75R11712 PB-F
By Turner of Coleman H.B. No. 2221
Substitute the following for H.B. No. 2221:
By Lewis of Tarrant C.S.H.B. No. 2221
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to limitations on the amount of life insurance risk that
1-3 may be written by certain agents of or assumed by a stipulated
1-4 premium insurance company.
1-5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-6 SECTION 1. Section 3, Article 21.07, Insurance Code, is
1-7 amended to read as follows:
1-8 Sec. 3. ISSUANCE OF LICENSE UNDER CERTAIN CIRCUMSTANCES.
1-9 The commissioner [State Board of Insurance] shall issue a license
1-10 to a person or corporation in such form as the department [it] may
1-11 prepare authorizing such applicant to write the types of insurance
1-12 authorized by law to be issued by applicant's appointing insurance
1-13 carrier, except that:
1-14 (a) Such applicant shall not be authorized to write health
1-15 and accident insurance unless: (i) applicant, if not a partnership
1-16 or corporation, shall have first passed a written examination as
1-17 provided for in this Article 21.07, as amended, or (ii) applicant
1-18 will act only as a ticket-selling agent of a public carrier with
1-19 respect to accident life insurance covering risks of travel or as
1-20 an agent selling credit life, health and accident insurance issued
1-21 exclusively in connection with credit transactions, or (iii)
1-22 applicant will write policies or riders to policies providing only
1-23 lump sum cash benefits in the event of the accidental death, or
1-24 death by accidental means, or dismemberment, or providing only
2-1 ambulance expense benefits in the event of accident or sickness;
2-2 and
2-3 (b) Such applicant, if not a partnership or corporation,
2-4 shall not be authorized to write life insurance in excess of
2-5 $10,000 [$7,500] upon any one life unless: (i) applicant, if not a
2-6 partnership or corporation, shall have first passed a written
2-7 examination as provided for in this Article 21.07, as amended, or
2-8 (ii) applicant will act only as a ticket-selling agent of a public
2-9 carrier with respect to accident life insurance covering risks of
2-10 travel or as an agent selling credit life, health and accident
2-11 insurance issued exclusively in connection with credit
2-12 transactions, or (iii) applicant will write policies or riders to
2-13 policies providing only lump sum cash benefits in the event of the
2-14 accidental death, or death by accidental means, or dismemberment,
2-15 or providing only ambulance expense benefits in the event of
2-16 accident or sickness.
2-17 SECTION 2. Section 4A, Article 21.07, Insurance Code, is
2-18 amended to read as follows:
2-19 Sec. 4A. EXAMINATION OF APPLICANT FOR LICENSE TO WRITE LIFE
2-20 INSURANCE UPON ANY ONE LIFE IN EXCESS OF $10,000 [$7,500]. (a)
2-21 Each applicant for a license under the provisions of this Article
2-22 21.07, Insurance Code, as amended, who desires to write life
2-23 insurance in excess of $10,000 [$7,500] upon any one life, other
2-24 than as excepted in Section 3 of this Article 21.07, within this
2-25 state shall submit to a personal written examination prescribed by
2-26 the commissioner [State Board of Insurance] and administered in the
2-27 English or Spanish language to determine the applicant's [his]
3-1 competency with respect to life insurance and the applicant's [his]
3-2 familiarity with the pertinent provisions of the laws of the State
3-3 of Texas relating to life insurance and shall pass the same to the
3-4 satisfaction of the commissioner [State Board of Insurance];
3-5 except that no written examination shall be required of an
3-6 applicant that is a partnership or corporation.
3-7 (b)(i) The commissioner [State Board of Insurance] shall,
3-8 within sixty (60) days from the effective date of this Act,
3-9 establish reasonable rules and regulations with respect to the
3-10 scope, type and conduct of such written examination and the times
3-11 and places within this State where such examinations shall be held.
3-12 The rules and regulations of the commissioner [State Board of
3-13 Insurance] shall designate textbooks, manuals and other materials
3-14 to be studied by applicants in preparation for examination pursuant
3-15 to this Section. Such textbooks, manuals and other materials may
3-16 consist of matter available to applicants by purchase from the
3-17 publisher or may consist of matter prepared at the direction of the
3-18 commissioner [State Board of Insurance] and distributed to
3-19 applicants upon request therefor and payment of the reasonable cost
3-20 thereof. All examination questions shall be prepared from the
3-21 contents of the textbooks, manuals and other materials designated
3-22 or prepared by the commissioner [State Board of Insurance] pursuant
3-23 to this Section. Unless the commissioner [State Board of
3-24 Insurance] accepts a qualifying examination administered by a
3-25 testing service, as provided under Article 21.01-1, Insurance Code,
3-26 as amended, the commissioner [State Board of Insurance] shall
3-27 charge each applicant a fee in an amount not to exceed $20.00 for
4-1 the privilege of taking such written examination and which fee
4-2 shall not be returned under any circumstance other than for failure
4-3 to appear and take the examination after the applicant has given at
4-4 least 24 hours' notice of an emergency situation to the
4-5 commissioner [State Board of Insurance] and received the [board]
4-6 approval of the commissioner. A new examination fee shall be paid
4-7 for each and every examination.
4-8 (ii) The commissioner [State Board of Insurance] may
4-9 also establish reasonable rules and regulations whereby, in the
4-10 discretion of the commissioner [State Board of Insurance], any
4-11 insurance carrier may be permitted to conduct written examinations
4-12 for its agents, subject to such reasonable conditions, requirements
4-13 and standards as the commissioner [State Board of Insurance] shall
4-14 require and establish as a predicate for the granting of such
4-15 authority and for the reasonable supervision, examination and
4-16 inspection of each such carrier's procedures in giving examinations
4-17 to its agents, but provided further that such authority so granted
4-18 to any insurance carrier to give such examinations may be
4-19 terminated by the commissioner [State Board of Insurance] on notice
4-20 and hearing if it shall find that such authorized insurance carrier
4-21 shall have violated the conditions, requirements and standards
4-22 required of such carrier to qualify to conduct written
4-23 examinations.
