By Brimer H.B. No. 222
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the licensing of agents for health maintenance
1-3 organizations.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Section 1, Chapter 213, Acts of the 54th
1-6 Legislature, Regular Session, 1955 (Article 21.07-1, Vernon's Texas
1-7 Insurance Code), is amended to read as follows:
1-8 Sec. 1. <LEGAL RESERVE LIFE INSURANCE> AGENT DEFINED. (a)
1-9 This Act shall be known as The Texas Agents Qualification and
1-10 License Law for Agents of Legal Reserve Life Insurance Companies
1-11 authorized to do business in Texas. It repeals the provisions of
1-12 Article 21.07 of the Texas Insurance Code, 1951, to the extent only
1-13 as applicable to such agents. This Act has no application to
1-14 agents for local mutual aid associations, or for statewide mutual
1-15 associations or, except as provided by Subsection (a-1) of this
1-16 section, for any type or kind of insurance organization other than
1-17 legal reserve life insurance companies, and existing statutes,
1-18 including Article 21.07 of the Texas Insurance Code, 1951,
1-19 applicable to such agents, other than agents of legal reserve life
1-20 insurance companies, shall remain in full force and effect.
1-21 (a-1) Unless a person or legal entity is licensed under this
1-22 Act, the person or entity may not:
1-23 (1) represent a health maintenance organization,
1-24 including a health maintenance organization offering only a single
2-1 health care service plan, in the solicitation, negotiation,
2-2 procurement, or effectuation of health maintenance organization
2-3 membership; or
2-4 (2) be held out as representing a health maintenance
2-5 organization for a purpose described by Subdivision (1) of this
2-6 subsection.
2-7 (b) The term "<life insurance> agent" for the purpose of
2-8 this Act means any person or corporation that is an authorized
2-9 agent of a legal reserve life insurance company or health
2-10 maintenance organization, and any person who is a sub-agent of such
2-11 agent, who acts as such in the solicitation of, negotiation for, or
2-12 procurement of, or collection of premiums on, an insurance or
2-13 annuity contract with a legal reserve life insurance company or who
2-14 acts as described by Subsection (a-1) of this section. The <;
2-15 except that the> term "<life insurance> agent" shall not include:
2-16 (1) any regular salaried officer or employee of a
2-17 legal reserve life insurance company, or of a licensed life
2-18 insurance agent, who devotes substantially all of the officer's or
2-19 employee's <his or her> time to activities other than the
2-20 solicitation of applications for insurance or annuity contracts and
2-21 receives no commission or other compensation directly dependent
2-22 upon the business obtained, and who does not solicit or accept from
2-23 the public applications for insurance or annuity contracts;
2-24 (1-A) any regular salaried officer or employee of a
2-25 health maintenance organization or of a licensed health maintenance
2-26 organization agent, who devotes substantially all of the officer's
2-27 or employee's time to activities other than the solicitation of
3-1 applications for health maintenance organization membership and
3-2 receives no commission or other compensation directly dependent
3-3 upon the business obtained and who does not solicit or accept from
3-4 the public applications for health maintenance organization
3-5 membership;
3-6 (2) employers or their officers or employees, or the
3-7 trustees of any employee benefit plan, to the extent that such
3-8 employers, officers, employees or trustees are engaged in the
3-9 administration or operation of any program of employee benefits
3-10 involving the use of insurance or annuities issued by a legal
3-11 reserve life insurance company or memberships issued by a health
3-12 maintenance organization, provided that such employers, officers,
3-13 employees or trustees are not in any manner compensated, directly
3-14 or indirectly, by the legal reserve life insurance company or
3-15 health maintenance organization issuing the <such> insurance or
3-16 annuity contracts or memberships;
3-17 (3) banks, savings and loan associations, or credit
3-18 unions, or the officers and employees of banks, savings and loan
3-19 associations, or credit unions, to the extent that such banks,
3-20 savings and loan associations, credit unions, or officers and
3-21 employees collect and remit premiums or charges by charging same
3-22 against accounts of depositors on the orders of such depositors;
3-23 (4) a ticket-selling agent of a public carrier with
3-24 respect to accident life insurance tickets covering risks of
3-25 travel;
3-26 (5) an agent selling credit life, health and accident
3-27 insurance issued exclusively in connection with credit
4-1 transactions, or acting as agent or solicitor for health and
4-2 accident insurance under license issued pursuant to the provisions
4-3 of Article 21.14 of the Texas Insurance Code; or
4-4 (6) a person or the employee of a person who has
4-5 contracted to provide administrative, management, or health care
4-6 services to a health maintenance organization and who is
4-7 compensated for those services by the payment of an amount
4-8 calculated as a percentage of the revenues, net income, or profit
4-9 of the health maintenance organization, if that method of
4-10 compensation is the sole basis for subjecting that person or the
4-11 employee of the person to this section.
4-12 (c) The term "sub-agent" means any person, except a regular
4-13 salaried officer or employee of a legal reserve life insurance
4-14 company, of a health maintenance organization, or of an <a licensed
4-15 life insurance> agent, engaging in activities defined in Paragraph
4-16 1(b), above, who acts for or on behalf of an <a licensed life
4-17 insurance> agent in the solicitation of, negotiation for, or
4-18 procurement, <or> making, or effectuation of, or collection of
4-19 premiums or charges on, an insurance or annuity contract or health
4-20 maintenance organization membership, whether or not the sub-agent
4-21 <he> is designated by such agent as a sub-agent or a solicitor or
4-22 by any other title. Each such sub-agent shall be deemed to be an
4-23 <a life insurance> agent, as defined above, and wherever, in
4-24 succeeding Sections of this Act, the term "<life insurance> agent"
4-25 is used, it shall include sub-agents, whether or not they are
4-26 specifically mentioned. Each such sub-agent shall be subject to
4-27 the provisions of this Act to the same extent as an <a life
5-1 insurance> agent.
5-2 (d) The terms "insurance or annuity contract," "insurance
5-3 contract," and "annuity contract," shall mean a contract or policy
5-4 of life, health or accident (including hospitalization) insurance,
5-5 or an annuity contract, issued by any legal reserve company or
5-6 insurer engaged in the business of writing life, health or accident
5-7 (including hospitalization) insurance, or annuity contracts.
5-8 (d-1) The term "membership," when used in this Act, means a
5-9 membership in a health maintenance organization.
5-10 (e) The term "excess risk" shall mean all or any portion of
5-11 a life, health or accident insurance risk or contract of annuity
5-12 for which application is made through an agent, and which exceeds
5-13 the amount of insurance or annuity which will be provided by the
5-14 insurer for which such agent is licensed.
5-15 (f) The term "rejected risk" shall mean a life, health or
5-16 accident insurance risk or annuity contract for which application
5-17 has been made through an agent and which insurance or annuity
5-18 contract is declined by the insurer for which such agent is
5-19 licensed.
