AN ACT
1-1 relating to licensing requirements for certain insurance agents.
1-2 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-3 SECTION 1. Subsections (b) and (c), Section 1, Chapter 213,
1-4 Acts of the 54th Legislature, 1955 (Article 21.07-1, Vernon's Texas
1-5 Insurance Code), are amended to read as follows:
1-6 (b) The term "life insurance agent" for the purpose of this
1-7 Act means any person or corporation that is an authorized agent of
1-8 a legal reserve life insurance company, and any person who is a
1-9 sub-agent of such agent, who acts as such, whether through an oral,
1-10 written, or electronic communication or otherwise, in the
1-11 solicitation of, negotiation for, or procurement of, or collection
1-12 of premiums on, an insurance or annuity contract with a legal
1-13 reserve life insurance company; except that the term "life
1-14 insurance agent" shall not include:
1-15 (1) any regular salaried officer or employee of a
1-16 legal reserve life insurance company, or of a licensed life
1-17 insurance agent, who devotes substantially all of his or her time
1-18 to activities other than the solicitation of applications for
1-19 insurance or annuity contracts and receives no commission or other
1-20 compensation directly dependent upon the business obtained, and who
1-21 does not solicit or accept from the public applications for
1-22 insurance or annuity contracts;
1-23 (2) employers or their officers or employees, or the
2-1 trustees of any employee benefit plan, to the extent that such
2-2 employers, officers, employees or trustees are engaged in the
2-3 administration or operation of any program of employee benefits
2-4 involving the use of insurance or annuities issued by a legal
2-5 reserve life insurance company, provided that such employers,
2-6 officers, employees or trustees are not in any manner compensated,
2-7 directly or indirectly, by the legal reserve life insurance company
2-8 issuing such insurance or annuity contracts;
2-9 (3) banks, savings and loan associations, or credit
2-10 unions, or the officers and employees of banks, savings and loan
2-11 associations, or credit unions, to the extent that such banks,
2-12 savings and loan associations, credit unions, or officers and
2-13 employees collect and remit premiums by charging same against
2-14 accounts of depositors on the orders of such depositors;
2-15 (4) a ticket-selling agent of a public carrier with
2-16 respect to accident life insurance tickets covering risks of
2-17 travel; or
2-18 (5) an agent selling credit life, health and accident
2-19 insurance issued exclusively in connection with credit
2-20 transactions, or acting as agent or solicitor for health and
2-21 accident insurance under license issued pursuant to the provisions
2-22 of Article 21.14 of the Texas Insurance Code.
2-23 (c) The term "sub-agent" means any person, except a regular
2-24 salaried officer or employee of a legal reserve life insurance
2-25 company, or of a licensed life insurance agent, engaging in
3-1 activities defined in Paragraph 1(b), above, who acts for or on
3-2 behalf of a licensed life insurance agent, whether through an oral,
3-3 written, or electronic communication or otherwise, in the
3-4 solicitation of, negotiation for, or procurement or making of, or
3-5 collection of premiums on, an insurance or annuity contract,
3-6 whether or not he is designated by such agent as a sub-agent or a
3-7 solicitor or by any other title. Each such sub-agent shall be
3-8 deemed to be a life insurance agent, as defined above, and
3-9 wherever, in succeeding Sections of this Act, the term "life
3-10 insurance agent" is used, it shall include sub-agents, whether or
3-11 not they are specifically mentioned. Each such sub-agent shall be
3-12 subject to the provisions of this Act to the same extent as a life
3-13 insurance agent.
