1-1 By: Brimer, Siebert (Senate Sponsor - Patterson) H.B. No. 219
1-2 (In the Senate - Received from the House April 10, 1997;
1-3 April 11, 1997, read first time and referred to Committee on
1-4 Economic Development; May 16, 1997, reported favorably by the
1-5 following vote: Yeas 8, Nays 0; May 16, 1997, sent to printer.)
1-6 A BILL TO BE ENTITLED
1-7 AN ACT
1-8 relating to the licensing of agents for health maintenance
1-9 organizations.
1-10 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-11 SECTION 1. Section 1, Chapter 213, Acts of the 54th
1-12 Legislature, Regular Session, 1955 (Article 21.07-1, Vernon's Texas
1-13 Insurance Code), is amended to read as follows:
1-14 Sec. 1. [LEGAL RESERVE LIFE INSURANCE] AGENT DEFINED. (a)
1-15 This Act shall be known as The Texas Agents Qualification and
1-16 License Law for Agents of Legal Reserve Life Insurance Companies
1-17 authorized to do business in Texas. It repeals the provisions of
1-18 Article 21.07 of the Texas Insurance Code, 1951, to the extent only
1-19 as applicable to such agents. This Act has no application to
1-20 agents for local mutual aid associations, or for statewide mutual
1-21 associations or, except as provided by Subsection (a-1) of this
1-22 section, for any type or kind of insurance organization other than
1-23 legal reserve life insurance companies, and existing statutes,
1-24 including Article 21.07 of the Texas Insurance Code, 1951,
1-25 applicable to such agents, other than agents of legal reserve life
1-26 insurance companies, shall remain in full force and effect.
1-27 (a-1) Unless a person or legal entity is licensed under this
1-28 Act, the person or entity may not:
1-29 (1) represent a health maintenance organization,
1-30 including a health maintenance organization offering only a single
1-31 health care service plan, in the solicitation, negotiation,
1-32 procurement, or effectuation of health maintenance organization
1-33 membership; or
1-34 (2) be held out as representing a health maintenance
1-35 organization for a purpose described by Subdivision (1) of this
1-36 subsection.
1-37 (b) The term "[life insurance] agent" for the purpose of
1-38 this Act means any person or corporation that is an authorized
1-39 agent of a legal reserve life insurance company or health
1-40 maintenance organization, and any person who is a sub-agent of such
1-41 agent, who acts as such in the solicitation of, negotiation for, or
1-42 procurement of, or collection of premiums on, an insurance or
1-43 annuity contract with a legal reserve life insurance company or who
1-44 acts as described by Subsection (a-1) of this section. The [;
1-45 except that the] term "[life insurance] agent" shall not include:
1-46 (1) any regular salaried officer or employee of a
1-47 legal reserve life insurance company, or of a licensed life
1-48 insurance agent, who devotes substantially all of the officer's or
1-49 employee's [his or her] time to activities other than the
1-50 solicitation of applications for insurance or annuity contracts and
1-51 receives no commission or other compensation directly dependent
1-52 upon the business obtained, and who does not solicit or accept from
1-53 the public applications for insurance or annuity contracts;
1-54 (1-A) any regular salaried officer or employee of a
1-55 health maintenance organization or of a licensed health maintenance
1-56 organization agent, who devotes substantially all of the officer's
1-57 or employee's time to activities other than the solicitation of
1-58 applications for health maintenance organization membership and
1-59 receives no commission or other compensation directly dependent
1-60 upon the business obtained and who does not solicit or accept from
1-61 the public applications for health maintenance organization
1-62 membership;
1-63 (2) employers or their officers or employees, or the
1-64 trustees of any employee benefit plan, to the extent that such
2-1 employers, officers, employees or trustees are engaged in the
2-2 administration or operation of any program of employee benefits
2-3 involving the use of insurance or annuities issued by a legal
2-4 reserve life insurance company or memberships issued by a health
2-5 maintenance organization, provided that such employers, officers,
2-6 employees or trustees are not in any manner compensated, directly
2-7 or indirectly, by the legal reserve life insurance company or
2-8 health maintenance organization issuing the [such] insurance or
2-9 annuity contracts or memberships;
2-10 (3) banks, savings and loan associations, or credit
2-11 unions, or the officers and employees of banks, savings and loan
2-12 associations, or credit unions, to the extent that such banks,
2-13 savings and loan associations, credit unions, or officers and
2-14 employees collect and remit premiums or charges by charging same
2-15 against accounts of depositors on the orders of such depositors;
2-16 (4) a ticket-selling agent of a public carrier with
2-17 respect to accident life insurance tickets covering risks of
2-18 travel;
2-19 (5) an agent selling credit life, health and accident
2-20 insurance issued exclusively in connection with credit
2-21 transactions, or acting as agent or solicitor for health and
2-22 accident insurance under license issued pursuant to the provisions
2-23 of Article 21.14 of the Texas Insurance Code; or
2-24 (6) a person or the employee of a person who has
2-25 contracted to provide administrative, management, or health care
2-26 services to a health maintenance organization and who is
2-27 compensated for those services by the payment of an amount
2-28 calculated as a percentage of the revenues, net income, or profit
2-29 of the health maintenance organization, if that method of
2-30 compensation is the sole basis for subjecting that person or the
2-31 employee of the person to this section.
2-32 (c) The term "sub-agent" means any person, except a regular
2-33 salaried officer or employee of a legal reserve life insurance
2-34 company, of a health maintenance organization, or of an [a licensed
2-35 life insurance] agent, engaging in activities defined in Paragraph
2-36 1(b), above, who acts for or on behalf of an [a licensed life
2-37 insurance] agent in the solicitation of, negotiation for, or
2-38 procurement, [or] making, or effectuation of, or collection of
2-39 premiums or charges on, an insurance or annuity contract or health
2-40 maintenance organization membership, whether or not the sub-agent
2-41 [he] is designated by such agent as a sub-agent or a solicitor or
2-42 by any other title. Each such sub-agent shall be deemed to be an
2-43 [a life insurance] agent, as defined above, and wherever, in
2-44 succeeding Sections of this Act, the term "[life insurance] agent"
2-45 is used, it shall include sub-agents, whether or not they are
2-46 specifically mentioned. Each such sub-agent shall be subject to
2-47 the provisions of this Act to the same extent as an [a life
2-48 insurance] agent.
2-49 (d) The terms "insurance or annuity contract," "insurance
2-50 contract," and "annuity contract," shall mean a contract or policy
2-51 of life, health or accident (including hospitalization) insurance,
2-52 or an annuity contract, issued by any legal reserve company or
2-53 insurer engaged in the business of writing life, health or accident
2-54 (including hospitalization) insurance, or annuity contracts.
2-55 (d-1) The term "membership," when used in this Act, means a
2-56 membership in a health maintenance organization.