4-24 (c) After the commissioner determines [State Board of
4-25 Insurance shall determine] that such applicant has successfully
4-26 passed the written examination or it has been waived, the
4-27 commissioner [State Board of Insurance] shall forthwith issue a
5-1 license to such applicant which shall also authorize such applicant
5-2 to write life insurance upon any one life in excess of $10,000
5-3 [$7,500] for the designated insurance carrier.
5-4 (d) The commissioner [State Board of Insurance] is hereby
5-5 authorized in its sole discretion to appoint an Advisory Board to
5-6 make recommendations to it with respect to the scope, type and
5-7 conduct of written examinations and the Advisory Board, if so
5-8 appointed, shall consist of individuals experienced in the life
5-9 insurance business and may include company officers, managers and
5-10 employees, general managers and licensed agents. The members of
5-11 the Advisory Board shall serve without pay.
5-12 (e) When any license shall be issued by the commissioner
5-13 [State Board of Insurance] to an applicant entitled to write life
5-14 insurance upon any one life in excess of $10,000 [$7,500], the
5-15 license shall have stamped thereon the words, "Life Insurance in
5-16 Excess of $10,000 [$7,500]."
5-17 SECTION 3. Article 21.07, Insurance Code, is amended by
5-18 adding Section 15A to read as follows:
5-19 Sec. 15A. CERTAIN AGENTS FOR STIPULATED PREMIUM COMPANIES.
5-20 A person or corporation that holds a license issued under Chapter
5-21 213, Acts of the 54th Legislature, Regular Session, 1955 (Article
5-22 21.07-1, Vernon's Texas Insurance Code), is entitled to write life
5-23 insurance under that license for a stipulated premium company
5-24 without obtaining a license under this article. A stipulated
5-25 premium company may appoint as its agent a person or corporation
5-26 that holds a license under Chapter 213, Acts of the 54th
5-27 Legislature, Regular Session, 1955 (Article 21.07-1, Vernon's Texas
6-1 Insurance Code).
6-2 SECTION 4. Article 22.07, Insurance Code, is amended by
6-3 adding Section 3 to read as follows:
6-4 Sec. 3. If the surplus of a stipulated premium company is at
6-5 least Fifty Thousand Dollars ($50,000.00) but less than Two Hundred
6-6 Thousand Dollars ($200,000.00), the stipulated premium company
6-7 shall reinsure the insurance amount that exceeds Ten Thousand
6-8 Dollars ($10,000.00) on a life insurance risk on any one life.
6-9 SECTION 5. Section 1(b), Article 22.13, Insurance Code, is
6-10 amended to read as follows:
6-11 (b) Except as otherwise provided by this subsection, it [It]
6-12 shall be unlawful for any stipulated premium company to assume
6-13 liability on a life insurance risk on any one life in an amount in
6-14 excess of Ten Thousand Dollars ($10,000.00). If a stipulated
6-15 premium company assumes a life insurance risk under a life
6-16 insurance policy, the initial death benefit of Ten Thousand Dollars
6-17 ($10,000.00) or less may increase to an amount greater than Ten
6-18 Thousand Dollars ($10,000.00). For a policy in which the death
6-19 benefit subsequent to issuance exceeds Ten Thousand Dollars
6-20 ($10,000.00), the death benefit at the end of each policy year may
6-21 not exceed the greater of the maximum increase as specified in the
6-22 policy, compounded annually, or the CPI-U, compounded annually.
6-23 The maximum increase that may be specified in a life insurance
6-24 policy subject to this article is five percent, compounded
6-25 annually. For purposes of this subsection, the CPI-U for a given
6-26 calendar year is the consumer price index for all urban consumers
6-27 for all items and for all regions of the United States, combined as
7-1 determined by the United States Department of Labor, Bureau of
7-2 Labor Statistics, on September 30 of the prior calendar year.
7-3 SECTION 6. Article 22.23(a), Insurance Code, is amended to
7-4 read as follows:
7-5 (a) Each stipulated premium company possessing capital and
7-6 unencumbered surplus of at least the combined total sum of
7-7 $100,000.00 may issue policies of life insurance as authorized and
7-8 permitted under the provisions of Chapter Three of this Insurance
7-9 Code provided that:
7-10 (1) no individual life shall be insured for more than
7-11 $10,000.00, except as provided by Section 1(b), Article 22.13, of
7-12 this code or Article 22.23A of this code;
7-13 (2) each such policy shall be reserved and reinsured
7-14 as required under the provisions of Chapter Three of this Insurance
7-15 Code; and
7-16 (3) each such life policy shall be issued only upon an
7-17 endowment or limited pay basis.
7-18 SECTION 7. This Act takes effect September 1, 1997, and
7-19 applies only to an insurance policy that is delivered, issued for
7-20 delivery, or renewed on or after January 1, 1998. A policy that is
7-21 delivered, issued for delivery, or renewed before January 1, 1998,
7-22 is governed by the law as it existed immediately before the
7-23 effective date of this Act, and that law is continued in effect for
7-24 that purpose.
7-25 SECTION 8. The importance of this legislation and the
7-26 crowded condition of the calendars in both houses create an
7-27 emergency and an imperative public necessity that the
8-1 constitutional rule requiring bills to be read on three several
8-2 days in each house be suspended, and this rule is hereby suspended.