Texas is one of the most broker-friendly states in the country for insurance premium financing. The Texas Department of Insurance (TDI) provides a clear regulatory framework that permits premium financing for commercial policies, allows brokers to earn arranger fees, and supports a competitive market of licensed premium finance companies. Here's everything Texas insurance brokers need to know.
Is premium financing legal in Texas?
Yes. Premium financing is fully legal and regulated in Texas under the Texas Insurance Code, Chapter 651 (Insurance Premium Finance Companies). The TDI licenses and oversees premium finance companies operating in the state, and the regulatory framework is well-established and broker-friendly.
Texas has a large and active commercial insurance market — making it one of the highest-volume states for premium financing in the U.S. The state's size, economic diversity, and significant concentration of industries like construction, oil and gas, logistics, and agriculture all contribute to strong demand for commercial coverage and, by extension, premium financing.
Texas premium finance regulations: what brokers need to know
Licensing requirements for premium finance companies
In Texas, premium finance companies must be licensed by the TDI to operate. When you work with a PFC, confirm they hold a current Texas license. A reputable partner like Patch will be licensed in Texas and will handle all regulatory compliance on their end.
Do Texas brokers need a separate license?
No. Texas insurance producers do not need a separate license to arrange premium financing for their clients. Your existing Texas producer license covers this activity. You're acting as an intermediary connecting your client with the PFC — which falls within the scope of your producer license.
Interest rate regulations
Texas regulates the interest rates that premium finance companies can charge. Rates are subject to the TDI's oversight and must be disclosed in the finance agreement. In practice, Texas rates are competitive, and the regulatory framework ensures clients aren't subject to predatory pricing.
Arranger fees in Texas
Texas permits brokers to earn arranger fees on premium finance transactions. This is a meaningful additional revenue opportunity for Texas brokers who are actively writing commercial accounts.
Under Texas regulations, arranger fees must be disclosed in the premium finance agreement. The specific disclosure language is handled by the premium finance company — your PFC will include the required disclosures automatically when generating finance agreements for Texas clients.
Typical arranger fees in Texas range from 1% to 3% of the financed premium, consistent with the national range. On the large commercial accounts common in Texas — contractors, trucking companies, oilfield services firms, and others — these fees can be substantial.
A Texas broker writing a $200,000 commercial package for a mid-sized contractor can earn $3,000–$6,000 in arranger fees on that single account — on top of their standard carrier commission.
Types of insurance commonly financed in Texas
Premium financing is used across virtually all commercial lines in Texas. The most common include:
- General liability — particularly for contractors, construction, and trade businesses
- Commercial auto and trucking — Texas has one of the largest commercial trucking fleets in the country
- Workers' compensation — though Texas is unique in that workers' comp isn't mandatory for most private employers, those who carry it often finance it
- Commercial property — especially in coastal and storm-prone regions where premiums are elevated
- Oil and gas / energy liability — a Texas specialty with high-premium accounts well-suited to financing
- Professional liability — E&O, D&O, and technology liability for Texas's growing professional services sector
- Umbrella and excess liability
Why Texas is a strong market for premium financing
Large commercial premium volume
Texas is the second-largest state by GDP and home to a disproportionate number of mid-market businesses. Larger businesses carry larger premiums — which means more financing volume and larger arranger fees per transaction.
Hardening market conditions
Property premiums in coastal Texas have risen significantly in recent years due to hurricane exposure and weather-related losses. Commercial auto rates have also climbed. These increases make premium financing more valuable — clients who previously paid upfront are increasingly open to spreading the cost.
Strong independent broker community
Texas has a large and active independent insurance broker community. Independent brokers — particularly those focused on commercial lines — are the primary users of premium financing, and the Texas market is well-served by multiple licensed PFCs competing for broker relationships.
How Patch serves Texas brokers
Patch is licensed in Texas and built specifically for independent insurance brokers. Texas brokers working with Patch benefit from:
- Same-day funding — policy premiums funded within hours of the signed finance agreement
- Digital workflow — quotes, agreements, and e-signatures handled entirely online
- Transparent arranger fees — you know exactly what you'll earn before presenting the option to your client
- Texas-compliant disclosures — all required TDI disclosure language included automatically
- Dedicated broker support — real people who understand the Texas market
Getting started as a Texas broker
If you're a licensed Texas insurance producer and want to start offering premium financing to your commercial clients, the process is straightforward:
- Apply to be an appointed broker with a licensed Texas PFC
- Review and sign the broker agreement, which will specify your arranger fee rate
- Start quoting financing on your commercial accounts
- Earn arranger fees on every funded transaction
Most Texas brokers who are new to premium financing are surprised by how simple the process is — and how quickly the additional revenue adds up. If you're writing commercial accounts in Texas and not offering premium financing, you're missing a genuine opportunity.
Frequently asked questions
Does Texas require workers' compensation insurance?
Texas is unique — it's the only state that doesn't require most private employers to carry workers' compensation insurance. However, employers who do carry it (and many do) can finance those premiums like any other commercial policy.
Can I finance surplus lines policies in Texas?
Yes. Surplus lines policies are generally eligible for premium financing in Texas, as long as the policy is cancellable. Confirm with your PFC for specific carrier and policy eligibility.
Are there minimum premium amounts for financing in Texas?
Minimum premium requirements vary by lender. Most Texas PFCs have minimum financed premium amounts in the range of $1,000–$2,500. Larger minimums may apply for certain policy types. Check with your specific PFC.
How are cancellations handled in Texas?
If a client defaults on their premium finance loan, the PFC issues a notice of cancellation to the insurer and recovers the unearned premium. Texas law specifies the notice periods and procedures that PFCs must follow — your PFC handles this in compliance with TDI requirements.
Is Patch licensed to operate in Texas?
Yes. Patch Premium Finance is licensed by the Texas Department of Insurance to operate as a premium finance company in the state. Texas brokers can appoint with Patch and start offering financing to their Texas commercial clients immediately.