5-20 (g) The terms "Industrial" and "weekly premium life
5-21 insurance on a debit basis" refer to the type of life insurance
5-22 defined in Article 3.52 of the Texas Insurance Code.
5-23 SECTION 2. Sections 3(a) and (b), Chapter 213, Acts of the
5-24 54th Legislature, Regular Session, 1955 (Article 21.07-1, Vernon's
5-25 Texas Insurance Code), are amended to read as follows:
5-26 (a) No person or corporation shall act as an <a life
5-27 insurance> agent within this State until the person or corporation
6-1 <he or it> shall have procured a license as required by the laws of
6-2 this State.
6-3 (b) No insurer or <licensed life insurance> agent doing
6-4 business in this State shall pay directly or indirectly any
6-5 commission, or other valuable consideration, to any person or
6-6 corporation for services as an <a life insurance> agent within this
6-7 State, unless such person or corporation shall hold a currently
6-8 valid license to act as an <a life insurance> agent as required by
6-9 the laws of this State; nor shall any person or corporation, other
6-10 than a duly licensed <life insurance> agent, accept any such
6-11 commission or other valuable consideration; provided, however, that
6-12 the provisions of this Section shall not prevent the payment or
6-13 receipt of renewal or other deferred commissions to or by any
6-14 person solely because such person or corporation has ceased to hold
6-15 a license to act as an <a life insurance> agent.
6-16 SECTION 3. Sections 4(a), (b), (d), (e), and (f), Chapter
6-17 213, Acts of the 54th Legislature, Regular Session, 1955 (Article
6-18 21.07-1, Vernon's Texas Insurance Code), are amended to read as
6-19 follows:
6-20 (a) Each applicant for a license to act as an <a life
6-21 insurance> agent within this State shall file with the Commissioner
6-22 a completed written application on forms furnished by the
6-23 Commissioner. The application shall be signed and duly sworn by
6-24 the applicant. The prescribed form shall require the applicant to
6-25 state the applicant's full name; residence; age; occupation and
6-26 place of business for five years preceding date of the application;
6-27 whether the applicant has ever held a license in any state to
7-1 solicit life insurance<,> or any other insurance or to solicit
7-2 memberships <in any State>; whether the applicant has been refused,
7-3 or has had suspended or revoked a license to solicit life
7-4 insurance<,> or any other insurance or to solicit memberships in
7-5 any State; what insurance or health care plan experience, if any,
7-6 the applicant has had; what instruction in life insurance and in
7-7 the <insurance> laws of this State governing insurance and health
7-8 maintenance organizations the applicant has had or expects to have;
7-9 whether any insurer, health maintenance organization, or general
7-10 agent claims the applicant is indebted under any agency contract,
7-11 and if so, the name of the claimant, the nature of the claim and
7-12 the applicant's defense thereto; whether the applicant has had an
7-13 agency contract cancelled and, if so, when, by what company, health
7-14 maintenance organization, or general agent and the reasons
7-15 therefor; whether the applicant will devote all or part of the
7-16 applicant's efforts to acting as an <a life insurance> agent, and,
7-17 if part only, how much time the applicant will devote to such work,
7-18 and in what other business or businesses the applicant is engaged
7-19 or employed; and such other information pertinent to the licensing
7-20 of such agent as the Commissioner in the Commissioner's discretion
7-21 may prescribe. It is not intended that the Commissioner shall be
7-22 authorized to deny a license to an applicant on the sole ground
7-23 that the applicant will act only part time as an <a life insurance>
7-24 agent.
7-25 (b) The application shall be accompanied by a certificate on
7-26 forms furnished by the Commissioner and signed by an officer or
7-27 properly authorized representative of the life insurance company or
8-1 health maintenance organization that the applicant proposes to
8-2 represent, stating that the applicant has completed the educational
8-3 requirements as provided in this Act, and that the insurer or
8-4 health maintenance organization desires that the applicant be
8-5 licensed as an <a life insurance> agent to represent it in this
8-6 State.
8-7 (d) The Board shall issue a license to an individual or to a
8-8 general partnership engaging in the business of insurance or acting
8-9 as an agent for a health maintenance organization. Each partner in
8-10 the partnership must be licensed individually as an agent under
8-11 this Act.
8-12 (e) The Commissioner shall issue a license to a corporation
8-13 if the Commissioner finds:
8-14 (1) That the corporation is a Texas corporation
8-15 organized or existing under the Texas Business Corporation Act or
8-16 the Texas Professional Corporation Act (Article 1528e, Vernon's
8-17 Texas Civil Statutes), having its principal place of business in
8-18 the State of Texas and having as one of its purposes the authority
8-19 to act as agent under this Act;
8-20 (2) That every officer, director, and shareholder of
8-21 the corporation is individually licensed as an agent under the
8-22 provisions of this Act, or that every officer and director of the
8-23 corporation is individually licensed under this Act, that the
8-24 corporation is a wholly owned subsidiary of a parent corporation
8-25 that is licensed under this Act, and that every shareholder of the
8-26 parent corporation is individually licensed under this Act; and
8-27 (3) That such corporation will have the ability to pay
9-1 any sums up to $25,000 which it might become legally obligated to
9-2 pay on account of any claim made against it by any customer and
9-3 caused by any negligent act, error, or omission of the corporation
9-4 or any person for whose acts the corporation is legally liable in
9-5 the conduct of its business as under this Act. The term "customer"
9-6 as used herein shall mean any person, firm, or corporation to whom
9-7 such corporation sells or attempts to sell a policy of insurance or
9-8 membership or from whom such corporation accepts an application for
9-9 insurance or membership. Such ability shall be proven in one of
9-10 the following ways:
9-11 (A) An errors and omissions policy insuring such
9-12 corporation against errors and omissions in at least the sum of
9-13 $100,000 with no more than a $10,000 deductible feature issued by
9-14 an insurance company licensed to do business in the State of Texas
9-15 or, if a policy cannot be obtained from a company licensed to do
9-16 business in Texas, a policy issued by a company not licensed to do
9-17 business in Texas on filing an affidavit with the State Board of
9-18 Insurance stating the inability to obtain coverage and receiving
9-19 the Board's approval; or
9-20 (B) A bond executed by such corporation as
9-21 principal and a surety company authorized to do business in this
9-22 State, as surety, in the principal sum of $25,000, payable to the
9-23 State Board of Insurance for the use and benefit of customers of
9-24 such corporation, conditioned that such corporation shall pay any
9-25 final judgment recovered against it by any customer; or
9-26 (C) A deposit of cash or securities of the class
9-27 authorized by Articles 2.08 and 2.10 of the Insurance Code, having
10-1 a fair market value of $25,000 with the State Treasurer. The State
10-2 Treasurer is hereby authorized and directed to accept and receive
10-3 such deposit and hold it exclusively for the protection of any
10-4 customer of such corporation recovering a final judgment against
10-5 such corporation. Such deposit may be withdrawn only upon filing
10-6 with the Commissioner satisfactory evidence that the corporation
10-7 has withdrawn from business and has no unsecured liabilities
10-8 outstanding, or that such corporation has provided for the
10-9 protection of its customers by furnishing an errors and omissions
10-10 policy or a bond as provided. Securities so deposited may be
10-11 exchanged from time to time for other qualified securities.
