both U.S. and alien).

    Hawaii (Action Item for both U.S. and Alien Insurers): On September 13, 2023, we first reported that the Hawaii Insurance Division (the “Department”) issued Memorandum 2023-4E, “Hawaii August 2023 Wildfires and Wind Damages Claims Data Call” (the “Data Call”). On February 5, 2025, the Department extended the Data Call. The Data Call “requests that all property and casualty insurers and surplus lines carriers respond to this data call.” Such insurers shall report “claims related to wildfire and wind damage which stemmed from the State of Hawaii August 8, 2023, disaster” via the NAIC online portal. Reports are now due on July 10, 2025, containing cumulative claims data reported as of June 30, 2025, and January 12, 2026, containing cumulative claims data reported as of December 31, 2025. The Data Call template contains two non-claims reporting schedules (i) Reinsurance Reporting schedule and (ii) Total Insured Value Reporting by zip code and lines of business schedule. In addition to the two non-claims reporting schedules, insurers shall report information on claims related to the August 2023, wildfires and wind damages affecting the following lines of business:

    • Residential Property;
    • Commercial Property;
    • Business Interruption;
    • Personal Auto;
    • Commercial Auto; and
    • All Other Lines of Business, which shall exclude Workers Compensation, other than property damage claims, and non-property/casualty claims.

    Finally, the Data Call template instructions state “[i]n the event a company has no claims to report and does not anticipate any claims to be reported, the company must notify Hawaii Insurance Division at HI2023WildfireDataCall@dcca.hawaii.gov. The company will not be required to submit any reports to the NAIC. If a company later receives relevant claims, then they should notify Hawaii Insurance Division and begin reporting data to the NAIC for the next reporting period.” However, an insurer “that determines it has no claim information to report (yet) based on what is required shall submit reports with zeros in the first row of each tab in the template provided.”

    Applicability: The Data Call applies to all surplus lines insurers (both U.S. and alien).

    New York (Action Item for New York Excess Line Brokers): On February 11, 2025, the Excess Line Association of New York (ELANY) issued Bulletin No. 2025-06, “DFS cybersecurity certification of compliance filing due April 15, 2025” (the “Bulletin”). The Bulletin serves as a reminder to New York licensees, which includes excess line brokers, and states that the “Department of Financial Services cybersecurity regulation compliance certification filings are due no later than April 15, 2025. Licensees[, including excess line brokers,] will need to file either a Certificate of Compliance OR an Acknowledgement of Noncompliance.” (Emphasis added). The Bulletin contains ELANY’s three step guide regarding the submission of the cybersecurity certification of compliance.

    Applicability: The Bulletin applies to excess line brokers.

    Pennsylvania: On February 8, 2025, the Pennsylvania Insurance Department (the “Department”) published a notice (the “Notice”) soliciting comments on the Department’s current export list. The Notice is addressed to “surplus lines agents and interested parties….” (Emphasis added). The Notice provides that those “wishing to comment on the Commissioner’s current export list are invited to submit a written statement within 30 days from the date of publication of this notice in the Pennsylvania Bulletin.” Written comments must include “sufficient detail and relevant facts to inform the [Department] of the exact basis of the statement.” Written comments must be submitted via email to Lori Rumpf at lrumpf@pa.gov. Once the Department considers the written comments received, it will publish a notice providing for a 15-day opportunity to comment on any proposed changes to the Department’s export list prior to the publication of such list.

    Applicability: The Department’s export list applies to all surplus lines insurers (both U.S. and alien) as well as to surplus line brokers.

    Tennessee (Action Item for both U.S. and Alien Insurers): On February 5, 2025, the Tennessee Department of Commerce and Insurance (the “Department”) issued Bulletin 25-01, “reconciliation of premium on surplus lines policies issued in Tennessee” (the “Bulletin”). The Bulletin is addressed is “all non-admitted insurers doing business in Tennessee”. (Emphasis added). The Bulletin states that the Department “requests that all non-admitted insurers doing business in Tennessee submit the information outlined in [the Bulletin] regarding surplus lines insurance policies written in Tennessee beginning with calendar year 2024 and going forward.” The Bulletin clarifies that the information requested is “necessary to reconcile the premiums written by non-admitted insurance companies with the premiums reported to Tennessee by non-admitted filers (i.e., surplus lines agents/brokers, direct procurement, and risk purchasing groups).” (Emphasis added). Accordingly, beginning with “information regarding premiums written for policies that became effective in calendar year 2024, the Department requests that all non-admitted insurers begin submitting policy data to the Department through” the Surplus Lines Information Portal (SLIP), which is available here. (Emphasis added). Should a surplus lines insurer not have an account with SLIP, it may register on the SLIP login page. Further, surplus lines insurers “may submit data into SLIP using either manual data entry or via an XML batch process for multiple policy submissions.” The following data elements should be included for each policy submitted to the Department by a surplus lines insurer:

    • Policy number;
    • Name of the insured;
    • Name of the surplus lines broker or direct procurement filer;
    • Amount of premium (100% of the premium for Tennessee “Home State” policies); and
    • Transaction effective date.

    Foreign (U.S.) surplus lines insurers writing business in Tennessee should submit the requested data above by March 31, 2025, for polices effective January 1, 2024, through December 31, 2024. For those surplus lines policies effective in 2025 and beyond, foreign (U.S.) surplus lines insurers should follow the reporting schedule below. Alien (non-U.S.) surplus lines insurers should submit the requested data above by June 30 of each year containing policy data pertaining to the preceding year.

    Reporting Schedule
    Foreign (U.S.) Surplus Lines Insurers
    Reporting PeriodTransaction Effective DateReporting Deadline
    1st QuarterJanuary 1 – March 31June 30
    2nd QuarterApril 1 – June 30September 30
    3rd QuarterJuly 1 – September 30December 31
    4th QuarterOctober 1 – December 31March 31 of the following year
    Alien (non-U.S.) Surplus Lines Insurers
    Reporting PeriodTransaction Effective DateReporting Deadline
    AnnualJanuary 1 – December 31June 30 of the following year

    Applicability: The Bulletin applies to all surplus lines insurers (both U.S. and alien). Moreover, surplus lines insurers should take note of the different reporting deadlines for foreign (U.S.) and alien (non-U.S.) surplus lines insurers.

    Texas: On November 20, 2024, we reported that the Texas Department of Insurance (the “Department”) issued a notice regarding an informal working draft for prohibited tying arrangements. On February 7, 2025, the Department issued a notice (the “Notice”) regarding the proposed rule relating to prohibited tying arrangements (the “Proposed Rule”). If enacted, the Proposed Rule would create a new § 21.1008 under 28 Tex. Admin. Code § 21.1001, eq seq., relating to prohibited trade practices. In particular, the Proposed Rule, if enacted, would provide that “[i]t is an unfair trade practice in violation of Insurance Code Chapter 541, concerning Unfair Methods of Competition and Unfair or Deceptive Acts or Practices, for a person to make the purchase of or use an underwriting guideline that makes the purchase of: (1) a residential property insurance policy contingent on the purchase of a personal automobile insurance policy from any specific person; or (2) a personal automobile insurance policy contingent on the purchase of a residential property insurance policy from any specific person.” The Notice makes clear that the Proposed Rule applies broadly by stating “[s]ubsection (b) of proposed new §21.1008 provides definitions for the section. The definition of ‘person’ comes from Insurance Code §541.002(2), which is a wide-reaching definition, making the chapter and this rule applicable to any individual or other legal entity engaged in the business of insurance.” Moreover, the Notice provides that “Insurance Code §981.073 affirms applicability to surplus lines insurance.” However, we note that Tex. Ins. Code Ann. § 981.073 relates to the applicability of Texas law relating to “a domestic surplus lines insurer”. (Emphasis added). Finally, the Notice states that the Department “will consider any written comments on the [Proposed Rule] that are received by [the Department] no later than 5:00 p.m., central time, on March 24, 2025.” Written comments may be sent via email to ChiefClerk@tdi.texas.gov and oral comments will be considered during the public hearing, which is scheduled for 10:00 am central time, on March 10, 2025, in Room 2.035 of the Barbara Jordan State Office Building, 1601 Congress Avenue, Austin, Texas 78701.

    Applicability: Notwithstanding the Notice’s reference to surplus lines insurance under Tex. Ins. Code Ann. § 981.073 relating to domestic surplus lines insurers, the term “person” is broadly defined under the Proposed Rule, which likely applies all surplus lines insurers (both U.S. and alien) as well as to surplus line brokers.