A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to certain licensed nonresident insurance agents.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Article 21.11, Insurance Code, is amended to read
1-5 as follows:
1-6 Art. 21.11. NONRESIDENT [COMMISSIONS TO NON-RESIDENTS;
1-7 CANCELLATION OF NON-RESIDENT AGENT'S LICENSE; NON-RESIDENT AGENT
1-8 NOT TO ACT AS SURPLUS LINES] AGENT
1-9 Sec. 1. NONRESIDENT AGENT LICENSE. (a) Notwithstanding
1-10 Sections 3(a) and (b), Article 21.14, of this code, the department
1-11 shall license a person who is not a resident of this state to act
1-12 as a nonresident agent in accordance with Article 21.14 of this
1-13 code, subject to the limitations of this article.
1-14 (b) An applicant for issuance of a license under this
1-15 section must meet the requirements for issuance of a license under
1-16 Article 21.14 of this code, except that the department shall waive
1-17 any of those license requirements for an applicant with a valid
1-18 license from another state or jurisdiction that has license
1-19 requirements substantially equivalent to those of this state.
1-20 Sec. 2. RIGHTS OF LICENSE HOLDER. (a) Except as provided
1-21 by this section, a license issued under this article to an
1-22 individual who is not a resident of this state grants the same
1-23 rights and privileges afforded under a license issued under Article
1-24 21.14 of this code.
1-25 (b) A person who holds a license issued under this article
2-1 may not:
2-2 (1) maintain an office in this state;
2-3 (2) solicit insurance business in this state by any
2-4 method, including an oral, written, or electronic communication; or
2-5 (3) employ solicitors or others to directly or
2-6 indirectly solicit insurance in this state.
2-7 (c) The commissioner shall impose on a resident of another
2-8 state or jurisdiction of the United States who is an applicant for
2-9 a license or a holder of a license issued under this article any
2-10 requirement or restriction that:
2-11 (1) the other state or jurisdiction of the United
2-12 States imposes on a resident of this state who is a nonresident
2-13 applicant or license holder in that state or jurisdiction; and
2-14 (2) is in addition to or stricter than the
2-15 requirements or restrictions imposed under the insurance law of
2-16 this state on an applicant or license holder who is not a resident
2-17 of this state.
2-18 (d) For purposes of Subsection (c) of this section,
2-19 "requirement or restriction" includes a requirement or restriction
2-20 imposed by a law or regulation that:
2-21 (1) limits the rights or privileges of a person;
2-22 (2) affects a commission or other compensation paid to
2-23 a person; or
2-24 (3) imposes a condition precedent on a person.
2-25 Sec. 3. LIMITATIONS. (a) This article does not permit:
2-26 (1) [Any person, agent, firm, or corporation licensed
2-27 by the Board to act as a fire and marine, marine, tornado, rent,
3-1 accident, casualty, liability, health, elevator, disability, plate
3-2 glass, burglary, bonding, title, surety or fidelity insurance agent
3-3 in the State of Texas, is hereby prohibited from paying, directly
3-4 or indirectly, any commission, brokerage or other valuable
3-5 consideration on account of any policy or policies covering
3-6 property, person or persons in this State, to any person, persons,
3-7 agent, firm or corporation that is a non-resident of this State, or
3-8 to any person or persons, agent, firm or corporation not duly
3-9 licensed by the Board as a fire, fire and marine, marine, tornado,
3-10 rent, accident, casualty, liability, health, elevator, disability,
3-11 plate glass, burglary, bonding, title, surety or fidelity insurance
3-12 agent; excepting however, that on any policy of insurance
3-13 originated by a Licensed Non-Resident Insurance Agent, as
3-14 hereinafter defined, and covering property or persons in this
3-15 State, a Texas local Recording Agent may divide the commission with
3-16 the originating Licensed Non-Resident Insurance Agent, but in any
3-17 such case the insurance company or carrier shall pay to the Texas
3-18 Local Recording Agent through which such policy is issued, signed
3-19 or countersigned, his minimum share, which shall be a sum not less
3-20 than the amount of commission or brokerage required to be paid by
3-21 the laws or regulations of the State of such originating
3-22 Non-Resident Agent when a similar policy of insurance is originated
3-23 by a Texas Local Recording Agent covering persons or property in
3-24 such other State.]
3-25 [Nothing herein shall prevent a Texas Local Recording Agent
3-26 from dividing with, or paying commissions to, another Texas Local
3-27 Recording Agent. Nothing herein shall relieve any insurance
4-1 company or carrier covered thereby from writing Texas risks through
4-2 Texas agents as provided in Article 21.09, Insurance Code.]
4-3 [A Licensed Non-Resident Insurance Agent is any person, firm
4-4 or corporation residing or domiciled in another State and having a
4-5 Non-Resident Insurance Agent's license as is hereinafter
4-6 authorized.]
4-7 [Upon application, in such form as the Board of Insurance
4-8 Commissioners may require, a non-resident of this State who is duly
4-9 licensed to transact insurance other than life under the laws of
4-10 the State wherein such applicant resides, if such State does not
4-11 prohibit residents of this State from acting as insurance agent
4-12 therein, the Board of Insurance Commissioners may issue to such
4-13 applicant a Non-Resident Agent's license.]