10-12 A binding commitment to issue such a policy or bond, or the
10-13 tender of such securities, shall be sufficient in connection with
10-14 any application for license.
10-15 Nothing contained herein shall be construed to permit any
10-16 unlicensed employee or agent of any corporation to perform any act
10-17 of an agent under this Act without obtaining a license.
10-18 If at any time, any corporation holding a license under this
10-19 Act does not maintain the qualifications necessary to obtain a
10-20 license, the license of such corporation to act as an agent shall
10-21 be cancelled or denied in accordance with the provisions of
10-22 Sections 12 and 13 of this Act; provided, however, that should any
10-23 person who is not an agent licensed under this Act acquire shares
10-24 in such a corporation by devise or descent, they shall have a
10-25 period of 90 days from date of acquisition within which to obtain a
10-26 license as an agent or to dispose of the shares to an agent
10-27 licensed under this Act.
11-1 Should such an unlicensed person acquire shares in such a
11-2 corporation and not dispose of them within said period of 90 days
11-3 to a licensed agent, then they must be purchased by the corporation
11-4 for their book value, that is, the value of said shares of stock as
11-5 reflected by the regular books and records of said corporation as
11-6 of the date of the acquisition of said shares by said unlicensed
11-7 person. Should the corporation fail or refuse to so purchase such
11-8 shares, its license shall be cancelled.
11-9 Any such corporation shall have the power to redeem the
11-10 shares of any shareholder, or the shares of a deceased shareholder,
11-11 upon such terms as may be agreed upon by the board of directors and
11-12 such shareholder or such shareholder's personal representative, or
11-13 at such price and upon such terms as may be provided in the
11-14 articles of incorporation, the bylaws, or an existing contract
11-15 entered into between the shareholders of the corporation.
11-16 Each corporation licensed as an agent under this Act shall
11-17 file, under oath, a list of the names and addresses of all of its
11-18 officers, directors, and shareholders with its application for
11-19 renewal license.
11-20 Each corporation licensed as an agent under this Act shall
11-21 notify the State Board of Insurance upon any change in its
11-22 officers, directors, or shareholders not later than the 30th day
11-23 after the date on which the change became effective.
11-24 Except as provided by Subdivision (2) of this subsection, a
11-25 corporation may not own any interest in another corporation
11-26 licensed under this Act, and each owner of an interest in a
11-27 corporation licensed under this Act shall be a natural person who
12-1 holds a valid license issued under this Act.
12-2 No association or any legal entity of any nature, other than
12-3 an individual person, general partnership, or corporation, may be
12-4 licensed as an <a life insurance> agent.
12-5 (f) Each applicant, prior to sitting for the written
12-6 examination as provided for in Section 5 of this Act, shall
12-7 complete, under the supervision of such sponsoring insurer or
12-8 health maintenance organization, an educational program that shall
12-9 include:
12-10 (1) such texts as may be prescribed by the
12-11 Commissioner of Insurance on the recommendation of the Advisory
12-12 Board as provided in Subsection (c) of Section 5 of this Act; and
12-13 (2) materials that will provide the applicant with the
12-14 basic knowledge of:
12-15 (A) the broad principles of insurance,
12-16 licensing, and regulatory laws of this State;
12-17 (B) principles related to medicare supplement
12-18 insurance; <and>
12-19 (C) principles related to regulation of health
12-20 maintenance organizations and membership;
12-21 (D) the obligations and duties of an <a life
12-22 insurance> agent; and
12-23 (E) principles related to small employer
12-24 insurance as set forth in Chapter 26, Insurance Code.
12-25 SECTION 4. Section 4A, Chapter 213, Acts of the 54th
12-26 Legislature, Regular Session, 1955 (Article 21.07-1, Vernon's Texas
12-27 Insurance Code), is amended to read as follows:
13-1 Sec. 4A. PERSONS OTHER THAN <LICENSED LIFE> AGENTS WHO MAY
13-2 SHARE IN PROFITS OF AN <A LIFE> AGENT. (a) On the death of an <a
13-3 licensed life> agent who is a member of an agency partnership, the
13-4 surviving spouse and children, if any, of the deceased partner, or
13-5 a trust for the surviving spouse and children, may share in the
13-6 profits of the agency partnership during the lifetime of the
13-7 surviving spouse or children, as provided by a written partnership
13-8 agreement, or in the absence of any written agreement, as agreed by
13-9 the surviving partner or partners and the surviving spouse, the
13-10 trustee, and the legal representative of the surviving children.
13-11 The surviving spouse and any surviving children or trusts are not
13-12 required to qualify as <life> agents to participate in the profits
13-13 but may not perform any act of an <a life> agent on behalf of the
13-14 partnership without having qualified as an <a life> agent. An <A
13-15 licensed life> agent who is a member of an agency partnership may,
13-16 with the approval of the other members of the partnership, transfer
13-17 an interest in the agency partnership to the partner's <his>
13-18 children or a trust for the children and may operate that interest
13-19 for their use and benefit. The children or trusts may share in the
13-20 profits of the agency partnership. The children or trusts are not
13-21 required to qualify as an <a life> agent to participate in the
13-22 profits but may not perform any act of an <a life> agent on behalf
13-23 of the partnership without having qualified as an <a life> agent.
13-24 (b) On the death of an <a licensed life> agent, who is a
13-25 sole proprietorship, unless otherwise provided by the will admitted
13-26 to probate of the deceased agent, the surviving spouse and
13-27 children, if any, of the deceased agent, or a trust for the
14-1 surviving spouse and children, may share in the profits of the
14-2 continuance of the agency business of the deceased agent, if the
14-3 agency business is continued by an <a licensed life> agent. The
14-4 surviving spouse, trusts, or children may participate in the
14-5 profits during the lifetime of the surviving spouse and children.
