1. (a) An unauthorized insurer is not eligible to write surplus lines insurance in this state under the following circumstances:

   1. (1) it does not have capital and surplus required under the Insurance Code, Article 1.14-2, §8, and has not been granted an exemption under the Insurance Code, Article 1.14-2, §8;
   2. (2) it does not have capital and surplus that is adequate in relation to its premium writings and the exposure of risks it assumes;
   3. (3) it is not of good repute and does not provide reasonably prompt service to its policyholders in the payment of valid losses and claims;
   4. (4) the management is not of good repute or is incompetent or untrustworthy or so lacking in insurance company managerial experience as to make its proposed operation hazardous to the insurance-buying public;
   5. (5) the State Board of Insurance has good reason to believe that it is affiliated directly or indirectly through ownership, control, reinsurance transactions, or other insurance or business relations, with any person whose business operations are or have been detrimental to policyholders, shareholders, investors, creditors, or to the public;
   6. (6) it is an alien unauthorized insurer and does not provide evidence of an irrevocable trust fund in a Federal Reserve System member bank in the United States in an amount not less than $5.4 million for the protection of all its policyholders in the United States. Such trust fund must comply with the Insurance Code, Article 1.14-2, §8(d);
   7. (7) it does not provide evidence of a license or authority from its domiciliary state or country that it is authorized in that state or country to write the kind and class of business that it proposes to write in Texas.
2. (b) Surplus lines agents or unauthorized insurers shall provide to the Surplus Lines Stamping Office of Texas (the stamping office), and the stamping office shall examine, information relating to unauthorized insurers' eligibility to write surplus lines insurance. Such information shall include unauthorized insurers' financial statements and documents evidencing authorization to write in its domiciliary jurisdiction the same kind and class of business that it proposes to write in Texas, as well as documents evidencing United States trust funds of alien unauthorized insurers.
3. (c) Unauthorized insurers or surplus lines agents shall provide other information relevant to the stamping office's examination of eligibility that is requested under §15.13 of this title (relating to Surplus Lines Insurance Requests for Information, Examination, and Complaints). Such information may include, but is not limited to, activities of management and agents, history and competency of reinsurers, pattern of claims services, domestic trust agreements, powers of attorney, and biographical affidavits of owners, officers, directors, and the management.
4. (d) Information received under this section is public record and shall be available for inspection. Such information may be released upon written request. Release of such information shall not be construed as a representation as to its accuracy or reliability. The information so released shall not relieve a surplus lines agent of duties under the Insurance Code, Article 1.14-2, or under §15.9 of this title (relating to Duty of Reasonable Effort by Surplus Lines Agents To Ascertain Financial Condition and Other Practices of Unauthorized Insurers).
5. (e) The State Board of Insurance, the stamping office, and the commissioner have no duty or responsibility under the Insurance Code, this section, or §15.101 of this title (relating to Plan of Operation of the Surplus Lines Stamping Office of Texas) to determine the actual financial conditions or claim practices of any unauthorized insurer. The eligibility of each unauthorized insurer underwriting or proposing to underwrite surplus lines risks in Texas is subject to the continuous scrutiny of the State Board of Insurance and the stamping office as provided by rules and regulations of the State Board of Insurance.
6. (f) If an unauthorized insurer's eligibility is in question, the stamping office shall provide to the surplus lines agent an opportunity to provide additional information.
7. (g) The stamping office shall report to the commissioner whether unauthorized insurers have submitted evidence which appears to be satisfactory evidence for eligibility under this section and the Insurance Code, Article 1.14-2. Such reports shall be maintained privileged and confidential unless and until introduced into evidence at an administrative hearing or in a court of competent jurisdiction.
8. (h) Upon receiving reports under subsection (g) of this section, the commissioner shall determine if satisfactory evidence of eligibility has been presented and notify the surplus lines agent or unauthorized insurer of that determination.
9. (i) A list of unauthorized insurers that have provided satisfactory evidence of eligibility shall be maintained by the State Board of Insurance and shall be public record. Such list shall be available for public inspection and may be released upon written request. Such list shall contain sufficient information to inform the public of the limitations of the board's authority with regard to surplus lines insurers and the relevant differences between surplus lines insurers and admitted insurers.

Source Note:The provisions of this §15.8 adopted to be effective January 1, 1976; amended to be effective March 15, 1981, 6 TexReg 770; amended to be effective November 10, 1988, 13 TexReg 5470; amended to be effective March 11, 1992, 17 TexReg 1542; amended to be effective November 12, 1998, 23 TexReg 11403.