3-14 SECTION 2. Subsection (a), Section 16, Chapter 213, Acts of
3-15 the 54th Legislature, 1955 (Article 21.07-1, Vernon's Texas
3-16 Insurance Code), is amended to read as follows:
3-17 (a) In this section, "accident and health insurance agent"
3-18 means any person or corporation that is an authorized agent of a
3-19 legal reserve life insurance company and who acts as such agent,
3-20 whether through an oral, written, or electronic communication or
3-21 otherwise, only in the solicitation of, negotiation for,
3-22 procurement of, or collection of premiums on an accident and health
3-23 insurance contract with a legal reserve life insurance company, but
3-24 does not include:
3-25 (1) a regular salaried officer or employee of a legal
4-1 reserve life insurance company, or of a licensed life or accident
4-2 and health insurance agent, who devotes substantially all of his or
4-3 her time to activities other than the solicitation of applications
4-4 for insurance contracts and receives no commission or other
4-5 compensation directly dependent upon the business obtained and who
4-6 does not solicit or accept from the public applications for
4-7 insurance contracts;
4-8 (2) employers or their officers or employees, or the
4-9 trustees of any employee benefit plan, to the extent that those
4-10 employers, officers, employees, or trustees are engaged in the
4-11 administration or operation of any program of employee benefits
4-12 involving the use of insurance issued by a legal reserve life
4-13 insurance company, provided that those employers, officers,
4-14 employees, or trustees are not in any manner compensated directly
4-15 or indirectly by the legal reserve life insurance company issuing
4-16 the insurance contracts;
4-17 (3) banks or their officers and employees to the
4-18 extent that the banks, or their officers, and employees collect and
4-19 remit premiums by charging the premiums against the account of a
4-20 depositor on the orders of the depositor;
4-21 (4) a ticket-selling agent of a public carrier with
4-22 respect to accident and health insurance tickets covering risks of
4-23 travel; or
4-24 (5) an agent selling credit health and accident
4-25 insurance issued exclusively in connection with credit
5-1 transactions, or acting as agent or solicitor for health and
5-2 accident insurance under a license issued under either Article
5-3 21.07, Article 21.07-1, or Article 21.14, Insurance Code.
5-4 SECTION 3. Section 20, Article 21.14, Insurance Code, is
5-5 amended to read as follows:
5-6 Sec. 20. LIFE, HEALTH AND ACCIDENT INSURANCE, INAPPLICABLE
5-7 TO; OTHER EXCEPTIONS. The [No] provisions of this article do not
5-8 [shall] apply to the Life, Health and Accident Insurance business
5-9 or the Life, Health and Accident Department of the companies
5-10 engaged therein, nor shall it apply to any of the following,
5-11 namely:
5-12 (a) Any actual full-time home office salaried employee of
5-13 any insurance carrier licensed to do business in Texas, other than
5-14 an employee who solicits or receives an application for the sale of
5-15 insurance through an oral, written, or electronic communication in
5-16 accordance with Section 20A of this article.
5-17 (b) Any actual attorney in fact and its actual traveling
5-18 salaried representative as to business transacted through such
5-19 attorney in fact or salaried representative of any reciprocal
5-20 exchange or interinsurance exchange admitted to do business in
5-21 Texas.
5-22 (c) Any adjuster of losses, and/or inspector of risks, for
5-23 an insurance carrier licensed to do business in Texas.
5-24 (d) Any General Agent or State Agent or Branch Manager
5-25 representing an admitted and licensed insurance company or carrier,
6-1 or insurance companies or carriers, in a supervisory capacity.
6-2 (e) The actual attorney in fact for any Lloyds.
6-3 (f) All incorporated or unincorporated mutual insurance
6-4 companies, their agents and representatives, organized and/or
6-5 operating under and by authority of Chapters 16 and 17 of this
6-6 code.
6-7 (g) Nothing in this entire article shall ever be construed
6-8 to apply to any member, agent, employee, or representative of any
6-9 county or farm mutual insurance company as exempted under Chapters
6-10 16 and 17 of this code.
6-11 (h) Nothing in this article shall apply to the group motor
6-12 vehicle insurance business or the group motor vehicle department of
6-13 the companies engaged in that business.
6-14 (i) Salaried employees not involved in solicitation or
6-15 negotiation of insurance in the office of a local recording agent
6-16 who devote their full time to clerical and administrative services,
6-17 including the incidental taking of information from customers and
6-18 receipt of premiums in the office of a local recording agent,
6-19 provided the employees do not receive any commissions and their
6-20 compensation is not varied by the volume of premiums taken and
6-21 received.
6-22 SECTION 4. Article 21.14, Insurance Code, is amended by
6-23 adding Section 20A to read as follows:
6-24 Sec. 20A. FULL-TIME HOME OFFICE SOLICITORS: MANDATORY
6-25 REGISTRATION, CONTINUING EDUCATION, AND NOTIFICATION TO CONSUMERS;
7-1 DISCIPLINARY ACTIONS. (a) Any actual full-time home office
7-2 salaried employee of any insurance carrier licensed to do business
7-3 in Texas who solicits or receives an application for the sale of
7-4 insurance through an oral, written, or electronic communication
7-5 shall register with the commissioner.