14-6 The surviving spouse, trusts, or children are not required to
14-7 qualify as <life> agents in order to participate in the profits of
14-8 the agency but may not perform any act of an <a life> agent in
14-9 connection with the continuance of the agency business without
14-10 first having been licensed as an <a life> agent. An <A licensed
14-11 life> agent who is a sole proprietorship may transfer an interest
14-12 in his agency to the sole proprietor's <his> children, or a trust
14-13 for the <his> children, and may operate that interest for their use
14-14 and benefit. The children may share in the profits of the <life>
14-15 agency during their lifetime, and during that time are not required
14-16 to qualify as an <a life> agent in order to participate in those
14-17 profits but may not perform any act of an <a life> agent in
14-18 connection with the agency business without first being licensed as
14-19 an <a life> agent.
14-20 (c) On the death of a shareholder in a corporate <licensed
14-21 life> agency, the surviving spouse and children, if any, of the
14-22 deceased shareholder, or a trust for the surviving spouse and
14-23 children may share in the profits of the corporate agency during
14-24 the lifetime of the surviving spouse or children, if and as
14-25 provided by a contract entered into by and between all of the
14-26 shareholders and the corporation. The surviving spouse, surviving
14-27 children, or trusts are not required to individually qualify as an
15-1 <a life> agent in order to participate in those profits but may not
15-2 perform any act of an <a life> agent on behalf of the corporation
15-3 without having qualified as an <a life> agent. A shareholder in a
15-4 corporate <licensed life> agency may, if provided by a contract
15-5 entered into by and between all of the shareholders and the
15-6 corporation, transfer an interest in the agency to the
15-7 shareholder's <his> children or a trust for the <his> children, and
15-8 the children or trusts may share in the profits of the agency to
15-9 the extent of the interest during their lifetime. The children or
15-10 trusts are not required to qualify as an <a life> agent to
15-11 participate in the profits but may not perform any act of an <a
15-12 life> agent on behalf of the corporation without having qualified
15-13 as an <a life> agent.
15-14 SECTION 5. Sections 5(a) and (c), Chapter 213, Acts of the
15-15 54th Legislature, Regular Session, 1955 (Article 21.07-1, Vernon's
15-16 Texas Insurance Code), are amended to read as follows:
15-17 (a) Each prospective applicant for a license to act as an <a
15-18 life insurance> agent within this State shall submit to a personal
15-19 written examination administered in the English or Spanish
15-20 language, as prescribed by the State Board of Insurance, to
15-21 determine the applicant's competence with respect to insurance and
15-22 annuity contracts, including medicare supplement contracts, and
15-23 memberships, and the applicant's familiarity with the pertinent
15-24 provisions of the laws of this State and the obligations and duties
15-25 of an <a life insurance> agent, and shall pass the same to the
15-26 satisfaction of the State Board of Insurance. A nonrefundable
15-27 examination fee, in an amount determined by the Board but not more
16-1 than $20, must accompany the application to take the examination.
16-2 The department shall charge the fee each time the examination is
16-3 taken. The department shall give certifications of a passing score
16-4 to those applicants that obtain such a score. No written
16-5 examination shall be required of:
16-6 (1) An applicant for the renewal of a license issued
16-7 by the State Board of Insurance pursuant to Article 21.07, Texas
16-8 Insurance Code, 1951, which is currently in force at the time of
16-9 the effective date of this Act;
16-10 (2) An applicant whose license as an <a life
16-11 insurance> agent expired less than one year prior to the date of
16-12 application may, in the discretion of the State Board of Insurance,
16-13 be issued a license without written examination;
16-14 (3) A person who holds the designation Chartered Life
16-15 Underwriter (CLU);
16-16 (4) An applicant that is a partnership or corporation.
16-17 (c) The Commissioner shall appoint an Advisory Board
16-18 consisting of eight persons of whom two shall be holders of
16-19 licenses issued under this Article, one <two> shall be employed by
16-20 a legal reserve life insurance company and familiar with the
16-21 operations of legal reserve life insurance companies, one shall be
16-22 employed by a health maintenance organization and familiar with the
16-23 operations of health maintenance organizations, two shall be
16-24 general agents and managers, and two shall be citizens of the State
16-25 of Texas who are neither agents, general managers, nor employees of
16-26 legal reserve life insurance companies, which shall make
16-27 recommendations to the Commissioner <him> with respect to the
17-1 scope, type, and conduct of written examinations and the times and
17-2 places within the State where they shall be held. This Advisory
17-3 Board shall make such recommendations not less frequently than once
17-4 every four years. The members of the Advisory Board shall serve
17-5 without pay but shall be reimbursed for their reasonable expenses
17-6 in attending meetings of the Advisory Board.
17-7 SECTION 6. Section 6, Chapter 213, Acts of the 54th
17-8 Legislature, Regular Session, 1955 (Article 21.07-1, Vernon's Texas
17-9 Insurance Code), is amended to read as follows:
17-10 Sec. 6. ISSUANCE OR DENIAL OF LICENSE. After the applicant,
17-11 if required to do so, has passed the written examination to the
17-12 satisfaction of the Commissioner, a license shall be issued
17-13 forthwith. If the license is denied for any of the reasons set
17-14 forth in Section 12 of this Act, the Commissioner shall notify the
17-15 applicant and the insurer or health maintenance organization in
17-16 writing that the license will not be issued to the applicant.
17-17 SECTION 7. Sections 7(a) and (b), Chapter 213, Acts of the
17-18 54th Legislature, Regular Session, 1955 (Article 21.07-1, Vernon's
17-19 Texas Insurance Code), are amended to read as follows:
17-20 (a) A person not resident in this State may be licensed as
17-21 an <a life insurance> agent upon compliance with the provisions of
17-22 this Act, provided that the State in which such person resides will
17-23 accord the same privilege to a citizen of this State.
17-24 (b) The <Life Insurance> Commissioner is further authorized
17-25 to enter into reciprocal agreements with the appropriate official
17-26 or any other State waiving the written examination of any applicant
17-27 resident in such other State, provided:
18-1 (1) That a written examination is required of
18-2 applicants for an <a life insurance> agent's license in such other
18-3 State;
18-4 (2) That the appropriate official of such other State
18-5 certifies that the applicant holds a currently valid license as an
18-6 <a life insurance> agent in such other State and either passed such
18-7 written examination or was the holder of an <a life insurance>
18-8 agent's license prior to the time such written examination was
18-9 required;
18-10 (3) That the applicant has no place of business within
18-11 this State in the transaction of business as an <a life insurance>
18-12 agent;
18-13 (4) That in such other State, a resident of this State
18-14 is privileged to procure an <a life insurance> agent's license upon
18-15 the foregoing conditions and without discrimination as to fees or
18-16 otherwise in favor of the residents of such other State.
