75R7625 E
By Craddick H.B. No. 578
Substitute the following for H.B. No. 578:
By Smithee C.S.H.B. No. 578
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 local recording 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 license requirement for an applicant with a valid license from
1-18 another state or jurisdiction that has license requirements
1-19 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.
2-1 (b) A person who holds a license issued under this article
2-2 may not solicit insurance business in this state by any method,
2-3 including an oral, written, or electronic communication.
2-4 (c) The commissioner shall impose on a resident of another
2-5 state or jurisdiction who is an applicant for a license or a holder
2-6 of a license issued under this article any requirement or
2-7 restriction that:
2-8 (1) the other state or jurisdiction imposes on a
2-9 resident of this state who is a nonresident applicant or license
2-10 holder in that state or jurisdiction; and
2-11 (2) is in addition to or stricter than the
2-12 requirements or restrictions imposed under the insurance law of
2-13 this state on an applicant or license holder who is not a resident
2-14 of this state.
2-15 (d) For purposes of Subsection (c) of this section,
2-16 "requirement or restriction" includes a requirement or restriction
2-17 imposed by a law or regulation that:
2-18 (1) limits the rights or privileges of a person;
2-19 (2) affects a commission or other compensation paid to
2-20 a person; or
2-21 (3) imposes a condition precedent on a person.
2-22 Sec. 3. LIMITATIONS. (a) This article does not permit:
2-23 (1) [Any person, agent, firm, or corporation licensed
2-24 by the Board to act as a fire and marine, marine, tornado, rent,
2-25 accident, casualty, liability, health, elevator, disability, plate
2-26 glass, burglary, bonding, title, surety or fidelity insurance agent
2-27 in the State of Texas, is hereby prohibited from paying, directly
3-1 or indirectly, any commission, brokerage or other valuable
3-2 consideration on account of any policy or policies covering
3-3 property, person or persons in this State, to any person, persons,
3-4 agent, firm or corporation that is a non-resident of this State, or
3-5 to any person or persons, agent, firm or corporation not duly
3-6 licensed by the Board as a fire, fire and marine, marine, tornado,
3-7 rent, accident, casualty, liability, health, elevator, disability,
3-8 plate glass, burglary, bonding, title, surety or fidelity insurance
3-9 agent; excepting however, that on any policy of insurance
3-10 originated by a Licensed Non-Resident Insurance Agent, as
3-11 hereinafter defined, and covering property or persons in this
3-12 State, a Texas local Recording Agent may divide the commission with
3-13 the originating Licensed Non-Resident Insurance Agent, but in any
3-14 such case the insurance company or carrier shall pay to the Texas
3-15 Local Recording Agent through which such policy is issued, signed
3-16 or countersigned, his minimum share, which shall be a sum not less
3-17 than the amount of commission or brokerage required to be paid by
3-18 the laws or regulations of the State of such originating
3-19 Non-Resident Agent when a similar policy of insurance is originated
3-20 by a Texas Local Recording Agent covering persons or property in
3-21 such other State.]
3-22 [Nothing herein shall prevent a Texas Local Recording Agent
3-23 from dividing with, or paying commissions to, another Texas Local
3-24 Recording Agent. Nothing herein shall relieve any insurance
3-25 company or carrier covered thereby from writing Texas risks through
3-26 Texas agents as provided in Article 21.09, Insurance Code.]
3-27 [A Licensed Non-Resident Insurance Agent is any person, firm
4-1 or corporation residing or domiciled in another State and having a
4-2 Non-Resident Insurance Agent's license as is hereinafter
4-3 authorized.]
4-4 [Upon application, in such form as the Board of Insurance
4-5 Commissioners may require, a non-resident of this State who is duly
4-6 licensed to transact insurance other than life under the laws of
4-7 the State wherein such applicant resides, if such State does not
4-8 prohibit residents of this State from acting as insurance agent
4-9 therein, the Board of Insurance Commissioners may issue to such
4-10 applicant a Non-Resident Agent's license.]