2-57 (e) The term "excess risk" shall mean all or any portion of
2-58 a life, health or accident insurance risk or contract of annuity
2-59 for which application is made through an agent, and which exceeds
2-60 the amount of insurance or annuity which will be provided by the
2-61 insurer for which such agent is licensed.
2-62 (f) The term "rejected risk" shall mean a life, health or
2-63 accident insurance risk or annuity contract for which application
2-64 has been made through an agent and which insurance or annuity
2-65 contract is declined by the insurer for which such agent is
2-66 licensed.
2-67 (g) The terms "Industrial" and "weekly premium life
2-68 insurance on a debit basis" refer to the type of life insurance
2-69 defined in Article 3.52 of the Texas Insurance Code.
3-1 SECTION 2. Sections 3(a) and (b), Chapter 213, Acts of the
3-2 54th Legislature, Regular Session, 1955 (Article 21.07-1, Vernon's
3-3 Texas Insurance Code), are amended to read as follows:
3-4 (a) No person or corporation shall act as an [a life
3-5 insurance] agent within this State until the person or corporation
3-6 has [he or it shall have] procured a license as required by the
3-7 laws of this State.
3-8 (b) No insurer or [licensed life insurance] agent doing
3-9 business in this State shall pay directly or indirectly any
3-10 commission, or other valuable consideration, to any person or
3-11 corporation for services as an [a life insurance] agent within this
3-12 State, unless such person or corporation shall hold a currently
3-13 valid license to act as an [a life insurance] agent as required by
3-14 the laws of this State; nor shall any person or corporation, other
3-15 than a duly licensed [life insurance] agent, accept any such
3-16 commission or other valuable consideration; provided, however, that
3-17 the provisions of this Section shall not prevent the payment or
3-18 receipt of renewal or other deferred commissions to or by any
3-19 person solely because such person or corporation has ceased to hold
3-20 a license to act as an [a life insurance] agent.
3-21 SECTION 3. Sections 4(a), (b), (d), (e), and (f), Chapter
3-22 213, Acts of the 54th Legislature, Regular Session, 1955 (Article
3-23 21.07-1, Vernon's Texas Insurance Code), are amended to read as
3-24 follows:
3-25 (a) Each applicant for a license to act as an [a life
3-26 insurance] agent within this State shall file with the Commissioner
3-27 a completed written application on forms furnished by the
3-28 Commissioner. The application shall be signed and duly sworn by
3-29 the applicant. The prescribed form shall require the applicant to
3-30 state the applicant's full name; residence; age; occupation and
3-31 place of business for five years preceding date of the application;
3-32 whether the applicant has ever held a license in any state to
3-33 solicit life insurance[,] or any other insurance or to solicit
3-34 memberships [in any State]; whether the applicant has been refused,
3-35 or has had suspended or revoked a license to solicit life
3-36 insurance[,] or any other insurance or to solicit memberships in
3-37 any State; what insurance or health care plan experience, if any,
3-38 the applicant has had; what instruction in life insurance and in
3-39 the [insurance] laws of this State governing insurance and health
3-40 maintenance organizations the applicant has had or expects to have;
3-41 whether any insurer, health maintenance organization, or general
3-42 agent claims the applicant is indebted under any agency contract,
3-43 and if so, the name of the claimant, the nature of the claim and
3-44 the applicant's defense thereto; whether the applicant has had an
3-45 agency contract cancelled and, if so, when, by what company, health
3-46 maintenance organization, or general agent and the reasons
3-47 therefor; whether the applicant will devote all or part of the
3-48 applicant's efforts to acting as an [a life insurance] agent, and,
3-49 if part only, how much time the applicant will devote to such work,
3-50 and in what other business or businesses the applicant is engaged
3-51 or employed; and such other information pertinent to the licensing
3-52 of such agent as the Commissioner in the Commissioner's discretion
3-53 may prescribe. It is not intended that the Commissioner shall be
3-54 authorized to deny a license to an applicant on the sole ground
3-55 that the applicant will act only part time as an [a life insurance]
3-56 agent.
3-57 (b) The application shall be accompanied by a certificate on
3-58 forms furnished by the Commissioner and signed by an officer or
3-59 properly authorized representative of the life insurance company or
3-60 health maintenance organization that the applicant proposes to
3-61 represent, stating that the applicant has completed the educational
3-62 requirements as provided in this Act, and that the insurer or
3-63 health maintenance organization desires that the applicant be
3-64 licensed as an [a life insurance] agent to represent it in this
3-65 State.
3-66 (d) The Commissioner [Board] shall issue a license to an
3-67 individual or to a general partnership engaging in the business of
3-68 insurance or acting as an agent for a health maintenance
3-69 organization. Each partner in the partnership must be licensed
4-1 individually as an agent under this Act.
4-2 (e) The Commissioner shall issue a license to a corporation
4-3 if the Commissioner finds:
4-4 (1) That the corporation is a Texas corporation
4-5 organized or existing under the Texas Business Corporation Act or
4-6 the Texas Professional Corporation Act (Article 1528e, Vernon's
4-7 Texas Civil Statutes) having its principal place of business in the
4-8 State of Texas and having as one of its purposes the authority to
4-9 act as agent under this Act;
4-10 (2) That every officer, director, and shareholder of
4-11 the corporation is individually licensed as an agent under the
4-12 provisions of this Act, or that every officer and director of the
4-13 corporation is individually licensed under this Act, that the
4-14 corporation is a wholly owned subsidiary of a parent corporation
4-15 that is licensed under this Act, and that every shareholder of the
4-16 parent corporation is individually licensed under this Act; and
4-17 (3) That such corporation will have the ability to pay
4-18 any sums up to $25,000 which it might become legally obligated to
4-19 pay on account of any claim made against it by any customer and
4-20 caused by any negligent act, error, or omission of the corporation
4-21 or any person for whose acts the corporation is legally liable in
4-22 the conduct of its business as under this Act. The term "customer"
4-23 as used herein shall mean any person, firm, or corporation to whom
4-24 such corporation sells or attempts to sell a policy of insurance or
4-25 membership or from whom such corporation accepts an application for
4-26 insurance or membership. Such ability shall be proven in one of
4-27 the following ways:
4-28 (A) An errors and omissions policy insuring such
4-29 corporation against errors and omissions in at least the sum of
4-30 $100,000 with no more than a $10,000 deductible feature issued by
4-31 an insurance company licensed to do business in the State of Texas
4-32 or, if a policy cannot be obtained from a company licensed to do
4-33 business in Texas, a policy issued by a company not licensed to do
4-34 business in Texas on filing an affidavit with the Commissioner
4-35 [State Board of Insurance] stating the inability to obtain coverage
4-36 and receiving the Commissioner's [Board's] approval; or
4-37 (B) A bond executed by such corporation as
4-38 principal and a surety company authorized to do business in this
4-39 State, as surety, in the principal sum of $25,000, payable to the
4-40 Texas Department [State Board] of Insurance for the use and benefit
4-41 of customers of such corporation, conditioned that such corporation
4-42 shall pay any final judgment recovered against it by any customer;
4-43 or
4-44 (C) A deposit of cash or securities of the class
4-45 authorized by Articles 2.08 and 2.10 of the Insurance Code, having
4-46 a fair market value of $25,000 with the Comptroller [State
4-47 Treasurer]. The Comptroller [State Treasurer] is hereby authorized
4-48 and directed to accept and receive such deposit and hold it
4-49 exclusively for the protection of any customer of such corporation
4-50 recovering a final judgment against such corporation. Such deposit
4-51 may be withdrawn only upon filing with the Commissioner
4-52 satisfactory evidence that the corporation has withdrawn from
4-53 business and has no unsecured liabilities outstanding, or that such
4-54 corporation has provided for the protection of its customers by
4-55 furnishing an errors and omissions policy or a bond as provided.