18-17 SECTION 8. Section 8, Chapter 213, Acts of the 54th
18-18 Legislature, Regular Session, 1955 (Article 21.07-1, Vernon's Texas
18-19 Insurance Code), is amended to read as follows:
18-20 Sec. 8. AGENT MAY BE LICENSED TO REPRESENT ADDITIONAL
18-21 INSURERS OR HEALTH MAINTENANCE ORGANIZATIONS. (a) Any <life
18-22 insurance> agent licensed in this state may represent and act as an
18-23 <a life insurance> agent for more than one life insurance company
18-24 or health maintenance organization at any time while the agent's
18-25 license is in force, if the agent so desires. Any <such life
18-26 insurance> agent and the company or health maintenance organization
18-27 involved must give notice to the Commissioner of any additional
19-1 appointment or appointments authorizing the agent to act as an <a
19-2 life insurance> agent for an additional life insurance company or
19-3 companies or health maintenance organization or organizations.
19-4 Such notice must be accompanied by a certificate from each insurer
19-5 or health maintenance organization to be named in each additional
19-6 appointment, and must state that said insurer or organization
19-7 desires to appoint the applicant as its agent. This notice shall
19-8 also contain such other information as the Commissioner may
19-9 require. The agent shall be required to pay a nonrefundable fee in
19-10 an amount not to exceed $16 as determined by the State Board of
19-11 Insurance for each additional appointment applied for, which fee
19-12 shall accompany the notice. If approval of the additional
19-13 appointment is not received from the Commissioner before the eighth
19-14 day after the date on which the completed application and fee were
19-15 received by the Commissioner, the agent and the insurance carrier
19-16 or health maintenance organization, in the absence of notice of
19-17 disapproval, may assume that the Commissioner approves the
19-18 application, and the agent may act for the insurance carrier or
19-19 health maintenance organization.
19-20 (b) Any <life insurance> agent licensed in this state may
19-21 solicit, negotiate, or effect applications for policies of life
19-22 insurance or place excess or rejected risks with any legal reserve
19-23 life insurance company lawfully doing business in this state other
19-24 than an insurer such agent is licensed to represent, if such agent
19-25 requests appointment with such company simultaneously with the
19-26 submission to such company of the application for insurance
19-27 solicited by him or it. However, no commissions shall be paid by
20-1 such company to the agent until such time as notice of appointment
20-2 with respect to such agent has been given to the Commissioner
20-3 pursuant to the provisions of Subsection (a) of this section.
20-4 (c) No insurer, health maintenance organization, general
20-5 agent, or agent, directly or through any representative, shall
20-6 furnish to any agent any blank forms, applications, stationery, or
20-7 other supplies to be used in soliciting, negotiating, or effecting
20-8 contracts of insurance or memberships on its behalf unless such
20-9 blank forms, applications, stationery, or other supplies relate to
20-10 a class of business with respect to which such agent is a licensed
20-11 agent, whether for that insurer or health maintenance organization
20-12 or another insurer or health maintenance organization.
20-13 (d) Any insurer, health maintenance organization, general
20-14 agent, or agent who furnishes any of the supplies specified in
20-15 Subsection (c) of this section to any agent or prospective agent
20-16 not licensed to represent the insurer or health maintenance
20-17 organization and who accepts from or writes any insurance business
20-18 for such agent or agency shall be subject to civil liability to any
20-19 insured of such insurer to the same extent and in the same manner
20-20 as if such agent or prospective agent had been appointed, licensed,
20-21 or authorized by the insurer, health maintenance organization, or
20-22 such agent to act in the insurer's, health maintenance
20-23 organization's, or agent's <its or his> behalf.
20-24 (e) An appointment made under this section to authorize an
20-25 agent to act as an agent for an insurance carrier or health
20-26 maintenance organization continues in effect without the necessity
20-27 of renewal until it is terminated and withdrawn by the insurance
21-1 carrier or health maintenance organization as provided by this
21-2 section or is otherwise terminated in accordance with this Act.
21-3 Each renewal license issued to the agent authorizes the agent to
21-4 represent and act for the insurance carriers or health maintenance
21-5 organizations for which the agent holds an appointment until the
21-6 appointment is terminated, and that agent is considered to be the
21-7 agent of the appointing insurance carriers or health maintenance
21-8 organizations for the purposes of this Act.
21-9 SECTION 9. Section 9(a), Chapter 213, Acts of the 54th
21-10 Legislature, Regular Session, 1955 (Article 21.07-1, Vernon's Texas
21-11 Insurance Code), is amended to read as follows:
21-12 (a) Except as may be provided by a staggered renewal system
21-13 adopted under Article 21.01-2, Insurance Code, each license issued
21-14 to an <a life insurance> agent shall expire two years following the
21-15 date of issue, unless prior thereto it is suspended or revoked by
21-16 the Commissioner.
21-17 SECTION 10. Sections 10(a), (b), (c), (e), and (f), Chapter
21-18 213, Acts of the 54th Legislature, Regular Session, 1955 (Article
21-19 21.07-1, Vernon's Texas Insurance Code), are amended to read as
21-20 follows:
21-21 (a) The department may issue a temporary <life insurance>
21-22 agent's license, effective for ninety days, without requiring the
21-23 applicant to pass a written examination, as follows:
21-24 (1) To an applicant who has fulfilled the provisions
21-25 of Section 4 of this Act where such applicant will actually collect
21-26 the premiums on industrial life insurance contracts during the
21-27 period of such temporary license; provided, however, that if such
22-1 temporary license is not received from the department within seven
22-2 days from the date the application was sent to the department, the
22-3 company may assume that the temporary license will be issued in due
22-4 course and the applicant may proceed to act as an agent. For the
22-5 purpose of this subsection an industrial life insurance contract
22-6 shall mean a contract for which the premiums are payable at monthly
22-7 or more frequent intervals directly by the owner thereof, or by a
22-8 person representing the owner, to a representative of the company;
22-9 (2) To any person who is being considered for
22-10 appointment as an agent by an insurer or health maintenance
22-11 organization immediately upon receipt by the department of an
22-12 application executed by such person in the form required by Section
22-13 4 of this Act, together with a nonrefundable filing fee of $100 and
22-14 a certificate signed by an officer or properly authorized
22-15 representative of such insurer or health maintenance organization
22-16 stating:
22-17 (A) that such person is being considered for
22-18 appointment by such insurer or health maintenance organization as
22-19 its full-time agent;
22-20 (B) that such insurer or health maintenance
22-21 organization desires that such person be issued a temporary
