7.1 The Surplus Lines Stamping Office of Texas: Legal Status, Board, Plan of Operation, Duties, and Limits

7.1 The Surplus Lines Stamping Office of Texas: Legal Status, Board, Plan of Operation, Duties, and Limits

The Surplus Lines Stamping Office of Texas, known publicly as SLTX, is the organization every Texas surplus lines agent deals with on every policy. The outline lists "Stamping Office" as its own topic and cites TIC §§ 981.105 and 981.151-.160 and 28 TAC §§ 15.106 and 15.201. This section covers what the office is, who controls it, what it does, and what it cannot do.

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1. Legal Status (TIC Chapter 981, Subchapter D)

• Nonprofit association: "The Surplus Lines Stamping Office of Texas is a nonprofit association" (TIC § 981.151). It is not a state agency, and it is not an insurer.
• Funding: SLTX is funded by the stamping fee collected on each Texas surplus lines policy (§ 981.154(b)(5)).
• Supervision: The commissioner supervises the office, which is subject to the applicable provisions of the Insurance Code and the commissioner's rules (§ 981.155).
• Examination: The commissioner may examine the office at any time. The office pays the cost, and its board members, officers, and employees may be examined under oath (§ 981.156).
• TDI's rules add that the office is commonly called a "service office" by peer offices around the country (28 TAC § 15.2(b)(5)).

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2. Board of Directors (TIC § 981.152)

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3. The Plan of Operation and Fee Changes

• Plan (TIC § 981.153): The office's procedures, including board terms, are set by a plan of operation approved by the commissioner. Amendments take effect on commissioner order. If the office fails to submit a suitable amendment, the commissioner may adopt one, and related rules, after notice and hearing.
• Approval process (28 TAC § 15.201): Proposed amendments go to the commissioner, who may accept or reject them after TDI gives public notice and an opportunity to comment. The office must post its current approved plan on its website.
• Stamping fee changes (28 TAC § 15.201(e)): When the board recommends a new stamping fee, the commissioner publishes notice in the Texas Register showing the current and proposed fee, allows a 20-day comment period, and then approves or denies the change by order.
• Agent duty: Every surplus lines agent must comply with the plan of operation (TIC § 981.214).

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4. Duties and Functions

Statutory Duties (TIC § 981.154)

The office must, as the plan of operation provides:

1. Receive, record, and review each surplus lines contract an agent is required to file;
2. Give the commissioner an evaluation of the eligibility of each contract and each surplus lines insurer;
3. Prepare monthly reports for the commissioner on the prior month's surplus lines business, and other reports on surplus lines business;
4. Collect a stamping fee from each surplus lines agent. The fee covers the office's operating costs, is paid by the insured, is determined by the department, and may not exceed three-fourths of one percent of gross premium; and
5. Employ staff, borrow money, contract, and take other acts that encourage compliance with Chapter 981 and its rules.

Rule-Based Functions (28 TAC Chapter 15)

• Evaluation and reporting (§ 15.9): The office evaluates filings for eligibility and compliance and may ask the agent for more information. It reports to TDI within 60 days of discovery any policy issued by an ineligible insurer, any noncompliant type of contract, and any licensed act performed by an unlicensed person. It reports promptly on uncorrected administrative or technical errors.
• Requests for information (§ 15.107): The office may request additional information and must report to TDI if the agent does not timely provide it. By mutual agreement, it may review records at the agent's office.
• Late-filing reports (§ 15.114): It publishes a monthly report of untimely filings by the 15th of each month and sends TDI an annual report of untimely filings by the first business day of April (Section 7.3).
• Insurer eligibility (TIC § 981.210; 28 TAC § 15.301): Insurers send eligibility documentation to TDI and the office, and an agent may place coverage only after the office provides TDI evidence that the insurer is eligible. SLTX publishes the list of eligible insurers.

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5. Legal Protections

• Confidentiality (TIC § 981.158): An individual surplus lines contract filed with the office is confidential and not public information under the Public Information Act, although state agencies may still access it.
• Records (§ 981.159): The state library and archives law does not apply to the office or its records.
• Immunity (§ 981.157): The office, its board members, officers, agents, and employees, and TDI and the commissioner, are not liable for acts or omissions in performing their duties under Subchapter D.

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6. What the Stamping Office Cannot Do

• No enforcement authority: Subchapter D does not give the office authority to enforce Chapter 981 or Chapter 225 (TIC § 981.160). It records, reviews, evaluates, and reports; TDI enforces.
• No licensing: It does not issue, renew, suspend, or revoke licenses.
• No fines: Late-filing fees are assessed by the commissioner under TIC § 981.105, based on the office's reports. Administrative penalties and sanctions come from TDI under Chapters 82 and 84, and tax penalties come from the Comptroller.
• No approval or guarantee: A stamped or processed filing does not mean TDI or SLTX approved the policy's wording or rates, and it does not guarantee the insurer's solvency. Surplus lines policies remain outside TPCIGA.
• No claims handling: The office does not underwrite, issue policies, or pay claims.