4-56 Securities so deposited may be exchanged from time to time for
4-57 other qualified securities.
4-58 A binding commitment to issue such a policy or bond, or the
4-59 tender of such securities, shall be sufficient in connection with
4-60 any application for license.
4-61 Nothing contained herein shall be construed to permit any
4-62 unlicensed employee or agent of any corporation to perform any act
4-63 of an agent under this Act without obtaining a license.
4-64 If at any time, any corporation holding a license under this
4-65 Act does not maintain the qualifications necessary to obtain a
4-66 license, the license of such corporation to act as an agent shall
4-67 be cancelled or denied in accordance with the provisions of
4-68 Sections 12 and 13 of this Act; provided, however, that should any
4-69 person who is not an agent licensed under this Act acquire shares
5-1 in such a corporation by devise or descent, they shall have a
5-2 period of 90 days from date of acquisition within which to obtain a
5-3 license as an agent or to dispose of the shares to an agent
5-4 licensed under this Act.
5-5 Should such an unlicensed person acquire shares in such a
5-6 corporation and not dispose of them within said period of 90 days
5-7 to a licensed agent, then they must be purchased by the corporation
5-8 for their book value, that is, the value of said shares of stock as
5-9 reflected by the regular books and records of said corporation as
5-10 of the date of the acquisition of said shares by said unlicensed
5-11 person. Should the corporation fail or refuse to so purchase such
5-12 shares, its license shall be cancelled.
5-13 Any such corporation shall have the power to redeem the
5-14 shares of any shareholder, or the shares of a deceased shareholder,
5-15 upon such terms as may be agreed upon by the board of directors and
5-16 such shareholder or such shareholder's personal representative, or
5-17 at such price and upon such terms as may be provided in the
5-18 articles of incorporation, the bylaws, or an existing contract
5-19 entered into between the shareholders of the corporation.
5-20 Each corporation licensed as an agent under this Act shall
5-21 file, under oath, a list of the names and addresses of all of its
5-22 officers, directors, and shareholders with its application for
5-23 renewal license.
5-24 Each corporation licensed as an agent under this Act shall
5-25 notify the Texas Department [State Board] of Insurance upon any
5-26 change in its officers, directors, or shareholders not later than
5-27 the 30th day after the date on which the change became effective.
5-28 Except as provided by Subdivision (2) of this subsection, a
5-29 corporation may not own any interest in another corporation
5-30 licensed under this Act, and each owner of an interest in a
5-31 corporation licensed under this Act shall be a natural person who
5-32 holds a valid license issued under this Act.
5-33 No association or any legal entity of any nature, other than
5-34 an individual person, general partnership, or corporation, may be
5-35 licensed as an [a life insurance] agent.
5-36 (f) Each applicant, prior to sitting for the written
5-37 examination as provided for in Section 5 of this Act, shall
5-38 complete, under the supervision of such sponsoring insurer or
5-39 health maintenance organization, an educational program that shall
5-40 include:
5-41 (1) such texts as may be prescribed by the
5-42 Commissioner of Insurance on the recommendation of the Advisory
5-43 Board as provided in Subsection (c) of Section 5 of this Act; and
5-44 (2) materials that will provide the applicant with the
5-45 basic knowledge of:
5-46 (A) the broad principles of insurance,
5-47 licensing, and regulatory laws of this State;
5-48 (B) principles related to medicare supplement
5-49 insurance; [and]
5-50 (C) principles related to regulation of health
5-51 maintenance organizations and membership;
5-52 (D) the obligations and duties of an [a life
5-53 insurance] agent; and
5-54 (E) principles related to small employer
5-55 insurance under Chapter 26, Insurance Code.
5-56 SECTION 4. Section 4A, Chapter 213, Acts of the 54th
5-57 Legislature, Regular Session, 1955 (Article 21.07-1, Vernon's Texas
5-58 Insurance Code), is amended to read as follows:
5-59 Sec. 4A. PERSONS OTHER THAN [LICENSED LIFE] AGENTS WHO MAY
5-60 SHARE IN PROFITS OF AN [A LIFE] AGENT. (a) On the death of an [a
5-61 licensed life] agent who is a member of an agency partnership, the
5-62 surviving spouse and children, if any, of the deceased partner, or
5-63 a trust for the surviving spouse and children, may share in the
5-64 profits of the agency partnership during the lifetime of the
5-65 surviving spouse or children, as provided by a written partnership
5-66 agreement, or in the absence of any written agreement, as agreed by
5-67 the surviving partner or partners and the surviving spouse, the
5-68 trustee, and the legal representative of the surviving children.
5-69 The surviving spouse and any surviving children or trusts are not
6-1 required to qualify as [life] agents to participate in the profits
6-2 but may not perform any act of an [a life] agent on behalf of the
6-3 partnership without having qualified as an [a life] agent. An [A
6-4 licensed life] agent who is a member of an agency partnership may,
6-5 with the approval of the other members of the partnership, transfer
6-6 an interest in the agency partnership to the partner's [his]
6-7 children or a trust for the children and may operate that interest
6-8 for their use and benefit. The children or trusts may share in the
6-9 profits of the agency partnership. The children or trusts are not
6-10 required to qualify as an [a life] agent to participate in the
6-11 profits but may not perform any act of an [a life] agent on behalf
6-12 of the partnership without having qualified as an [a life] agent.
6-13 (b) On the death of an [a licensed life] agent, who is a
6-14 sole proprietorship, unless otherwise provided by the will admitted
6-15 to probate of the deceased agent, the surviving spouse and
6-16 children, if any, of the deceased agent, or a trust for the
6-17 surviving spouse and children, may share in the profits of the
6-18 continuance of the agency business of the deceased agent, if the
6-19 agency business is continued by an [a licensed life] agent. The
6-20 surviving spouse, trusts, or children may participate in the
6-21 profits during the lifetime of the surviving spouse and children.