22-22 license; provided that if such temporary license shall not have
22-23 been received from the department within seven days from the date
22-24 on which the application and certificate were delivered to or
22-25 mailed to the department the insurer or health maintenance
22-26 organization may assume that such temporary license will be issued
22-27 in due course and the applicant may proceed to act as an agent;
23-1 provided, however, that no temporary license shall be renewable nor
23-2 issued more than once in a consecutive six months period to the
23-3 same applicant; and provided further, that no temporary license
23-4 shall be granted to any person who does not intend to apply for a
23-5 license to sell <life> insurance or memberships to the public
23-6 generally and it is intended to prohibit the use of a temporary
23-7 license to obtain commissions from sales to persons of family
23-8 employment or business relationships to the temporary licensee, to
23-9 accomplish which purposes an insurer or health maintenance
23-10 organization is hereby prohibited from knowingly paying directly or
23-11 indirectly to the holder of a temporary license under this
23-12 subsection any commissions on the sale of a contract of insurance
23-13 or membership covering <on the life of> the temporary licensee, <or
23-14 on the life of> any person related to the temporary licensee <him>
23-15 by blood or marriage, <or on the life of> any person who is or has
23-16 been during the past six months the temporary licensee's <his>
23-17 employer either as an individual or as a member of a partnership,
23-18 association, firm or corporation, or <on the life of> any person
23-19 who is or who has been during the past six months his employee, and
23-20 the holder of a temporary license is hereby prohibited from
23-21 receiving or accepting commissions on the sale of a contract of
23-22 insurance or membership to any person included in the foregoing
23-23 classes of relationship;
23-24 (C) that a person who has been issued a
23-25 temporary license under this subsection and is acting under the
23-26 authority of the temporary license may not engage in any insurance
23-27 solicitation, sale, or other agency transaction that results in or
24-1 is intended to result in the replacement of any existing individual
24-2 life insurance policy form or annuity contract that is in force or
24-3 receive, directly or indirectly, any commission or other
24-4 compensation that may or does result from such solicitation, sale,
24-5 or other agency transaction; and that any person holding a
24-6 permanent license may not circumvent or attempt to circumvent the
24-7 intent of this subdivision by acting for or with a person holding
24-8 such a temporary license. As used in this subdivision,
24-9 "replacement" means any transaction in which a new life insurance
24-10 or annuity contract is to be purchased, and it is known or should
24-11 be known to the temporary agent that by reason of the solicitation,
24-12 sale, or other transaction the existing life insurance or annuity
24-13 contract has been or is to be:
24-14 (i) lapsed, forfeited, surrendered, or
24-15 otherwise terminated;
24-16 (ii) converted to reduced paid-up
24-17 insurance, continued as extended term insurance, or otherwise
24-18 reduced in value by the use of nonforfeiture benefits or other
24-19 policy values;
24-20 (iii) amended so as to effect either a
24-21 reduction in benefits or in the term for which coverage would
24-22 otherwise remain in force or for which benefits would be paid;
24-23 (iv) reissued with any reduction in cash
24-24 value; or
24-25 (v) pledged as collateral or subjected to
24-26 borrowing, whether in a single loan or under a schedule of
24-27 borrowing over a period of time for amounts in the aggregate
25-1 exceeding 25 percent of the loan value set forth in the policy; and
25-2 (D) that such person will complete, under such
25-3 insurer's or health maintenance organization's supervision, at
25-4 least forty hours of training as prescribed by Subsection (c) of
25-5 this Section within fourteen days from the date on which the
25-6 application and certificate were delivered or mailed to the
25-7 department.
25-8 (b) The department shall have the authority to cancel,
25-9 suspend, or revoke the temporary appointment powers of any life
25-10 insurance company or health maintenance organization, if, after
25-11 notice and hearing, the commissioner <he> finds that such company
25-12 or health maintenance organization has abused such temporary
25-13 appointment powers. In considering such abuse, the department may
25-14 consider, but is not limited to, the number of temporary
25-15 appointments made by a company as provided by Subsection (f) of
25-16 this Section, the percentage of appointees sitting for the
25-17 examination as <life insurance> agents under this Article as it may
25-18 be in violation of Subsection (e) of this Section, and the number
25-19 of appointees successfully passing said examination in accordance
25-20 with Subsection (e). Appeals from the department's decision shall
25-21 be made in accordance with Section 13 hereof.
25-22 (c) At least forty hours of training must be administered to
25-23 any applicant for a temporary license as herein defined within
25-24 fourteen days from the date on which the application and
25-25 certificate were delivered or mailed to the department. Of this
25-26 forty-hour requirement, ten hours must be taught in a classroom
25-27 setting, including but not limited to an accredited college,
26-1 university, junior or community college, business school, or
26-2 private institute or classes sponsored by the insurer or health
26-3 maintenance organization and especially established for this
26-4 purpose. Such training program shall be constructed so as to
26-5 provide an applicant with the basic knowledge of:
26-6 (1) the broad principles of insurance, licensing, and
26-7 regulatory laws of this State; <and>
26-8 (2) the broad principles of health maintenance
26-9 organizations, membership, and related licensing and regulating
26-10 laws; and
26-11 (3) the obligations and duties of an <a life
26-12 insurance> agent.
26-13 (e) Each insurer is responsible for requiring that not less
26-14 than 70 percent of such insurer's or health maintenance
26-15 organization's applicants for temporary licenses sit for an
26-16 examination during any two consecutive calendar quarters. At least
26-17 50 percent of those applicants sitting for the examination must
26-18 pass during such a period.
26-19 (f) Each insurer or health maintenance organization may make
26-20 no more than two hundred and fifty temporary licensee appointments
26-21 during a calendar year under Subsection (a)(2) of this Section.
26-22 SECTION 11. Section 11(a), Chapter 213, Acts of the 54th
26-23 Legislature, Regular Session, 1955 (Article 21.07-1, Vernon's Texas
26-24 Insurance Code), is amended to read as follows:
26-25 (a) Each life insurance company and health maintenance
26-26 organization shall, upon termination of the appointment of any
26-27 <life insurance> agent, immediately file with the Commissioner a
27-1 statement of the facts relative to the termination of the
27-2 appointment and the date and cause thereof. The Commissioner shall
27-3 thereupon terminate the license of such agent to represent such
27-4 insurer or health maintenance organization in this State.
