Relating to arbitration provisions in certain surplus lines insurance contracts.
Summary
HB 2275 would regulate arbitration clauses in certain surplus lines insurance contracts covering risks located wholly in Texas. If such a contract includes an arbitration agreement, the bill requires the arbitration to take place in Texas unless the insurer and policyholder later agree to another venue after the insurer gives written notice of the requested change and provides a premium credit to cover the policyholder’s added costs. The bill also requires the arbitration to be governed by Texas law and the insurance contract to be interpreted under Texas law.
The measure applies only to surplus lines contracts delivered, issued for delivery, or renewed on or after January 1, 2026. Contracts in force before that date would remain subject to existing law. The bill would take effect September 1, 2025, but its operative changes would be phased in for new or renewed policies beginning in 2026.
Impact
HB 2275 would amend Section 981.101 of the Texas Insurance Code by adding new requirements for arbitration provisions in surplus lines insurance contracts tied to Texas-based risks. It would limit out-of-state arbitration venues and ensure Texas law governs both the arbitration process and contract interpretation, thereby strengthening state control over dispute resolution in this insurance market. The bill would affect surplus lines insurers, policyholders, and any disputes arising under covered contracts, while leaving pre-2026 contracts under prior law.
Sentiment
The available record shows no committee transcript or recorded votes, so there is no detailed public debate captured in the provided materials. Based on the bill’s text and its subject matter, the measure appears aimed at protecting Texas policyholders and keeping disputes involving Texas risks within Texas legal and procedural rules. The bill was ultimately laid on the table subject to call in the House, which suggests it did not advance at that stage despite being considered in committee.
Contention
The main point of contention is likely venue and governing law for arbitration. Supporters would favor requiring Texas-based arbitration and Texas law to reduce costs and prevent out-of-state forums from burdening policyholders, while insurers may object to limits on contractual freedom and the added requirement to provide a premium credit if venue is changed. Another possible issue is whether the bill interferes with surplus lines market flexibility, since surplus lines insurance is often used for specialized or hard-to-place risks.
Requires employment and consumer dispute arbitrations to be submitted to neutral third party arbitrators; establishes prohibited arbitration agreements and provisions; requires disclosure of information by certain arbitrators.
To Amend The Law Concerning Surplus Lines Insurance; And To Clarify That Surplus Lines Insurance Is Acceptable Coverage For Financial Responsibility Of Motor Vehicle Insurance Coverage.