6-22 The surviving spouse, trusts, or children are not required to
6-23 qualify as [life] agents in order to participate in the profits of
6-24 the agency but may not perform any act of an [a life] agent in
6-25 connection with the continuance of the agency business without
6-26 first having been licensed as an [a life] agent. An [A licensed
6-27 life] agent who is a sole proprietorship may transfer an interest
6-28 in his agency to the sole proprietor's [his] children, or a trust
6-29 for the [his] children, and may operate that interest for their use
6-30 and benefit. The children may share in the profits of the [life]
6-31 agency during their lifetime, and during that time are not required
6-32 to qualify as an [a life] agent in order to participate in those
6-33 profits but may not perform any act of an [a life] agent in
6-34 connection with the agency business without first being licensed as
6-35 an [a life] agent.
6-36 (c) On the death of a shareholder in a corporate [licensed
6-37 life] agency, the surviving spouse and children, if any, of the
6-38 deceased shareholder, or a trust for the surviving spouse and
6-39 children may share in the profits of the corporate agency during
6-40 the lifetime of the surviving spouse or children, if and as
6-41 provided by a contract entered into by and between all of the
6-42 shareholders and the corporation. The surviving spouse, surviving
6-43 children, or trusts are not required to individually qualify as an
6-44 [a life] agent in order to participate in those profits but may not
6-45 perform any act of an [a life] agent on behalf of the corporation
6-46 without having qualified as an [a life] agent. A shareholder in a
6-47 corporate [licensed life] agency may, if provided by a contract
6-48 entered into by and between all of the shareholders and the
6-49 corporation, transfer an interest in the agency to the
6-50 shareholder's [his] children or a trust for the [his] children, and
6-51 the children or trusts may share in the profits of the agency to
6-52 the extent of the interest during their lifetime. The children or
6-53 trusts are not required to qualify as an [a life] agent to
6-54 participate in the profits but may not perform any act of an [a
6-55 life] agent on behalf of the corporation without having qualified
6-56 as an [a life] agent.
6-57 SECTION 5. Sections 5(a) and (c), Chapter 213, Acts of the
6-58 54th Legislature, Regular Session, 1955 (Article 21.07-1, Vernon's
6-59 Texas Insurance Code), are amended to read as follows:
6-60 (a) Each prospective applicant for a license to act as an [a
6-61 life insurance] agent within this State shall submit to a personal
6-62 written examination administered in the English or Spanish
6-63 language, as prescribed by the Texas Department [State Board] of
6-64 Insurance, to determine the applicant's competence with respect to
6-65 insurance and annuity contracts, including medicare supplement
6-66 contracts, and memberships, and the applicant's familiarity with
6-67 the pertinent provisions of the laws of this State and the
6-68 obligations and duties of an [a life insurance] agent, and shall
6-69 pass the same to the satisfaction of the Texas Department [State
7-1 Board] of Insurance. A nonrefundable examination fee, in an amount
7-2 determined by the Commissioner [Board] but not more than $20, must
7-3 accompany the application to take the examination. The department
7-4 shall charge the fee each time the examination is taken. The
7-5 department shall give certifications of a passing score to those
7-6 applicants that obtain such a score. No written examination shall
7-7 be required of:
7-8 (1) An applicant for the renewal of a license issued
7-9 under [by the State Board of Insurance pursuant to] Article 21.07,
7-10 Texas Insurance Code, 1951, which is currently in force at the time
7-11 of the effective date of this Act;
7-12 (2) An applicant whose license as an [a life
7-13 insurance] agent expired less than one year prior to the date of
7-14 application may, in the discretion of the Texas Department [State
7-15 Board] of Insurance, be issued a license without written
7-16 examination;
7-17 (3) A person who holds the designation Chartered Life
7-18 Underwriter (CLU);
7-19 (4) An applicant that is a partnership or corporation.
7-20 (c) The Commissioner shall appoint an Advisory Board
7-21 consisting of eight persons of whom two shall be holders of
7-22 licenses issued under this Article, one [two] shall be employed by
7-23 a legal reserve life insurance company and familiar with the
7-24 operations of legal reserve life insurance companies, one shall be
7-25 employed by a health maintenance organization and familiar with the
7-26 operations of health maintenance organizations, two shall be
7-27 general agents and managers, and two shall be citizens of the State
7-28 of Texas who are neither agents, general managers, nor employees of
7-29 legal reserve life insurance companies, which shall make
7-30 recommendations to the Commissioner [him] with respect to the
7-31 scope, type, and conduct of written examinations and the times and
7-32 places within the State where they shall be held. This Advisory
7-33 Board shall make such recommendations not less frequently than once
7-34 every four years. The members of the Advisory Board shall serve
7-35 without pay but shall be reimbursed for their reasonable expenses
7-36 in attending meetings of the Advisory Board.
7-37 SECTION 6. Section 6, Chapter 213, Acts of the 54th
7-38 Legislature, Regular Session, 1955 (Article 21.07-1, Vernon's Texas
7-39 Insurance Code), is amended to read as follows:
7-40 Sec. 6. ISSUANCE OR DENIAL OF LICENSE. After the applicant,
7-41 if required to do so, has passed the written examination to the
7-42 satisfaction of the Commissioner, a license shall be issued
7-43 forthwith. If the license is denied for any of the reasons set
7-44 forth in Section 12 of this Act, the Commissioner shall notify the
7-45 applicant and the insurer or health maintenance organization in
7-46 writing that the license will not be issued to the applicant.
7-47 SECTION 7. Sections 7(a) and (b), Chapter 213, Acts of the
7-48 54th Legislature, Regular Session, 1955 (Article 21.07-1, Vernon's
7-49 Texas Insurance Code), are amended to read as follows:
7-50 (a) A person not resident in this State may be licensed as
7-51 an [a life insurance] agent upon compliance with the provisions of
7-52 this Act, provided that the State in which such person resides will
7-53 accord the same privilege to a citizen of this State.
7-54 (b) The [Life Insurance] Commissioner is further authorized
7-55 to enter into reciprocal agreements with the appropriate official
7-56 or any other State waiving the written examination of any applicant
7-57 resident in such other State, provided:
7-58 (1) That a written examination is required of
7-59 applicants for an [a life insurance] agent's license in such other
7-60 State;
7-61 (2) That the appropriate official of such other State
7-62 certifies that the applicant holds a currently valid license as an
7-63 [a life insurance] agent in such other State and either passed such
7-64 written examination or was the holder of an [a life insurance]
7-65 agent's license prior to the time such written examination was
7-66 required;
7-67 (3) That the applicant has no place of business within
7-68 this State in the transaction of business as an [a life insurance]
7-69 agent;
8-1 (4) That in such other State, a resident of this State
8-2 is privileged to procure an [a life insurance] agent's license upon
8-3 the foregoing conditions and without discrimination as to fees or
8-4 otherwise in favor of the residents of such other State.
