Tex. Ins. Code §981.004 — what it says, and how the exam tests it

Sec. 981.004. SURPLUS LINES INSURANCE AUTHORIZED. (a) An eligible surplus lines insurer may provide surplus lines insurance only if: (1) the full amount of required insurance cannot be obtained, after a diligent effort, from an insurer authorized to write and actually writing that kind and class of insurance in this state; (2) the insurance is placed through a surplus lines agent; and (3) the insurer meets the eligibility requirements of Subchapter B or B-1 as of the inception date and annual anniversary date of each insurance contract, cover note, or other confirmation of insurance. (b) An eligible surplus lines insurer may provide surplus lines insurance only in the amount that exceeds the amount of insurance obtainable from authorized insurers. (c) Subsection (a)(1) does not apply to insurance procured for an exempt commercial purchaser if: (1) the agent procuring or placing the insurance discloses to the exempt commercial purchaser that: (A) comparable insurance may be available from the admitted market that is subject to more regulatory oversight than the surplus lines market; and (B) a policy purchased in the admitted market may provide greater protection than the surplus lines insurance policy; and (2) after receiving the notice described by Subdivision (1), the exempt commercial purchaser requests in writing that the agent procure the insurance from or place the insurance with an eligible surplus lines insurer. (d) Subsection (a)(1) does not apply to insurance procured for an industrial insured if: (1) the agent procuring or placing the insurance discloses to the industrial insured that: (A) comparable insurance may be available from the admitted market that is subject to more regulatory oversight than the surplus lines market; and (B) a policy purchased in the admitted market may provide greater protection than the surplus lines insurance policy; (2) the surplus lines company offering the coverage has a financial strength rating of A- or better from the A. M. Best Company; and (3) after receiving the notice described by Subdivision (1), the industrial insured requests in writing that the agent procure the insurance from or place the insurance with an eligible surplus lines insurer. (e) Subsections (a)(1) and (b) do not apply to flood coverage under an insurance policy issued by an eligible surplus lines insurer that has a financial strength rating…