1-1 By: Turner of Coleman (Senate Sponsor - Ratliff) H.B. No. 2221
1-2 (In the Senate - Received from the House May 12, 1997;
1-3 May 13, 1997, read first time and referred to Committee on Economic
1-4 Development; May 17, 1997, reported favorably by the following
1-5 vote: Yeas 7, Nays 0; May 17, 1997, sent to printer.)
1-6 A BILL TO BE ENTITLED
1-7 AN ACT
1-8 relating to limitations on the amount of life insurance risk that
1-9 may be written by certain agents of or assumed by a stipulated
1-10 premium insurance company.
1-11 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-12 SECTION 1. Section 3, Article 21.07, Insurance Code, is
1-13 amended to read as follows:
1-14 Sec. 3. ISSUANCE OF LICENSE UNDER CERTAIN CIRCUMSTANCES.
1-15 The commissioner [State Board of Insurance] shall issue a license
1-16 to a person or corporation in such form as the department [it] may
1-17 prepare authorizing such applicant to write the types of insurance
1-18 authorized by law to be issued by applicant's appointing insurance
1-19 carrier, except that:
1-20 (a) Such applicant shall not be authorized to write health
1-21 and accident insurance unless: (i) applicant, if not a partnership
1-22 or corporation, shall have first passed a written examination as
1-23 provided for in this Article 21.07, as amended, or (ii) applicant
1-24 will act only as a ticket-selling agent of a public carrier with
1-25 respect to accident life insurance covering risks of travel or as
1-26 an agent selling credit life, health and accident insurance issued
1-27 exclusively in connection with credit transactions, or (iii)
1-28 applicant will write policies or riders to policies providing only
1-29 lump sum cash benefits in the event of the accidental death, or
1-30 death by accidental means, or dismemberment, or providing only
1-31 ambulance expense benefits in the event of accident or sickness;
1-32 and
1-33 (b) Such applicant, if not a partnership or corporation,
1-34 shall not be authorized to write life insurance in excess of
1-35 $10,000 [$7,500] upon any one life unless: (i) applicant, if not a
1-36 partnership or corporation, shall have first passed a written
1-37 examination as provided for in this Article 21.07, as amended, or
1-38 (ii) applicant will act only as a ticket-selling agent of a public
1-39 carrier with respect to accident life insurance covering risks of
1-40 travel or as an agent selling credit life, health and accident
1-41 insurance issued exclusively in connection with credit
1-42 transactions, or (iii) applicant will write policies or riders to
1-43 policies providing only lump sum cash benefits in the event of the
1-44 accidental death, or death by accidental means, or dismemberment,
1-45 or providing only ambulance expense benefits in the event of
1-46 accident or sickness.
1-47 SECTION 2. Section 4A, Article 21.07, Insurance Code, is
1-48 amended to read as follows:
1-49 Sec. 4A. EXAMINATION OF APPLICANT FOR LICENSE TO WRITE LIFE
1-50 INSURANCE UPON ANY ONE LIFE IN EXCESS OF $10,000 [$7,500]. (a)
1-51 Each applicant for a license under the provisions of this Article
1-52 21.07, Insurance Code, as amended, who desires to write life
1-53 insurance in excess of $10,000 [$7,500] upon any one life, other
1-54 than as excepted in Section 3 of this Article 21.07, within this
1-55 state shall submit to a personal written examination prescribed by
1-56 the commissioner [State Board of Insurance] and administered in the
1-57 English or Spanish language to determine the applicant's [his]
1-58 competency with respect to life insurance and the applicant's [his]
1-59 familiarity with the pertinent provisions of the laws of the State
1-60 of Texas relating to life insurance and shall pass the same to the
1-61 satisfaction of the commissioner [State Board of Insurance];
1-62 except that no written examination shall be required of an
1-63 applicant that is a partnership or corporation.
