SB455

Regular Session

Relating to arbitration provisions in certain surplus lines insurance contracts.

ModeratePlan for compliance

Low Cost

Effective:2025-09-01

Enforcing Agencies

Texas Department of Insurance

Compliance Analysis

Key implementation requirements and action items for compliance with this legislation

Implementation Timeline

Effective Date: September 1, 2025
Compliance Deadline: January 1, 2026
*Note:* The law applies to contracts delivered, issued for delivery, or renewed on or after this date. You have a four-month window (Sept-Dec 2025) to finalize templates.
Agency Rulemaking: The Texas Department of Insurance (TDI) is expected to issue guidance regarding the specific "form" required for mutual consent agreements (Subsection e) prior to the January 1 operational deadline.

Immediate Action Plan

Audit Templates (Immediate): Identify all surplus lines templates containing mandatory non-Texas venue or choice of law clauses.
Define Credit Strategy (Q3 2025): Establish a defensible methodology for calculating the "premium credit" for policies under $2M.
Monitor TDI (Q3-Q4 2025): Watch for the release of the mandatory consent form or guidance on the "form" requirement.
Manage Renewals (Q4 2025): Prepare for a surge of December renewals as policyholders and brokers attempt to lock in current terms before the January 1, 2026 cutoff.

Operational Changes Required

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.

Strategic Ambiguities & Considerations

The "Premium Credit" Calculation: The statute requires a credit for "costs" incurred by the policyholder for a venue change but offers no formula. A nominal credit (e.g., $50) carries high risk; if challenged, a court may deem it insufficient consideration and void the arbitration clause. Actuarial justification is recommended.
The "Form" Requirement: The statutory text regarding the agreement form is grammatically truncated ("in a form"). Do not draft your own waiver for the >$2M exception yet; wait for TDI to prescribe or approve a specific form to ensure enforceability.
"Wholly in this State": Multi-state risks are technically exempt. However, TDI may scrutinize policies where the vast majority (e.g., 90%+) of risk is in Texas to ensure "multi-state" status isn't being used as a loophole.

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Legislative Timeline

This bill's path through the Texas Legislature

TopicsInsurance Insurance--general Insurance--insurers & Agents Mediation, Dispute Resolution, & Arbitration

Official Analysis

View HRO Analysis View All Bill Documents

BILL ANALYSIS

Senate Research Center	S.B. 455
89R590 SCL-D	By: Middleton
	Business & Commerce
	2/25/2025
	As Filed

AUTHOR'S / SPONSOR'S STATEMENT OF INTENT

Surplus lines insurance is a special type of insurance that covers unique risks, and fills a gap in the standard market by covering things that most insurance companies can't or won't insure. Under current law, the Texas Department of Insurance (TDI) does not license surplus lines insurance companies, but the department does approve which ones can do business in the state. In order to be approved, surplus lines companies must meet financial requirements, be licensed in their home state or country, and comply with applicable nationwide uniform standards. However, concerns have been raised that surplus lines policies may contain a provision that subjects the policy to the laws and arbitration of a state outside of Texas and, thus, do not offer the same protections.

S.B. 455 seeks to address this issue by requiring a surplus lines insurance contract that contains an arbitration agreement must provide that the arbitration will be conducted in Texas and governed by the laws of Texas. Additionally, the surplus lines contract will be interpreted in accordance with the laws of Texas.

As proposed, S.B. 455 amends current law relating to arbitration provisions in surplus lines insurance contracts.

RULEMAKING AUTHORITY

This bill does not expressly grant any additional rulemaking authority to a state officer, institution, or agency.

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Section 981.101, Insurance Code, by adding Subsection (d), as follows:

(d) Requires that a surplus lines insurance contract that contains an arbitration agreement provide that:

(1) the arbitration will be conducted in this state and governed by the laws of this state; and

(2) the insurance contract will be interpreted in accordance with the laws of this state.

SECTION 2. Makes application of Section 981.101(d), Insurance Code, as added by this Act, prospective to January 1, 2026.

