Relating to arbitration provisions in certain surplus lines insurance contracts.

Contracts

• Template Overhaul: You must remove standard clauses mandating non-Texas arbitration or non-Texas choice of law from all surplus lines policy templates covering Texas-only risks.
• New Addendums:
• Policies <$2M: Create a "Venue Change Notice" and a mechanism to apply a specific premium credit if the policyholder agrees to non-Texas venue.
• Policies >$2M: Create a "Mutual Consent Waiver" to allow for non-Texas venue without a premium credit.

Hiring/Training

• Underwriting: Staff must be trained to identify the $2M Total Insured Value threshold, as it dictates which workflow (Premium Credit vs. Mutual Consent) applies.
• Broker Compliance: Brokers must be instructed not to bind coverage for Texas risks using old policy forms after December 31, 2025, to avoid E&O exposure.

Reporting & Record-Keeping

• Consent Tracking: You must retain signed documentation proving the policyholder affirmatively agreed to any non-Texas venue provision.
• Accounting: For policies under $2M where venue is changed, you must document the calculation and application of the premium credit. This will be subject to TDI audit.

Fees & Costs

• Premium Credits: Insurers must budget for revenue reductions on policies <$2M where they wish to retain out-of-state arbitration; the credit must reflect the "cost" to the policyholder of the venue change.
• Litigation Costs: Expect increased legal defense costs as disputes shift from favorable jurisdictions (e.g., NY, London) to Texas arbitration panels applying Texas law.