4-14 [The issuance of a Non-Resident Agent's license shall be for
4-15 the purpose of permitting a Local Recording Agent of Texas to
4-16 divide commission with an agent of another State on insurance
4-17 covering property or persons in this State placed with or through a
4-18 Local Recording Agent, and to permit an agent of another State, who
4-19 qualifies and is licensed as a Non-Resident Agent, to inspect and
4-20 service such risks in Texas, which license shall be subject to the
4-21 same fees, qualifications, requirements and restrictions as apply
4-22 to Local Recording Agents of this State, except that an office
4-23 shall not be maintained in this State by a Non-Resident Agent and
4-24 all such insurance transacted shall be through licensed Local
4-25 Recording Agents as provided in Article 21.09 of the Texas
4-26 Insurance Code; and provided further that a Non-Resident Agent
4-27 shall transact all matters with the Board of Insurance
5-1 Commissioners relating to rates and rate engineering and
5-2 terminology of standard policy forms through Local Recording
5-3 Agents, and nothing contained herein shall be construed as granting
5-4 authority to a Non-Resident Agent to transact such matters directly
5-5 with the Board of Insurance Commissioners; and, except that the
5-6 Board of Insurance Commissioners, at its discretion, on payment by
5-7 applicant of the examination fee, may enter into a reciprocal
5-8 arrangement with the officer having jurisdiction of insurance
5-9 business in any other State to accept in lieu of the written
5-10 examination of such an applicant residing therein, a certificate of
5-11 such officer to the effect that the applicant is licensed as an
5-12 insurance agent in such State and has complied with its
5-13 qualification standards in respect to the following:]
5-14 [(a) Experience or training;]
5-15 [(b) Reasonable familiarity with the broad principles
5-16 of insurance, licensing and regulatory laws, and with provisions,
5-17 terms, and conditions of the insurance which applicant proposes to
5-18 transact; and]
5-19 [(c) A fair and general understanding of the
5-20 obligations and duties of an insurance agent.]
5-21 [Nothing contained herein shall be construed to permit] any
5-22 person or firm [who is] licensed solely as a broker in the person's
5-23 or firm's state [State] of [his] residence to be granted a
5-24 [Non-Resident] license under this article [as referred to herein];
5-25 (2) [provided further that nothing contained herein
5-26 shall be construed to permit] a holder of a [Non-Resident Agent's]
5-27 license issued under this article to act as a surplus lines agent
6-1 [Surplus Lines Agent] under [the provisions of] Article 1.14-2 of
6-2 this code [the Insurance Code] or to perform any of the acts
6-3 permitted under Article 1.14-2 of this code, except as provided
6-4 under Section 10, Article 21.54, of this code; [thereunder] or
6-5 (3) [to permit] any person or firm who holds a
6-6 [Non-Resident Agent's] license issued under this article [as
6-7 authorized herein] to engage in any form of direct solicitation of
6-8 insurance within this state [State].
6-9 (b) The commissioner shall revoke a nonresident agent's [A
6-10 Non-Resident Agent's] license issued under this article if the
6-11 commissioner finds [shall be cancelled and not be subject to
6-12 reissuance when it is found by the Board of Insurance
6-13 Commissioners] that the [such] license was obtained or is being
6-14 used for the purpose of transacting insurance through a local
6-15 recording agent [Local Recording Agent] in [such] a manner that
6-16 permits the individual licensed under this article [as to permit a
6-17 Non-Resident Agent], by subterfuge, to transact insurance as a
6-18 local recording agent.
6-19 (c) In the circumstances described by Subsection (b) of this
6-20 section, the commissioner shall also revoke [Local Recording Agent,
6-21 and in which event] the license of the affected local recording
6-22 agent.
6-23 (d) A license revoked under Subsection (b) or (c) of this
6-24 section is [Local Recording Agent likewise shall be cancelled and]
6-25 not [be] subject to reissuance before the fifth anniversary of the
6-26 date the revocation is effective.
6-27 (e) The commissioner shall order that any [and all]
7-1 insurance transacted under an [such] arrangement described by
7-2 Subsection (b) of this section [shall] be cancelled[, provided
7-3 further that the provisions of Sections 16 and 17, Article 21.14 of
7-4 the Insurance Code shall apply to such cancellation].
7-5 (f) Article 21.01-2 of this code applies to licensing of a
7-6 nonresident agent under this article.
7-7 Sec. 4. HOME OFFICE EMPLOYEE. This article does not affect
7-8 the authority established under Section 20, Article 21.14, of this
7-9 code of an actual full-time home office salaried employee of an
7-10 insurance carrier licensed to do business in this state.
7-11 Sec. 5. RULES. The commissioner may adopt rules to
7-12 implement this article.
7-13 SECTION 2. Article 21.09, Insurance Code, is repealed.
7-14 SECTION 3. This Act applies only to conduct occurring on or
7-15 after the effective date of this Act. Conduct occurring before the
7-16 effective date of this Act is governed by the law as it existed
7-17 immediately before the effective date of this Act, and that law is
7-18 continued in effect for that purpose.
7-19 SECTION 4. The importance of this legislation and the
7-20 crowded condition of the calendars in both houses create an
7-21 emergency and an imperative public necessity that the
7-22 constitutional rule requiring bills to be read on three several
7-23 days in each house be suspended, and this rule is hereby suspended,
7-24 and that this Act take effect and be in force from and after its
7-25 passage, and it is so enacted.