8-5 SECTION 8. Section 8, Chapter 213, Acts of the 54th
8-6 Legislature, Regular Session, 1955 (Article 21.07-1, Vernon's Texas
8-7 Insurance Code), is amended to read as follows:
8-8 Sec. 8. AGENT MAY BE LICENSED TO REPRESENT ADDITIONAL
8-9 INSURERS OR HEALTH MAINTENANCE ORGANIZATIONS. (a) Any [life
8-10 insurance] agent licensed in this state may represent and act as an
8-11 [a life insurance] agent for more than one life insurance company
8-12 or health maintenance organization at any time while the agent's
8-13 license is in force, if the agent so desires. Any [such life
8-14 insurance] agent and the company or health maintenance organization
8-15 involved must give notice to the Commissioner of any additional
8-16 appointment or appointments authorizing the agent to act as an [a
8-17 life insurance] agent for an additional life insurance company or
8-18 companies or health maintenance organization or organizations.
8-19 Such notice must be accompanied by a certificate from each insurer
8-20 or health maintenance organization to be named in each additional
8-21 appointment, and must state that said insurer or organization
8-22 desires to appoint the applicant as its agent. This notice shall
8-23 also contain such other information as the Commissioner may
8-24 require. The agent shall be required to pay a nonrefundable fee in
8-25 an amount not to exceed $16 as determined by the Texas Department
8-26 [State Board] of Insurance for each additional appointment applied
8-27 for, which fee shall accompany the notice. If approval of the
8-28 additional appointment is not received from the Commissioner before
8-29 the eighth day after the date on which the completed application
8-30 and fee were received by the Commissioner, the agent and the
8-31 insurance carrier or health maintenance organization, in the
8-32 absence of notice of disapproval, may assume that the Commissioner
8-33 approves the application, and the agent may act for the insurance
8-34 carrier or health maintenance organization.
8-35 (b) Any [life insurance] agent licensed in this state may
8-36 solicit, negotiate, or effect applications for policies of life
8-37 insurance or place excess or rejected risks with any legal reserve
8-38 life insurance company lawfully doing business in this state other
8-39 than an insurer such agent is licensed to represent, if such agent
8-40 requests appointment with such company simultaneously with the
8-41 submission to such company of the application for insurance
8-42 solicited by him or it. However, no commissions shall be paid by
8-43 such company to the agent until such time as notice of appointment
8-44 with respect to such agent has been given to the Commissioner
8-45 pursuant to the provisions of Subsection (a) of this section.
8-46 (c) No insurer, health maintenance organization, general
8-47 agent, or agent, directly or through any representative, shall
8-48 furnish to any agent any blank forms, applications, stationery, or
8-49 other supplies to be used in soliciting, negotiating, or effecting
8-50 contracts of insurance or memberships on its behalf unless such
8-51 blank forms, applications, stationery, or other supplies relate to
8-52 a class of business with respect to which such agent is a licensed
8-53 agent, whether for that insurer or health maintenance organization
8-54 or another insurer or health maintenance organization.
8-55 (d) Any insurer, health maintenance organization, general
8-56 agent, or agent who furnishes any of the supplies specified in
8-57 Subsection (c) of this section to any agent or prospective agent
8-58 not licensed to represent the insurer or health maintenance
8-59 organization and who accepts from or writes any insurance business
8-60 for such agent or agency shall be subject to civil liability to any
8-61 insured of such insurer to the same extent and in the same manner
8-62 as if such agent or prospective agent had been appointed, licensed,
8-63 or authorized by the insurer, health maintenance organization, or
8-64 such agent to act in the insurer's, health maintenance
8-65 organization's, or agent's [its or his] behalf.
8-66 (e) An appointment made under this section to authorize an
8-67 agent to act as an agent for an insurance carrier or health
8-68 maintenance organization continues in effect without the necessity
8-69 of renewal until it is terminated and withdrawn by the insurance
9-1 carrier or health maintenance organization as provided by this
9-2 section or is otherwise terminated in accordance with this Act.
9-3 Each renewal license issued to the agent authorizes the agent to
9-4 represent and act for the insurance carriers or health maintenance
9-5 organizations for which the agent holds an appointment until the
9-6 appointment is terminated, and that agent is considered to be the
9-7 agent of the appointing insurance carriers or health maintenance
9-8 organizations for the purposes of this Act.
9-9 SECTION 9. Section 9(a), Chapter 213, Acts of the 54th
9-10 Legislature, Regular Session, 1955 (Article 21.07-1, Vernon's Texas
9-11 Insurance Code), is amended to read as follows:
9-12 (a) Except as may be provided by a staggered renewal system
9-13 adopted under Article 21.01-2, Insurance Code, each license issued
9-14 to an [a life insurance] agent shall expire two years following the
9-15 date of issue, unless prior thereto it is suspended or revoked by
9-16 the Commissioner.
9-17 SECTION 10. Sections 10(a), (b), (c), (e), and (f), Chapter
9-18 213, Acts of the 54th Legislature, Regular Session, 1955 (Article
9-19 21.07-1, Vernon's Texas Insurance Code), are amended to read as
9-20 follows:
9-21 (a) The department may issue a temporary [life insurance]
9-22 agent's license, effective for ninety days, without requiring the
9-23 applicant to pass a written examination, as follows:
9-24 (1) To an applicant who has fulfilled the provisions
9-25 of Section 4 of this Act where such applicant will actually collect
9-26 the premiums on industrial life insurance contracts during the
9-27 period of such temporary license; provided, however, that if such
9-28 temporary license is not received from the department within seven
9-29 days from the date the application was sent to the department, the
9-30 company may assume that the temporary license will be issued in due
9-31 course and the applicant may proceed to act as an agent. For the
9-32 purpose of this subsection an industrial life insurance contract
9-33 shall mean a contract for which the premiums are payable at monthly
9-34 or more frequent intervals directly by the owner thereof, or by a
9-35 person representing the owner, to a representative of the company;
9-36 (2) To any person who is being considered for
9-37 appointment as an agent by an insurer or health maintenance
9-38 organization immediately upon receipt by the department of an
9-39 application executed by such person in the form required by Section
9-40 4 of this Act, together with a nonrefundable filing fee of $100 and
9-41 a certificate signed by an officer or properly authorized
9-42 representative of such insurer or health maintenance organization
9-43 stating:
9-44 (A) that such person is being considered for
9-45 appointment by such insurer or health maintenance organization as
9-46 its full-time agent;
9-47 (B) that such insurer or health maintenance
9-48 organization desires that such person be issued a temporary