4-11 [The issuance of a Non-Resident Agent's license shall be for
4-12 the purpose of permitting a Local Recording Agent of Texas to
4-13 divide commission with an agent of another State on insurance
4-14 covering property or persons in this State placed with or through a
4-15 Local Recording Agent, and to permit an agent of another State, who
4-16 qualifies and is licensed as a Non-Resident Agent, to inspect and
4-17 service such risks in Texas, which license shall be subject to the
4-18 same fees, qualifications, requirements and restrictions as apply
4-19 to Local Recording Agents of this State, except that an office
4-20 shall not be maintained in this State by a Non-Resident Agent and
4-21 all such insurance transacted shall be through licensed Local
4-22 Recording Agents as provided in Article 21.09 of the Texas
4-23 Insurance Code; and provided further that a Non-Resident Agent
4-24 shall transact all matters with the Board of Insurance
4-25 Commissioners relating to rates and rate engineering and
4-26 terminology of standard policy forms through Local Recording
4-27 Agents, and nothing contained herein shall be construed as granting
5-1 authority to a Non-Resident Agent to transact such matters directly
5-2 with the Board of Insurance Commissioners; and, except that the
5-3 Board of Insurance Commissioners, at its discretion, on payment by
5-4 applicant of the examination fee, may enter into a reciprocal
5-5 arrangement with the officer having jurisdiction of insurance
5-6 business in any other State to accept in lieu of the written
5-7 examination of such an applicant residing therein, a certificate of
5-8 such officer to the effect that the applicant is licensed as an
5-9 insurance agent in such State and has complied with its
5-10 qualification standards in respect to the following:]
5-11 [(a) Experience or training;]
5-12 [(b) Reasonable familiarity with the broad principles
5-13 of insurance, licensing and regulatory laws, and with provisions,
5-14 terms, and conditions of the insurance which applicant proposes to
5-15 transact; and]
5-16 [(c) A fair and general understanding of the
5-17 obligations and duties of an insurance agent.]
5-18 [Nothing contained herein shall be construed to permit] any
5-19 person or firm [who is] licensed solely as a broker in the person's
5-20 or firm's state [State] of [his] residence to be granted a
5-21 [Non-Resident] license under this article [as referred to herein];
5-22 (2) [provided further that nothing contained herein
5-23 shall be construed to permit] a holder of a [Non-Resident Agent's]
5-24 license issued under this article to act as a surplus lines agent
5-25 [Surplus Lines Agent] under [the provisions of] Article 1.14-2 of
5-26 this code [the Insurance Code] or to perform any of the acts
5-27 permitted under Article 1.14-2 of this code; [thereunder] or
6-1 (3) [to permit] any person or firm who holds a
6-2 [Non-Resident Agent's] license issued under this article [as
6-3 authorized herein] to engage in any form of direct solicitation of
6-4 insurance within this state [State].
6-5 (b) The commissioner shall revoke a [A Non-Resident Agent's]
6-6 license issued under this article if the commissioner finds [shall
6-7 be cancelled and not be subject to reissuance when it is found by
6-8 the Board of Insurance Commissioners] that the [such] license was
6-9 obtained or is being used for the purpose of transacting insurance
6-10 through a local recording agent [Local Recording Agent] in [such] a
6-11 manner that permits the individual licensed under this article [as
6-12 to permit a Non-Resident Agent], by subterfuge, to transact
6-13 insurance as a local recording agent.
6-14 (c) In the circumstances described by Subsection (b) of this
6-15 section, the commissioner shall also revoke [Local Recording Agent,
6-16 and in which event] the license of the affected local recording
6-17 agent.
6-18 (d) A license revoked under Subsection (b) or (c) of this
6-19 section is [Local Recording Agent likewise shall be cancelled and]
6-20 not [be] subject to reissuance.
6-21 (e) The commissioner shall order that any [and all]
6-22 insurance transacted under an [such] arrangement described by
6-23 Subsection (b) of this section [shall] be cancelled[, provided
6-24 further that the provisions of Sections 16 and 17, Article 21.14 of
6-25 the Insurance Code shall apply to such cancellation].
6-26 Sec. 4. HOME OFFICE EMPLOYEE. This article does not affect
6-27 the authority established under Section 20, Article 21.14, of this
7-1 code of an actual full-time home office salaried employee of an
7-2 insurance carrier licensed to do business in this state.
7-3 Sec. 5. RULES. The commissioner may adopt rules to
7-4 implement this article.
7-5 SECTION 2. Article 21.09, Insurance Code, is repealed.
7-6 SECTION 3. This Act takes effect September 1, 1997, and
7-7 applies only to conduct occurring on or after that date. Conduct
7-8 occurring before the effective date of this Act is governed by the
7-9 law as it existed immediately before the effective date of this
7-10 Act, and that law is continued in effect for that purpose.
7-11 SECTION 4. The importance of this legislation and the
7-12 crowded condition of the calendars in both houses create an
7-13 emergency and an imperative public necessity that the
7-14 constitutional rule requiring bills to be read on three several
7-15 days in each house be suspended, and this rule is hereby suspended.