7-6 (b) Any insurance carrier licensed to do business in Texas
7-7 whose general plan of operation includes the use of employees
7-8 described in Subsection (a) of this section shall certify to the
7-9 commissioner that such employees receive continuing education of
7-10 not less than 15 hours per year designed to give such employees:
7-11 (1) reasonable familiarity with the broad principles
7-12 of insurance, with licensing and regulatory laws, and with
7-13 provisions, terms, and conditions of the insurance which the
7-14 registrant transacts; and
7-15 (2) a fair and general understanding of the
7-16 obligations and duties of an insurer to an insured, including
7-17 training in ethical considerations.
7-18 (c) The registration of any actual full-time home office
7-19 salaried employee shall be suspended and the employer insurance
7-20 carrier may be disciplined in accordance with the insurance laws of
7-21 this state, if the commissioner finds that the registrant:
7-22 (1) has wilfully violated any provision of this code,
7-23 the laws of this state, or a rule of the commissioner;
7-24 (2) has been guilty of fraudulent or dishonest acts;
7-25 (3) has materially misrepresented the terms and
8-1 conditions of any insurance policies or contracts;
8-2 (4) has made or issued, or caused to be made or
8-3 issued, any statement misrepresenting or making incomplete
8-4 comparisons regarding the terms or conditions of any insurance
8-5 contract legally issued by an insurance carrier for the purpose of
8-6 inducing or attempting to induce the owner of such contract to
8-7 forfeit or surrender such contract or allow it to expire for the
8-8 purpose of replacing such contract with another;
8-9 (5) is guilty of rebating any insurance premium or
8-10 discriminating as between insureds; or
8-11 (6) has been convicted of a felony involving fraud or
8-12 breach of fiduciary duty.
8-13 (d) Registrants under this section shall disclose such
8-14 registration when making an oral, written, or electronic
8-15 communication to solicit or receive an application for the sale of
8-16 insurance.
8-17 (e) The commissioner shall adopt rules to implement the
8-18 provisions of this section.
8-19 SECTION 5. Subchapter A, Chapter 21, Insurance Code, is
8-20 amended by adding Article 21.15-7 to read as follows:
8-21 Art. 21.15-7. INTERIM STUDY OF AGENTS AND AGENTS' LICENSES
8-22 STATUTES BY COMMISSIONER. The commissioner shall review and
8-23 evaluate the current agents and agents' licenses statutes in this
8-24 subchapter and report to the legislature on the findings no later
8-25 than January 1, 1999. In the review and evaluation of such
9-1 statutes the commissioner shall determine any changes needed: to
9-2 address new methods of marketing insurance, including new
9-3 technologies such as the Internet and telemarketing; to reduce the
9-4 number and types of agents' licenses and streamline and combine
9-5 such licenses where feasible; to determine which provisions of
9-6 these statutes should consistently apply to all licenses to be
9-7 granted under this subchapter; and to address other problems which
9-8 exist or may be occurring with agents' licensing requirements. In
9-9 performing the review and evaluation, the commissioner shall
9-10 appoint an advisory committee to assist in the evaluation and to
9-11 obtain input from the various interested parties. The advisory
9-12 committee shall include independent agents, life and health agents,
9-13 captive agents, insurers (including direct writers and insurers
9-14 that utilize agents), consumers, banks, and others who the
9-15 commissioner believes could contribute to the evaluation.
9-16 SECTION 6. This Act takes effect September 1, 1997.
9-17 SECTION 7. The importance of this legislation and the
9-18 crowded condition of the calendars in both houses create an
9-19 emergency and an imperative public necessity that the
9-20 constitutional rule requiring bills to be read on three several
9-21 days in each house be suspended, and this rule is hereby suspended.
S.B. No. 206
________________________________ ________________________________
President of the Senate Speaker of the House
I hereby certify that S.B. No. 206 passed the Senate on
March 26, 1997, by a viva-voce vote; May 10, 1997, Senate refused
to concur in House amendments and requested appointment of
Conference Committee; May 13, 1997, House granted request of the
Senate; May 31, 1997, Senate adopted Conference Committee Report by
a viva-voce vote.
_______________________________
Secretary of the Senate
I hereby certify that S.B. No. 206 passed the House, with
amendments, on May 8, 1997, by a non-record vote; May 13, 1997,
House granted request of the Senate for appointment of Conference
Committee; May 31, 1997, House adopted Conference Committee Report
by a non-record vote.
_______________________________
Chief Clerk of the House
Approved:
________________________________
Date
________________________________
Governor