9-49 license; provided that if such temporary license shall not have
9-50 been received from the department within seven days from the date
9-51 on which the application and certificate were delivered to or
9-52 mailed to the department the insurer or health maintenance
9-53 organization may assume that such temporary license will be issued
9-54 in due course and the applicant may proceed to act as an agent;
9-55 provided, however, that no temporary license shall be renewable nor
9-56 issued more than once in a consecutive six months period to the
9-57 same applicant; and provided further, that no temporary license
9-58 shall be granted to any person who does not intend to apply for a
9-59 license to sell [life] insurance or memberships to the public
9-60 generally and it is intended to prohibit the use of a temporary
9-61 license to obtain commissions from sales to persons of family
9-62 employment or business relationships to the temporary licensee, to
9-63 accomplish which purposes an insurer or health maintenance
9-64 organization is hereby prohibited from knowingly paying directly or
9-65 indirectly to the holder of a temporary license under this
9-66 subsection any commissions on the sale of a contract of insurance
9-67 or membership covering [on the life of] the temporary licensee, [or
9-68 on the life of] any person related to the temporary licensee [him]
9-69 by blood or marriage, [or on the life of] any person who is or has
10-1 been during the past six months the temporary licensee's [his]
10-2 employer either as an individual or as a member of a partnership,
10-3 association, firm or corporation, or [on the life of] any person
10-4 who is or who has been during the past six months his employee, and
10-5 the holder of a temporary license is hereby prohibited from
10-6 receiving or accepting commissions on the sale of a contract of
10-7 insurance or membership to any person included in the foregoing
10-8 classes of relationship;
10-9 (C) that a person who has been issued a
10-10 temporary license under this subsection and is acting under the
10-11 authority of the temporary license may not engage in any insurance
10-12 solicitation, sale, or other agency transaction that results in or
10-13 is intended to result in the replacement of any existing individual
10-14 life insurance policy form or annuity contract that is in force or
10-15 receive, directly or indirectly, any commission or other
10-16 compensation that may or does result from such solicitation, sale,
10-17 or other agency transaction; and that any person holding a
10-18 permanent license may not circumvent or attempt to circumvent the
10-19 intent of this subdivision by acting for or with a person holding
10-20 such a temporary license. As used in this subdivision,
10-21 "replacement" means any transaction in which a new life insurance
10-22 or annuity contract is to be purchased, and it is known or should
10-23 be known to the temporary agent that by reason of the solicitation,
10-24 sale, or other transaction the existing life insurance or annuity
10-25 contract has been or is to be:
10-26 (i) lapsed, forfeited, surrendered, or
10-27 otherwise terminated;
10-28 (ii) converted to reduced paid-up
10-29 insurance, continued as extended term insurance, or otherwise
10-30 reduced in value by the use of nonforfeiture benefits or other
10-31 policy values;
10-32 (iii) amended so as to effect either a
10-33 reduction in benefits or in the term for which coverage would
10-34 otherwise remain in force or for which benefits would be paid;
10-35 (iv) reissued with any reduction in cash
10-36 value; or
10-37 (v) pledged as collateral or subjected to
10-38 borrowing, whether in a single loan or under a schedule of
10-39 borrowing over a period of time for amounts in the aggregate
10-40 exceeding 25 percent of the loan value set forth in the policy; and
10-41 (D) that such person will complete, under such
10-42 insurer's or health maintenance organization's supervision, at
10-43 least forty hours of training as prescribed by Subsection (c) of
10-44 this Section within fourteen days from the date on which the
10-45 application and certificate were delivered or mailed to the
10-46 department.
10-47 (b) The department shall have the authority to cancel,
10-48 suspend, or revoke the temporary appointment powers of any life
10-49 insurance company or health maintenance organization, if, after
10-50 notice and hearing, the commissioner [he] finds that such company
10-51 or health maintenance organization has abused such temporary
10-52 appointment powers. In considering such abuse, the department may
10-53 consider, but is not limited to, the number of temporary
10-54 appointments made by a company as provided by Subsection (f) of
10-55 this Section, the percentage of appointees sitting for the
10-56 examination as [life insurance] agents under this Article as it may
10-57 be in violation of Subsection (e) of this Section, and the number
10-58 of appointees successfully passing said examination in accordance
10-59 with Subsection (e). Appeals from the department's decision shall
10-60 be made in accordance with Section 13 hereof.
10-61 (c) At least forty hours of training must be administered to
10-62 any applicant for a temporary license as herein defined within
10-63 fourteen days from the date on which the application and
10-64 certificate were delivered or mailed to the department. Of this
10-65 forty-hour requirement, ten hours must be taught in a classroom
10-66 setting, including but not limited to an accredited college,
10-67 university, junior or community college, business school, or
10-68 private institute or classes sponsored by the insurer or health
10-69 maintenance organization and especially established for this
11-1 purpose. Such training program shall be constructed so as to
11-2 provide an applicant with the basic knowledge of:
11-3 (1) the broad principles of insurance, licensing, and
11-4 regulatory laws of this State; [and]
11-5 (2) the broad principles of health maintenance
11-6 organizations, membership, and related licensing and regulating
11-7 laws; and
11-8 (3) the obligations and duties of an [a life
11-9 insurance] agent.
11-10 (e) Each insurer is responsible for requiring that not less
11-11 than 70 percent of such insurer's or health maintenance
11-12 organization's applicants for temporary licenses sit for an
11-13 examination during any two consecutive calendar quarters. At least
11-14 50 percent of those applicants sitting for the examination must
11-15 pass during such a period.
11-16 (f) Each insurer or health maintenance organization may make
11-17 no more than two hundred and fifty temporary licensee appointments
11-18 during a calendar year under Subsection (a)(2) of this Section.
11-19 SECTION 11. Section 11(a), Chapter 213, Acts of the 54th
11-20 Legislature, Regular Session, 1955 (Article 21.07-1, Vernon's Texas
11-21 Insurance Code), is amended to read as follows:
11-22 (a) Each life insurance company and health maintenance
11-23 organization shall, upon termination of the appointment of any
11-24 [life insurance] agent, immediately file with the Commissioner a
11-25 statement of the facts relative to the termination of the
11-26 appointment and the date and cause thereof. The Commissioner shall
11-27 thereupon terminate the license of such agent to represent such
11-28 insurer or health maintenance organization in this State.
