Texas Surplus Lines Agent Surety Bond

Texas Surplus Lines Agent Surety Bond

Texas repealed the surplus lines agent surety bond requirement effective January 1, 2006.

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This Bond Is No Longer Required

Texas repealed the surplus lines agent surety bond requirement effective January 1, 2006. Senate Bill 1564 amended Section 981.203 of the Texas Insurance Code to remove the financial responsibility requirement and repealed Section 981.206 entirely. The Texas Department of Insurance confirmed the change, stating that surplus lines agents are no longer required to provide proof of financial responsibility to the Department.

If you are applying for or renewing a Texas surplus lines license, you do not need to buy this bond. We have discontinued sales rather than sell a bond the state does not ask for.

Questions about your specific situation? Contact TDI Agent and Adjuster Licensing at 512-676-6500 or license@tdi.texas.gov.

What Changed, and When

Before 2006, Texas required surplus lines agents to file a $50,000 surety bond with the Texas Department of Insurance as a condition of licensure. That requirement came from Section 981.206 of the Texas Insurance Code, with Section 981.203 directing applicants to provide proof of financial responsibility under it.

Senate Bill 1564, passed by the 79th Texas Legislature, changed both. Section 1 of the bill amended 981.203 to delete the financial responsibility requirement. Section 2 repealed 981.206 outright. The effective date was January 1, 2006. The stated purpose was to streamline licensing and bring Texas in line with other states, since most had already moved away from bonding surplus lines agents.

The Texas Department of Insurance adopted conforming rule amendments removing the bond language from 28 TAC §§15.3–15.5, noting that surplus lines agents are no longer required to provide proof of financial responsibility to the Department.

What Texas Surplus Lines Agents Actually Need Now

TDI's current requirements for a Texas surplus lines license do not include a surety bond. As of TDI's most recent guidance, applicants need:

  • An underlying Texas license. Texas residents must hold an active General Lines Agent – Property and Casualty license or a Managing General Agent license. Non-residents must hold a surplus lines license from a reciprocal state.
  • To pass the exam. Administered by Pearson VUE. You must pass before applying — applying first means submitting a new application and paying the fee again.
  • A fingerprint background check. Started through TDI's online fingerprint portal. You must submit your application within one year of passing the exam or you will need to retake it.
  • The application and $50 fee. Filed online through Sircon or NIPR.

Surplus lines licenses do not carry a continuing education requirement. Licensed agents are required to file an annual insurance premium tax report with the Texas Comptroller under Texas Insurance Code Section 981.202, and to file copies of surplus lines contracts with the Surplus Lines Stamping Office of Texas under Section 981.213.

Why You May Still See This Bond Advertised

A number of surety agencies continue to list and sell a "Texas Surplus Lines Agent $50,000 Bond," and some cite Section 981.203 as the authority requiring it. That is the same section SB 1564 amended in order to remove the requirement. If you encounter a page telling you this bond is mandatory for licensure, check the citation against the current statute or call TDI directly before purchasing.

There are narrow situations where a Texas insurance licensee may still be asked for a bond — for example, certain non-resident business entity applicants who are not licensed in their resident state may need to show financial responsibility through either an errors and omissions policy or a bond. That is a different requirement than the repealed surplus lines agent bond. If someone has specifically asked you for a bond in writing, send us the request and we will tell you what it actually calls for.

Texas Bonds We Do Write

If you landed here looking for a Texas insurance-related surety bond, we may still be able to help. Contact us with the name of the bond and the agency requesting it, and we will confirm whether it is a live requirement before quoting anything.

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