1-64 (b)(i) The commissioner [State Board of Insurance] shall,
2-1 within sixty (60) days from the effective date of this Act,
2-2 establish reasonable rules and regulations with respect to the
2-3 scope, type and conduct of such written examination and the times
2-4 and places within this State where such examinations shall be held.
2-5 The rules and regulations of the commissioner [State Board of
2-6 Insurance] shall designate textbooks, manuals and other materials
2-7 to be studied by applicants in preparation for examination pursuant
2-8 to this Section. Such textbooks, manuals and other materials may
2-9 consist of matter available to applicants by purchase from the
2-10 publisher or may consist of matter prepared at the direction of the
2-11 commissioner [State Board of Insurance] and distributed to
2-12 applicants upon request therefor and payment of the reasonable cost
2-13 thereof. All examination questions shall be prepared from the
2-14 contents of the textbooks, manuals and other materials designated
2-15 or prepared by the commissioner [State Board of Insurance] pursuant
2-16 to this Section. Unless the commissioner [State Board of
2-17 Insurance] accepts a qualifying examination administered by a
2-18 testing service, as provided under Article 21.01-1, Insurance Code,
2-19 as amended, the commissioner [State Board of Insurance] shall
2-20 charge each applicant a fee in an amount not to exceed $20.00 for
2-21 the privilege of taking such written examination and which fee
2-22 shall not be returned under any circumstance other than for failure
2-23 to appear and take the examination after the applicant has given at
2-24 least 24 hours' notice of an emergency situation to the
2-25 commissioner [State Board of Insurance] and received the [board]
2-26 approval of the commissioner. A new examination fee shall be paid
2-27 for each and every examination.
2-28 (ii) The commissioner [State Board of Insurance] may
2-29 also establish reasonable rules and regulations whereby, in the
2-30 discretion of the commissioner [State Board of Insurance], any
2-31 insurance carrier may be permitted to conduct written examinations
2-32 for its agents, subject to such reasonable conditions, requirements
2-33 and standards as the commissioner [State Board of Insurance] shall
2-34 require and establish as a predicate for the granting of such
2-35 authority and for the reasonable supervision, examination and
2-36 inspection of each such carrier's procedures in giving examinations
2-37 to its agents, but provided further that such authority so granted
2-38 to any insurance carrier to give such examinations may be
2-39 terminated by the commissioner [State Board of Insurance] on notice
2-40 and hearing if it shall find that such authorized insurance carrier
2-41 shall have violated the conditions, requirements and standards
2-42 required of such carrier to qualify to conduct written
2-43 examinations.
2-44 (c) After the commissioner determines [State Board of
2-45 Insurance shall determine] that such applicant has successfully
2-46 passed the written examination or it has been waived, the
2-47 commissioner [State Board of Insurance] shall forthwith issue a
2-48 license to such applicant which shall also authorize such applicant
2-49 to write life insurance upon any one life in excess of $10,000
2-50 [$7,500] for the designated insurance carrier.
2-51 (d) The commissioner [State Board of Insurance] is hereby
2-52 authorized in its sole discretion to appoint an Advisory Board to
2-53 make recommendations to it with respect to the scope, type and
2-54 conduct of written examinations and the Advisory Board, if so
2-55 appointed, shall consist of individuals experienced in the life
2-56 insurance business and may include company officers, managers and
2-57 employees, general managers and licensed agents. The members of
2-58 the Advisory Board shall serve without pay.
2-59 (e) When any license shall be issued by the commissioner
2-60 [State Board of Insurance] to an applicant entitled to write life
2-61 insurance upon any one life in excess of $10,000 [$7,500], the
2-62 license shall have stamped thereon the words, "Life Insurance in
2-63 Excess of $10,000 [$7,500]."
2-64 SECTION 3. Article 21.07, Insurance Code, is amended by
2-65 adding Section 15A to read as follows:
2-66 Sec. 15A. CERTAIN AGENTS FOR STIPULATED PREMIUM COMPANIES.