11-29 SECTION 12. Section 12(a), Chapter 213, Acts of the 54th
11-30 Legislature, Regular Session, 1955 (Article 21.07-1, Vernon's Texas
11-31 Insurance Code), is amended to read as follows:
11-32 (a) The commissioner may discipline a license holder or deny
11-33 an application under Section 5, Article 21.01-2, Insurance Code, if
11-34 the Commissioner finds that the applicant, individually or through
11-35 any officer, director, or shareholder, for, or holder of such
11-36 license:
11-37 (1) Has wilfully violated any provision of the
11-38 insurance laws of this State;
11-39 (2) Has intentionally made a material misstatement in
11-40 the application for such license;
11-41 (3) Has obtained, or attempted to obtain, such license
11-42 by fraud or misrepresentation;
11-43 (4) Has misappropriated or converted to the
11-44 applicant's or licensee's own use or illegally withheld money
11-45 belonging to an insurer or health maintenance organization or an
11-46 insured or beneficiary;
11-47 (5) Has been guilty of fraudulent or dishonest
11-48 practices;
11-49 (6) Has materially misrepresented the terms and
11-50 conditions of [life] insurance policies, [or] contracts, or
11-51 memberships;
11-52 (7) Has made or issued, or caused to be made or
11-53 issued, any statement misrepresenting or making incomplete
11-54 comparisons regarding the terms or conditions of any insurance or
11-55 annuity contract legally issued by any insurer or membership
11-56 legally issued by a health maintenance organization, for the
11-57 purpose of inducing or attempting to induce the owner of such
11-58 contract or member to forfeit or surrender such contract or
11-59 membership or allow it to lapse for the purpose of replacing such
11-60 contract or membership with another;
11-61 (8) Has obtained, or attempted to obtain such license,
11-62 not for the purpose of holding the license holder or applicant
11-63 [himself or itself] out to the general public as an [a life
11-64 insurance] agent, but primarily for the purpose of soliciting,
11-65 negotiating or procuring [life] insurance or annuity contracts or
11-66 memberships covering the applicant or licensee, members of the
11-67 applicant's or licensee's family, or the applicant's or licensee's
11-68 business associates;
11-69 (9) Is convicted of a felony; or
12-1 (10) Is guilty of rebating an insurance premium or
12-2 commission to an insured.
12-3 SECTION 13. Section 14, Chapter 213, Acts of the 54th
12-4 Legislature, Regular Session, 1955 (Article 21.07-1, Vernon's Texas
12-5 Insurance Code), is amended to read as follows:
12-6 Sec. 14. PENALTY. Any person or officer, director, or
12-7 shareholder of a corporation required to be licensed by this Act
12-8 who individually, or as an officer or employee of a legal reserve
12-9 life insurance company, health maintenance organization, or other
12-10 corporation, violates any of the provisions of this Act shall, in
12-11 addition to any other penalty specifically provided, be guilty of a
12-12 misdemeanor and, upon conviction, shall be fined not more than
12-13 $500.00 or imprisoned not more than six months, or both, each such
12-14 violation being a separate offense hereunder. In addition, if such
12-15 offender or corporation of which he is an officer, director, or
12-16 shareholder holds a license as an [a life insurance] agent, such
12-17 license shall automatically expire upon such conviction.
12-18 SECTION 14. Sections 16(a), (b), (c), (d), (h), (i), and
12-19 (j), Chapter 213, Acts of the 54th Legislature, Regular Session,
12-20 1955 (Article 21.07-1, Vernon's Texas Insurance Code), are amended
12-21 to read as follows:
12-22 (a) In this section, "accident and health [insurance] agent"
12-23 means any person or corporation that is an authorized agent of a
12-24 legal reserve life insurance company or health maintenance
12-25 organization and who acts as such agent only in the solicitation
12-26 of, negotiation for, procurement of, or collection of premiums on
12-27 an accident and health insurance contract with a legal reserve life
12-28 insurance company or who acts only as described by Section 1(a-1)
12-29 of this Act. The term[, but] does not include:
12-30 (1) a regular salaried officer or employee of a legal
12-31 reserve life insurance company, or of a licensed life or accident
12-32 and health insurance agent, who devotes substantially all of the
12-33 officer's or employee's [his or her] time to activities other than
12-34 the solicitation of applications for insurance contracts and
12-35 receives no commission or other compensation directly dependent
12-36 upon the business obtained and who does not solicit or accept from
12-37 the public applications for insurance contracts;
12-38 (1-A) any regular salaried officer or employee of a
12-39 health maintenance organization or of a licensed health maintenance
12-40 organization agent, who devotes substantially all of the officer's
12-41 or employee's time to activities other than the solicitation of
12-42 applications for health maintenance organization membership and
12-43 receives no commission or other compensation directly dependent
12-44 upon the business obtained and who does not solicit or accept from
12-45 the public applications for health maintenance organization
12-46 membership;
12-47 (2) employers or their officers or employees, or the
12-48 trustees of any employee benefit plan, to the extent that those
12-49 employers, officers, employees, or trustees are engaged in the
12-50 administration or operation of any program of employee benefits
12-51 involving the use of insurance issued by a legal reserve life
12-52 insurance company or memberships issued by a health maintenance
12-53 organization, provided that those employers, officers, employees,
12-54 or trustees are not in any manner compensated directly or
12-55 indirectly by the legal reserve life insurance company or health
12-56 maintenance organization issuing the insurance contracts or
12-57 memberships;
12-58 (3) banks or their officers and employees to the
12-59 extent that the banks, or their officers, and employees collect and
12-60 remit premiums or charges by charging the premiums or charges
12-61 against the account of a depositor on the orders of the depositor;
12-62 (4) a ticket-selling agent of a public carrier with
12-63 respect to accident and health insurance tickets covering risks of
12-64 travel; [or]
12-65 (5) an agent selling credit health and accident
12-66 insurance issued exclusively in connection with credit
12-67 transactions, or acting as agent or solicitor for health and
12-68 accident insurance under a license issued under either Article
12-69 21.07, Article 21.07-1, or Article 21.14, Insurance Code; or
13-1 (6) a person or the employee of a person who has
13-2 contracted to provide administrative, management, or health care
13-3 services to a health maintenance organization and who is
13-4 compensated for those services by the payment of an amount
13-5 calculated as a percentage of the revenues, net income, or profit
13-6 of the health maintenance organization, if that method of
13-7 compensation is the sole basis for subjecting that person or the
13-8 employee of the person to this section.
13-9 (b) The Commissioner [State Board of Insurance] may issue a
13-10 license to a person or a corporation to act only as an accident and
13-11 health insurance agent for a legal reserve life insurance company
13-12 or health maintenance organization as provided by this section.
13-13 (c) Each applicant for a license under this section who
13-14 desires to act as an accident and health [insurance] agent within
13-15 this state shall submit to a personal written examination
13-16 prescribed by the Texas Department [State Board] of Insurance and
13-17 administered in the English or Spanish language to determine the
13-18 applicant's competency with respect to accident and health
13-19 insurance and memberships and familiarity with the pertinent
13-20 [provisions of the health and accident insurance] laws of this
13-21 state. Except as provided by Subsection (d) of this section, each
13-22 applicant must pass the examination to the satisfaction of the
13-23 Texas Department [State Board] of Insurance.
