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Sen. Middleton outlines bill to require Texas law and venue for arbitration in surplus-lines contracts; industry witnesses split
Summary
Senate Bill 455 would require surplus‑lines insurance arbitration and contract interpretation to be governed by Texas law and held in Texas when the insured’s home state is Texas. Insurers and brokers warned of unintended consequences; school districts, adjusters and consumer advocates supported the change.
Sen. Royce Middleton laid out Senate Bill 455, which would require arbitration clauses in surplus‑lines insurance contracts involving Texas residents to be governed by Texas law and arbitration to occur in Texas when the insured’s home state is Texas.
“Surplus lines used to be solely for specialized risk,” Middleton said, explaining that arbitration provisions requiring New York law and venues have imposed high costs and short limitations periods for Texas policyholders. “Senate Bill 455 requires that the arbitration be conducted in Texas and governed by Texas law. It also requires that the insurance contract be interpreted according to Texas law,” he said.
Proponents told the committee that travel and forum choice have led to large arbitration…
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