2-67 A person or corporation that holds a license issued under Chapter
2-68 213, Acts of the 54th Legislature, Regular Session, 1955 (Article
2-69 21.07-1, Vernon's Texas Insurance Code), is entitled to write life
3-1 insurance under that license for a stipulated premium company
3-2 without obtaining a license under this article. A stipulated
3-3 premium company may appoint as its agent a person or corporation
3-4 that holds a license under Chapter 213, Acts of the 54th
3-5 Legislature, Regular Session, 1955 (Article 21.07-1, Vernon's Texas
3-6 Insurance Code).
3-7 SECTION 4. Article 22.07, Insurance Code, is amended by
3-8 adding Section 3 to read as follows:
3-9 Sec. 3. If the surplus of a stipulated premium company is at
3-10 least Fifty Thousand Dollars ($50,000.00) but less than Two Hundred
3-11 Thousand Dollars ($200,000.00), the stipulated premium company
3-12 shall reinsure the insurance amount that exceeds Ten Thousand
3-13 Dollars ($10,000.00) on a life insurance risk on any one life.
3-14 SECTION 5. Section 1(b), Article 22.13, Insurance Code, is
3-15 amended to read as follows:
3-16 (b) Except as otherwise provided by this subsection, it [It]
3-17 shall be unlawful for any stipulated premium company to assume
3-18 liability on a life insurance risk on any one life in an amount in
3-19 excess of Ten Thousand Dollars ($10,000.00). If a stipulated
3-20 premium company assumes a life insurance risk under a life
3-21 insurance policy, the initial death benefit of Ten Thousand Dollars
3-22 ($10,000.00) or less may increase to an amount greater than Ten
3-23 Thousand Dollars ($10,000.00). For a policy in which the death
3-24 benefit subsequent to issuance exceeds Ten Thousand Dollars
3-25 ($10,000.00), the death benefit at the end of each policy year may
3-26 not exceed the greater of the maximum increase as specified in the
3-27 policy, compounded annually, or the CPI-U, compounded annually.
3-28 The maximum increase that may be specified in a life insurance
3-29 policy subject to this article is five percent, compounded
3-30 annually. For purposes of this subsection, the CPI-U for a given
3-31 calendar year is the consumer price index for all urban consumers
3-32 for all items and for all regions of the United States, combined as
3-33 determined by the United States Department of Labor, Bureau of
3-34 Labor Statistics, on September 30 of the prior calendar year.
3-35 SECTION 6. Article 22.23(a), Insurance Code, is amended to
3-36 read as follows:
3-37 (a) Each stipulated premium company possessing capital and
3-38 unencumbered surplus of at least the combined total sum of
3-39 $100,000.00 may issue policies of life insurance as authorized and
3-40 permitted under the provisions of Chapter Three of this Insurance
3-41 Code provided that:
3-42 (1) no individual life shall be insured for more than
3-43 $10,000.00, except as provided by Section 1(b), Article 22.13, of
3-44 this code or Article 22.23A of this code;
3-45 (2) each such policy shall be reserved and reinsured
3-46 as required under the provisions of Chapter Three of this Insurance
3-47 Code; and
3-48 (3) each such life policy shall be issued only upon an
3-49 endowment or limited pay basis.
3-50 SECTION 7. (a) This Act takes effect September 1, 1997, and
3-51 applies only to an insurance policy that is delivered, issued for
3-52 delivery, or renewed on or after that date. A policy that is
3-53 delivered, issued for delivery, or renewed before September 1,
3-54 1997, is governed by the law as it existed immediately before the
3-55 effective date of this Act, and that law is continued in effect for
3-56 that purpose.
3-57 (b) For purposes of this section, an insurance policy is
3-58 considered renewed on the date that the policyholder makes a
3-59 payment of a premium on the policy.
3-60 SECTION 8. The importance of this legislation and the
3-61 crowded condition of the calendars in both houses create an
3-62 emergency and an imperative public necessity that the
3-63 constitutional rule requiring bills to be read on three several
3-64 days in each house be suspended, and this rule is hereby suspended.
3-65 * * * * *