13-24 (d) A written examination is not required of:
13-25 (1) an applicant for license under this Section 16 if
13-26 the applicant has previously been licensed and currently holds on
13-27 the effective date of this section a valid license issued by the
13-28 Texas Department [State Board] of Insurance under Section 15 or
13-29 15A, Texas Health Maintenance Organization Act (Articles 20A.15 and
13-30 20A.15A, Vernon's Texas Insurance Code), as those sections existed
13-31 at any time before January 1, 2000, [either] Article 21.07,
13-32 Insurance Code, this Act, [Article 21.07-1,] or Article 21.14,
13-33 Insurance Code [of this code];
13-34 (2) an applicant whose license expires less than one
13-35 year before the date of application and who may, in the discretion
13-36 of the Texas Department [State Board] of Insurance, be issued a
13-37 license without written examination, provided the prior expired
13-38 license granted the applicant the right to act as an agent for
13-39 accident and health insurance; or
13-40 (3) an applicant that is a partnership or corporation;
13-41 provided, however, that a partnership or corporation may be
13-42 licensed hereunder only if it otherwise complies with the
13-43 provisions of Section 4 of this article, but in the application of
13-44 such section to such compensation hereunder, any requirement
13-45 pertaining to or reference therein to "life insurance" shall be
13-46 changed and limited to "health and accident coverage [insurance]"
13-47 only as is intended by the terms of [the] Section 16.
13-48 (h) After the Texas Department [State Board] of Insurance
13-49 determines that an applicant has successfully passed the written
13-50 examination or is exempt therefrom as provided in Subsection
13-51 (d) above, has been appointed to act as an agent by one or more
13-52 legal reserve life insurance companies or health maintenance
13-53 organizations, and has paid a nonrefundable license fee not to
13-54 exceed $50 as determined by the department [board], the department
13-55 [board] shall issue a license to such applicant authorizing the
13-56 applicant to act as an accident and health insurance agent for the
13-57 appointing insurance carrier or health maintenance organization.
13-58 (i) The Commissioner [State Board of Insurance] may appoint
13-59 an advisory committee to make recommendations to the Commissioner
13-60 [State Board of Insurance] relating to the scope, type, and conduct
13-61 of written examinations. The advisory committee must be composed
13-62 of individuals experienced in the accident and health insurance or
13-63 health maintenance organization business and may include company
13-64 officers, managers and employees, general managers, and licensed
13-65 agents. The members of the advisory committee shall serve without
13-66 pay.
13-67 (j) Sections 8, 9, 10, 11, 12, 13, and 14 of this article
13-68 shall apply to accident and health [insurance] agents of a legal
13-69 reserve life insurance company or health maintenance organization
14-1 licensed under this section, but in the application of such
14-2 sections to such agents any requirements, conditions, or references
14-3 therein to "life insurance" shall be changed and limited to "health
14-4 and accident coverage" [insurance] only as is intended by the
14-5 provisions of this section.
14-6 SECTION 15. Section 15(a), Texas Health Maintenance
14-7 Organization Act (Article 20A.15, Vernon's Texas Insurance Code),
14-8 is amended to read as follows:
14-9 (a) A health maintenance organization agent is anyone who
14-10 represents any health maintenance organization in the solicitation,
14-11 negotiation, procurement, or effectuation of health maintenance
14-12 organization membership or holds himself or herself out as such.
14-13 No person or other legal entity may perform the acts of a health
14-14 maintenance organization agent within this state unless such person
14-15 or legal entity has a valid health maintenance organization agent's
14-16 license issued pursuant to this Act or has a valid agent's or
14-17 health and accident agent's license issued pursuant to Chapter 213,
14-18 Acts of the 54th Legislature, Regular Session, 1955 (Article
14-19 21.07-1, Vernon's Texas Insurance Code). The term "health
14-20 maintenance organization agent" shall not include:
14-21 (1) any regular salaried officer or employee of a
14-22 health maintenance organization or of a licensed health maintenance
14-23 organization agent, who devotes substantially all of his or her
14-24 time to activities other than the solicitation of applications for
14-25 health maintenance organization membership and receives no
14-26 commission or other compensation directly dependent upon the
14-27 business obtained and who does not solicit or accept from the
14-28 public applications for health maintenance organization membership;
14-29 (2) employers or their officers or employees or the
14-30 trustees of any employee benefit plan to the extent that such
14-31 employers, officers, employees, or trustees are engaged in the
14-32 administration or operation of any program of employee benefits
14-33 involving the use of membership in a health maintenance
14-34 organization; provided that such employers, officers, employees, or
14-35 trustees are not in any manner compensated directly or indirectly
14-36 by the health maintenance organization issuing such health
14-37 maintenance organization membership;
14-38 (3) banks or their officers and employees to the
14-39 extent that such banks, officers, and employees collect and remit
14-40 charges by charging same against accounts of depositors on the
14-41 orders of such depositors; or
14-42 (4) any person or the employee of any person who has
14-43 contracted to provide administrative, management, or health care
14-44 services to a health maintenance organization and who is
14-45 compensated for those services by the payment of an amount
14-46 calculated as a percentage of the revenues, net income, or profit
14-47 of the health maintenance organization, if that method of
14-48 compensation is the sole basis for subjecting that person or the
14-49 employee of the person to this section.
14-50 SECTION 16. Section 15A(a), Texas Health Maintenance
14-51 Organization Act (Article 20A.15A, Vernon's Texas Insurance Code),
14-52 is amended to read as follows:
14-53 (a) A person acting as an agent for a health maintenance
14-54 organization offering only a single health care service plan who is
14-55 licensed by examination under Article 21.07, Insurance Code, or
14-56 Chapter 213, Acts of the 54th Legislature, Regular Session, 1955
14-57 (Article 21.07-1, Vernon's Texas Insurance Code), is subject to the
14-58 licensing requirements provided by this section, and except as
14-59 specifically provided by this Act or some other law, no other agent
14-60 licensing requirements apply. This section applies only to a
14-61 person licensed to act as an agent for a health maintenance
14-62 organization offering only a single health care service plan before
14-63 January 1, 1998.
14-64 SECTION 17. (a) Effective January 1, 2000, Sections 15 and
14-65 15A, Texas Health Maintenance Organization Act (Articles 20A.15 and
14-66 20A.15A, Vernon's Texas Insurance Code), are repealed.
14-67 (b) After December 31, 1997, the Texas Department of
14-68 Insurance may not issue or renew a license under Section 15 or 15A,
14-69 Texas Health Maintenance Organization Act (Articles 20A.15 and
15-1 20A.15A, Vernon's Texas Insurance Code), to act as a health
15-2 maintenance organization agent or as an agent for a health
15-3 maintenance organization offering only a single health service
15-4 plan.
15-5 SECTION 18. Except as provided by Section 17(a) of this Act,
15-6 this Act takes effect September 1, 1997, and applies only to a
15-7 license under Chapter 213, Acts of the 54th Legislature, Regular
15-8 Session, 1955 (Article 21.07-1, Vernon's Texas Insurance Code), to
15-9 act as an agent or as a health and accident agent that is issued or
15-10 renewed on or after January 1, 1998.
15-11 SECTION 19. The importance of this legislation and the
15-12 crowded condition of the calendars in both houses create an
15-13 emergency and an imperative public necessity that the
15-14 constitutional rule requiring bills to be read on three several
15-15 days in each house be suspended, and this rule is hereby suspended.
15-16 * * * * *