SECTION 3. Effective date: September 1, 2025.

Senate Authors

Sen. Mayes MiddletonRepublican · Primary Author

Coauthors (1)

Sarah Eckhardt (D)

House Sponsors

Rep. Matt MorganRepublican · Primary Sponsor

Joint Sponsors

Cosponsors (100)

Bill Text(with markup)

S.B. No. 455

View bill text in multiple formats on Texas Legislature website

Fiscal NoteView Original

	AN ACT
	relating to arbitration provisions in certain surplus lines
	insurance contracts.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
	SECTION 1. Section 981.101, Insurance Code, is amended by
	adding Subsections (d) and (e) to read as follows:
	(d) A surplus lines insurance contract for a risk located
	wholly in this state and that contains an arbitration agreement
	must provide that:
	(1) the arbitration will be:
	(A) conducted in this state; and
	(B) governed by the laws of this state; and
	(2) the insurance contract will be interpreted in
	accordance with the laws of this state unless:
	(A) the insurer and policyholder agree to a
	different venue after the insurer provides written notice to the
	policyholder of the insurer's request for a different venue; and
	(B) the insurer provides the policyholder with a
	premium credit for the costs incurred by the policyholder as a
	result of the change in venue.
	(e) Notwithstanding Subsection (d), for surplus lines
	insurance contracts for over $2 million in insured value, the
	insurer and policyholder may agree by mutual consent to a different
	arbitration venue and governance under another state's laws,
	provided the agreement is in a form.
	SECTION 2. Sections 981.101(d) and (e), Insurance Code, as
	added by this Act, apply only to a surplus lines insurance contract
	delivered, issued for delivery, or renewed on or after January 1,
	2026. A surplus lines insurance contract delivered, issued for
	delivery, or renewed before January 1, 2026, is governed by the law
	as it existed immediately before the effective date of this Act, and
	that law is continued in effect for that purpose.
	SECTION 3. This Act takes effect September 1, 2025.

LEGISLATIVE BUDGET BOARD
Austin, Texas

FISCAL NOTE, 89TH LEGISLATIVE REGULAR SESSION


March 3, 2025

TO:	Honorable Charles Schwertner, Chair, Senate Committee on Business & Commerce

FROM:	Jerry McGinty, Director, Legislative Budget Board

IN RE:	SB455 by Middleton (Relating to arbitration provisions in surplus lines insurance contracts.), As Introduced

No significant fiscal implication to the State is anticipated.

It is assumed that any costs associated with the bill could be absorbed using existing resources.

Local Government Impact

No fiscal implication to units of local government is anticipated.

Source Agencies:

454 Department of Insurance

LBB Staff:

JMc, RStu, GDZ, BFa

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Frequently Asked Questions

Common questions about SB455

What does Texas SB455 do?

SB455 prohibits surplus lines insurers from mandating out-of-state arbitration or choice of law for risks located wholly in Texas. Effective for policies issued or renewed starting January 1, 2026, carriers must either adopt Texas venue/law defaults or implement strict "opt-out" workflows involving premium credits or specific mutual consent forms. Implementation Timeline Effective Date: September 1, 2025 Compliance Deadline: January 1, 2026 Note: The law applies to contracts delivered, issued for delivery, or renewed on or after this date.

Who authored SB455?

SB455 was authored by Texas Senator Mayes Middleton during the Regular Session.

When was SB455 signed into law?

SB455 was signed into law by Governor Greg Abbott on May 27, 2025.

Which agencies enforce SB455?

SB455 is enforced by Texas Department of Insurance.

How urgent is compliance with SB455?

The compliance urgency for SB455 is rated as "moderate". Businesses and organizations should review the requirements and timeline to ensure timely compliance.

What is the cost impact of SB455?

The cost impact of SB455 is estimated as "low". This may vary based on industry and implementation requirements.

What topics does SB455 address?

SB455 addresses topics including insurance, insurance--general, insurance--insurers & agents and mediation, dispute resolution, & arbitration.

Legislative data provided by LegiScanLast updated: November 25, 2025

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