27-5 SECTION 12. Section 12(a), Chapter 213, Acts of the 54th
27-6 Legislature, Regular Session, 1955 (Article 21.07-1, Vernon's Texas
27-7 Insurance Code), is amended to read as follows:
27-8 (a) The commissioner may discipline a license holder or deny
27-9 an application under Section 5, Article 21.01-2, Insurance Code, if
27-10 the Commissioner finds that the applicant, individually or through
27-11 any officer, director, or shareholder, for, or holder of such
27-12 license:
27-13 (1) Has wilfully violated any provision of the
27-14 insurance laws of this State;
27-15 (2) Has intentionally made a material misstatement in
27-16 the application for such license;
27-17 (3) Has obtained, or attempted to obtain, such license
27-18 by fraud or misrepresentation;
27-19 (4) Has misappropriated or converted to the
27-20 applicant's or licensee's own use or illegally withheld money
27-21 belonging to an insurer or health maintenance organization or an
27-22 insured or beneficiary;
27-23 (5) Has been guilty of fraudulent or dishonest
27-24 practices;
27-25 (6) Has materially misrepresented the terms and
27-26 conditions of <life> insurance policies, <or> contracts, or
27-27 memberships;
28-1 (7) Has made or issued, or caused to be made or
28-2 issued, any statement misrepresenting or making incomplete
28-3 comparisons regarding the terms or conditions of any insurance or
28-4 annuity contract legally issued by any insurer or membership
28-5 legally issued by a health maintenance organization, for the
28-6 purpose of inducing or attempting to induce the owner of such
28-7 contract or member to forfeit or surrender such contract or
28-8 membership or allow it to lapse for the purpose of replacing such
28-9 contract or membership with another;
28-10 (8) Has obtained, or attempted to obtain such license,
28-11 not for the purpose of holding the license holder or applicant
28-12 <himself or itself> out to the general public as an <a life
28-13 insurance> agent, but primarily for the purpose of soliciting,
28-14 negotiating or procuring <life> insurance or annuity contracts or
28-15 memberships covering the applicant or licensee, members of the
28-16 applicant's or licensee's family, or the applicant's or licensee's
28-17 business associates;
28-18 (9) Is convicted of a felony; or
28-19 (10) Is guilty of rebating an insurance premium or
28-20 commission to an insured.
28-21 SECTION 13. Section 14, Chapter 213, Acts of the 54th
28-22 Legislature, Regular Session, 1955 (Article 21.07-1, Vernon's Texas
28-23 Insurance Code), is amended to read as follows:
28-24 Sec. 14. PENALTY. Any person or officer, director, or
28-25 shareholder of a corporation required to be licensed by this Act
28-26 who individually, or as an officer or employee of a legal reserve
28-27 life insurance company, health maintenance organization, or other
29-1 corporation, violates any of the provisions of this Act shall, in
29-2 addition to any other penalty specifically provided, be guilty of a
29-3 misdemeanor and, upon conviction, shall be fined not more than
29-4 $500.00 or imprisoned not more than six months, or both, each such
29-5 violation being a separate offense hereunder. In addition, if such
29-6 offender or corporation of which he is an officer, director, or
29-7 shareholder holds a license as an <a life insurance> agent, such
29-8 license shall automatically expire upon such conviction.
29-9 SECTION 14. Sections 16(a), (b), (c), (d), (h), (i), and
29-10 (j), Chapter 213, Acts of the 54th Legislature, Regular Session,
29-11 1955 (Article 21.07-1, Vernon's Texas Insurance Code), are amended
29-12 to read as follows:
29-13 (a) In this section, "accident and health <insurance> agent"
29-14 means any person or corporation that is an authorized agent of a
29-15 legal reserve life insurance company or health maintenance
29-16 organization and who acts as such agent only in the solicitation
29-17 of, negotiation for, procurement of, or collection of premiums on
29-18 an accident and health insurance contract with a legal reserve life
29-19 insurance company or who acts only as described by Section 1(a-1)
29-20 of this Act. The term<, but> does not include:
29-21 (1) a regular salaried officer or employee of a legal
29-22 reserve life insurance company, or of a licensed life or accident
29-23 and health insurance agent, who devotes substantially all of the
29-24 officer's or employee's <his or her> time to activities other than
29-25 the solicitation of applications for insurance contracts and
29-26 receives no commission or other compensation directly dependent
29-27 upon the business obtained and who does not solicit or accept from
30-1 the public applications for insurance contracts;
30-2 (1-A) any regular salaried officer or employee of a
30-3 health maintenance organization or of a licensed health maintenance
30-4 organization agent, who devotes substantially all of the officer's
30-5 or employee's time to activities other than the solicitation of
30-6 applications for health maintenance organization membership and
30-7 receives no commission or other compensation directly dependent
30-8 upon the business obtained and who does not solicit or accept from
30-9 the public applications for health maintenance organization
30-10 membership;
30-11 (2) employers or their officers or employees, or the
30-12 trustees of any employee benefit plan, to the extent that those
30-13 employers, officers, employees, or trustees are engaged in the
30-14 administration or operation of any program of employee benefits
30-15 involving the use of insurance issued by a legal reserve life
30-16 insurance company or memberships issued by a health maintenance
30-17 organization, provided that those employers, officers, employees,
30-18 or trustees are not in any manner compensated directly or
30-19 indirectly by the legal reserve life insurance company or health
30-20 maintenance organization issuing the insurance contracts or
30-21 memberships;
30-22 (3) banks or their officers and employees to the
30-23 extent that the banks, or their officers, and employees collect and
30-24 remit premiums or charges by charging the premiums or charges
30-25 against the account of a depositor on the orders of the depositor;
30-26 (4) a ticket-selling agent of a public carrier with
30-27 respect to accident and health insurance tickets covering risks of
31-1 travel; <or>
31-2 (5) an agent selling credit health and accident
31-3 insurance issued exclusively in connection with credit
31-4 transactions, or acting as agent or solicitor for health and
31-5 accident insurance under a license issued under either Article
31-6 21.07, Article 21.07-1, or Article 21.14, Insurance Code; or
31-7 (6) a person or the employee of a person who has
31-8 contracted to provide administrative, management, or health care
31-9 services to a health maintenance organization and who is
31-10 compensated for those services by the payment of an amount
31-11 calculated as a percentage of the revenues, net income, or profit
31-12 of the health maintenance organization, if that method of
31-13 compensation is the sole basis for subjecting that person or the
31-14 employee of the person to this section.
31-15 (b) The State Board of Insurance may issue a license to a
31-16 person or a corporation to act only as an accident and health
31-17 insurance agent for a legal reserve life insurance company or
31-18 health maintenance organization as provided by this section.
31-19 (c) Each applicant for a license under this section who
31-20 desires to act as an accident and health <insurance> agent within
31-21 this state shall submit to a personal written examination
31-22 prescribed by the State Board of Insurance and administered in the
31-23 English or Spanish language to determine the applicant's competency
31-24 with respect to accident and health insurance and memberships and
31-25 familiarity with the pertinent <provisions of the health and
31-26 accident insurance> laws of this state. Except as provided by
31-27 Subsection (d) of this section, each applicant must pass the
32-1 examination to the satisfaction of the State Board of Insurance.
