1. (a) Persons performing any of the following surplus lines insurance activities are required to have a surplus lines license:

   1. (1) supervising unlicensed staff engaged in activities described in subsection (b) of this section, except that supervision of staff may be conducted through the supervision of the staff's unlicensed supervisors;
   2. (2) negotiating, soliciting, effecting, procuring, or binding surplus lines insurance contracts for clients or offering advice, counsel, opinions, or explanations of surplus lines insurance products to agents or clients beyond the scope of underwriting policies or contracts, except for a general lines property and casualty agent making a referral of surplus lines business to a surplus lines agent or agency that then completes the surplus lines transaction; or
   3. (3) receiving any direct commission or variance in compensation based on the volume of surplus lines premiums taken and received from, or as a result of, another person selling, soliciting, binding, effecting, or procuring surplus lines insurance policies, contracts, or coverages, except for a general lines property and casualty agent making a referral of surplus lines business to a surplus lines agent or agency that then completes the surplus lines transaction.

2. (b) The following activities in a surplus lines agency do not require a surplus lines license if the employee does not receive any direct commission from selling, soliciting, binding, effecting, or procuring insurance policies, contracts or coverages, and/or the employee's compensation is not varied by the volume of premiums taken and received:

   1. (1) full-time clerical and administrative services, including, but not limited to, the incidental taking of information from clients, receipt of premiums in the office of a licensed agent, or transmitting to clients, as directed by a licensed surplus lines agent, prepared marketing materials or other prepared information and materials, including without limitation, invoices and evidences of coverage;
   2. (2) contacting clients to obtain or confirm information necessary to process an application for surplus lines insurance so long as the contact does not involve any activities for which a license would be required under subsection (a)(2) of this section;
   3. (3) performing the task of underwriting any insurance policy, contract, or coverage, including without limitation, pricing of the policy or contract; or
   4. (4) contacting clients, insureds, agents, other persons, or insurers to gather and transmit information regarding claims and losses under the policy to the extent that the contact does not require a licensed adjuster as set forth under Insurance Code Chapter 4101.
3. (c) This section shall not be construed to prohibit distribution of agency profits to unlicensed persons, including shareholders, partners, and employees.

4. (d) Before any surplus lines agent's license shall be issued, the following must be submitted by an applicant seeking a surplus lines license:

   1. (1) an appropriate, fully completed written application; and
   2. (2) the fee specified by §19.801 and §19.802 of this title (relating to General Provisions Regarding Licensing Fees and License Renewal and Amounts of Fees).
5. (e) Texas resident applicants and nonresident applicants who do not hold a surplus lines license in their state of residence or whose state of residence does not license Texas residents on a reciprocal basis as determined by the department, shall meet all licensing requirements as set forth in the Insurance Code Chapter 981. Nonresident applicants under this section shall also comply with the Insurance Code §4056.051.
6. (f) Nonresident applicants holding a surplus lines license in good standing in the agent's state of residence and meeting the requirements of the Insurance Code §4056.052 shall meet all the licensing requirements of the Insurance Code Chapter 981 to the extent that such Chapter 981 requirements are not waived by the commissioner under §4056.055.
7. (g) Each surplus lines license issued to an agent shall be valid for a term expiring two years after the date of issuance or as otherwise established by the commissioner under the Insurance Code §4003.001. The license may be renewed by submitting a renewal application and a non-refundable license fee as specified by §19.801 and §19.802 of this title.

Source Note:The provisions of this §15.3 adopted to be effective December 12, 2000, 25 TexReg 12179; amended to be effective October 21, 2002, 27 TexReg 9773; amended to be effective September 3, 2007, 32 TexReg 5703.