Texas Reduces Surplus Lines Stamping Fee
The Texas Department Insurance (“TDI”) Commissioner Cassie Brown issued an order decreasing the surplus lines stamping fee from .075% to .04% of gross premium resulting from surplus lines insurance contracts. The decrease will apply to new or renewal surplus lines policies with an effective date on or after January 1, 2024.
Guidance from the Surplus Lines Stamping Office of Texas (“SLTX”) states that the new stamping fee rate will apply to each new or renewal surplus lines policy with an effective date on or after January 1, 2024. The new rate will also apply to policy date extensions if effective on or after this date. Policies effective on or before December 31, 2023, will run to expiration, cancellation, or next annual anniversary date (for multi-year policies) at the existing rate of .075%. This includes any subsequent endorsements, audits, cancellations, reinstatements, installments, and monthly or quarterly reports.
The stamping fee is evaluated every year at the SLTX board of directors (“Board”) annual meeting. Under the Texas Administrative Code Chapter 15 rules, the Board must assess the anticipated volume of surplus lines premium during the upcoming year against their projected reserves (excluding funds for asset replacement), to ensure the reserves do not exceed two times the average of audited operating expenses for the five-year period immediately preceding the budget year. Based on outcome of this analysis, the Board recommends to TDI to increase, decrease or take no action regarding the stamping fee.
The recommendation to decrease the stamping fee was published for a 20-day comment period in the Texas Register on September 26, 2023, and on TDI’s website. TDI received one comment in support of the change. The stamping fee’s last decrease from .15% to .075% went into effect January 1, 2021. There was no change to the stamping fee in 2022 or 2023.
Read the detail supporting SLTX’s recommendation