32-2 (d) A written examination is not required of:
32-3 (1) an applicant for license under this Section 16 if
32-4 the applicant has previously been licensed and currently holds on
32-5 the effective date of this section a valid license issued by the
32-6 State Board of Insurance under Section 15 or 15A, Texas Health
32-7 Maintenance Organization Act (Articles 20A.15 and 20A.15A, Vernon's
32-8 Texas Insurance Code), as those sections existed at any time before
32-9 December 31, 1997, <either> Article 21.07, Insurance Code, this
32-10 Act, <Article 21.07-1,> or Article 21.14, Insurance Code <of this
32-11 code>;
32-12 (2) an applicant whose license expires less than one
32-13 year before the date of application and who may, in the discretion
32-14 of the State Board of Insurance, be issued a license without
32-15 written examination, provided the prior expired license granted the
32-16 applicant the right to act as an agent for accident and health
32-17 insurance; or
32-18 (3) an applicant that is a partnership or corporation;
32-19 provided, however, that a partnership or corporation may be
32-20 licensed hereunder only if it otherwise complies with the
32-21 provisions of Section 4 of this article, but in the application of
32-22 such section to such compensation hereunder, any requirement
32-23 pertaining to or reference therein to "life insurance" shall be
32-24 changed and limited to "health and accident coverage <insurance>"
32-25 only as is intended by the terms of <the> Section 16.
32-26 (h) After the State Board of Insurance determines that an
32-27 applicant has successfully passed the written examination or is
33-1 exempt therefrom as provided in Subsection (d) above, has been
33-2 appointed to act as an agent by one or more legal reserve life
33-3 insurance companies or health maintenance organizations, and has
33-4 paid a nonrefundable license fee not to exceed $50 as determined by
33-5 the board, the board shall issue a license to such applicant
33-6 authorizing the applicant to act as an accident and health
33-7 insurance agent for the appointing insurance carrier or health
33-8 maintenance organization.
33-9 (i) The State Board of Insurance may appoint an advisory
33-10 committee to make recommendations to the State Board of Insurance
33-11 relating to the scope, type, and conduct of written examinations.
33-12 The advisory committee must be composed of individuals experienced
33-13 in the accident and health insurance or health maintenance
33-14 organization business and may include company officers, managers
33-15 and employees, general managers, and licensed agents. The members
33-16 of the advisory committee shall serve without pay.
33-17 (j) Sections 8, 9, 10, 11, 12, 13, and 14 of this article
33-18 shall apply to accident and health <insurance> agents of a legal
33-19 reserve life insurance company or health maintenance organization
33-20 licensed under this section, but in the application of such
33-21 sections to such agents any requirements, conditions, or references
33-22 therein to "life insurance" shall be changed and limited to "health
33-23 and accident coverage" <insurance> only as is intended by the
33-24 provisions of this section.
33-25 SECTION 15. Section 15(a), Texas Health Maintenance
33-26 Organization Act (Article 20A.15, Vernon's Texas Insurance Code),
33-27 is amended to read as follows:
34-1 (a) A health maintenance organization agent is anyone who
34-2 represents any health maintenance organization in the solicitation,
34-3 negotiation, procurement, or effectuation of health maintenance
34-4 organization membership or holds himself or herself out as such.
34-5 No person or other legal entity may perform the acts of a health
34-6 maintenance organization agent within this state unless such person
34-7 or legal entity has a valid health maintenance organization agent's
34-8 license issued pursuant to this Act or has a valid agent's or
34-9 health and accident agent's license issued pursuant to Chapter 213,
34-10 Acts of the 54th Legislature, Regular Session, 1955 (Article
34-11 21.07-1, Vernon's Texas Insurance Code). The term "health
34-12 maintenance organization agent" shall not include:
34-13 (1) any regular salaried officer or employee of a
34-14 health maintenance organization or of a licensed health maintenance
34-15 organization agent, who devotes substantially all of his or her
34-16 time to activities other than the solicitation of applications for
34-17 health maintenance organization membership and receives no
34-18 commission or other compensation directly dependent upon the
34-19 business obtained and who does not solicit or accept from the
34-20 public applications for health maintenance organization membership;
34-21 (2) employers or their officers or employees or the
34-22 trustees of any employee benefit plan to the extent that such
34-23 employers, officers, employees, or trustees are engaged in the
34-24 administration or operation of any program of employee benefits
34-25 involving the use of membership in a health maintenance
34-26 organization; provided that such employers, officers, employees, or
34-27 trustees are not in any manner compensated directly or indirectly
35-1 by the health maintenance organization issuing such health
35-2 maintenance organization membership;
35-3 (3) banks or their officers and employees to the
35-4 extent that such banks, officers, and employees collect and remit
35-5 charges by charging same against accounts of depositors on the
35-6 orders of such depositors; or
35-7 (4) any person or the employee of any person who has
35-8 contracted to provide administrative, management, or health care
35-9 services to a health maintenance organization and who is
35-10 compensated for those services by the payment of an amount
35-11 calculated as a percentage of the revenues, net income, or profit
35-12 of the health maintenance organization, if that method of
35-13 compensation is the sole basis for subjecting that person or the
35-14 employee of the person to this section.
35-15 SECTION 16. Section 15A(a), Texas Health Maintenance
35-16 Organization Act (Article 20A.15A, Vernon's Texas Insurance Code),
35-17 is amended to read as follows:
35-18 (a) A person acting as an agent for a health maintenance
35-19 organization offering only a single health care service plan who is
35-20 licensed by examination under Article 21.07, Insurance Code, or
35-21 Chapter 213, Acts of the 54th Legislature, Regular Session, 1955
35-22 (Article 21.07-1, Vernon's Texas Insurance Code), is subject to the
35-23 licensing requirements provided by this section, and except as
35-24 specifically provided by this Act or some other law, no other agent
35-25 licensing requirements apply. This section applies only to a
35-26 person licensed to act as an agent for a health maintenance
35-27 organization offering only a single health care service plan before
36-1 January 1, 1996.
36-2 SECTION 17. (a) Effective January 1, 1998, Sections 15 and
36-3 15A, Texas Health Maintenance Organization Act (Articles 20A.15 and
36-4 20A.15A, Vernon's Texas Insurance Code), are repealed.
36-5 (b) After January 1, 1996, the Texas Department of Insurance
36-6 may not issue or renew a license under Section 15 or 15A, Texas
36-7 Health Maintenance Organization Act (Articles 20A.15 and 20A.15A,
36-8 Vernon's Texas Insurance Code), to act as a health maintenance
36-9 organization agent or as an agent for a health maintenance
36-10 organization offering only a single health service plan.
36-11 SECTION 18. Except as provided by Section 17(a) of this Act,
36-12 this Act takes effect September 1, 1995, and applies only to a
36-13 license under Chapter 213, Acts of the 54th Legislature, Regular
36-14 Session, 1955 (Article 21.07-1, Vernon's Texas Insurance Code), to
36-15 act as an agent or as a health and accident agent that is issued or
36-16 renewed on or after January 1, 1996.
36-17 SECTION 19. The importance of this legislation and the
36-18 crowded condition of the calendars in both houses create an
36-19 emergency and an imperative public necessity that the
36-20 constitutional rule requiring bills to be read on three several
36-21 days in each house be suspended, and this rule is hereby suspended.