1-1 By: Madla S.B. No. 206
1-2 (In the Senate - Filed January 15, 1997; January 16, 1997,
1-3 read first time and referred to Committee on Economic Development;
1-4 March 19, 1997, reported adversely, with favorable Committee
1-5 Substitute by the following vote: Yeas 10, Nays 0; March 19, 1997,
1-6 sent to printer.)
1-7 COMMITTEE SUBSTITUTE FOR S.B. No. 206 By: Madla
1-8 A BILL TO BE ENTITLED
1-9 AN ACT
1-10 relating to licensing requirements for certain insurance agents.
1-11 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-12 SECTION 1. Section 20, Article 21.14, Insurance Code, is
1-13 amended to read as follows:
1-14 Sec. 20. LIFE, HEALTH AND ACCIDENT INSURANCE, INAPPLICABLE
1-15 TO; OTHER EXCEPTIONS. The [No] provisions of this article do not
1-16 [shall] apply to the Life, Health and Accident Insurance business
1-17 or the Life, Health and Accident Department of the companies
1-18 engaged therein, nor shall it apply to any of the following,
1-19 namely:
1-20 (a) Any actual full-time home office salaried employee of
1-21 any insurance carrier licensed to do business in Texas, other than
1-22 an employee who solicits or receives an application for the sale of
1-23 insurance through an oral, written, or electronic communication in
1-24 accordance with Section 20A of this article.
1-25 (b) Any actual attorney in fact and its actual traveling
1-26 salaried representative as to business transacted through such
1-27 attorney in fact or salaried representative of any reciprocal
1-28 exchange or interinsurance exchange admitted to do business in
1-29 Texas.
1-30 (c) Any adjuster of losses, and/or inspector of risks, for
1-31 an insurance carrier licensed to do business in Texas.
1-32 (d) Any General Agent or State Agent or Branch Manager
1-33 representing an admitted and licensed insurance company or carrier,
1-34 or insurance companies or carriers, in a supervisory capacity.
1-35 (e) The actual attorney in fact for any Lloyds.
1-36 (f) All incorporated or unincorporated mutual insurance
1-37 companies, their agents and representatives, organized and/or
1-38 operating under and by authority of Chapters 16 and 17 of this
1-39 code.
1-40 (g) Nothing in this entire article shall ever be construed
1-41 to apply to any member, agent, employee, or representative of any
1-42 county or farm mutual insurance company as exempted under Chapters
1-43 16 and 17 of this code.
1-44 (h) Nothing in this article shall apply to the group motor
1-45 vehicle insurance business or the group motor vehicle department of
1-46 the companies engaged in that business.
1-47 SECTION 2. Article 21.14, Insurance Code, is amended by
1-48 adding Section 20A to read as follows:
1-49 Sec. 20A. FULL-TIME HOME OFFICE SOLICITORS; MANDATORY
1-50 REGISTRATION, CONTINUING EDUCATION, AND NOTIFICATION TO CONSUMERS;
1-51 AND DISCIPLINARY ACTIONS. (a) Any actual full-time home office
1-52 salaried employee of any insurance carrier licensed to do business
1-53 in Texas who solicits or receives an application for the sale of
1-54 insurance through an oral, written, or electronic communication
1-55 shall register with the commissioner.
1-56 (b) Any insurance carrier licensed to do business in Texas
1-57 whose general plan of operation includes the use of employees
1-58 described in Subsection (a) shall certify to the commissioner that
1-59 such employees receive continuing education of not less than 15
1-60 hours per year designed to give such employees:
1-61 (1) reasonable familiarity with the broad principles
1-62 of insurance, with licensing and regulatory laws, and with
1-63 provisions, terms, and conditions of the insurance which the
1-64 registrant transacts; and
2-1 (2) a fair and general understanding of the
2-2 obligations and duties of an insurer to an insured, including
2-3 training in ethical considerations.
2-4 (c) The registration of any actual full-time home office
2-5 salaried employee shall be suspended and the employer insurance
2-6 carrier may be disciplined in accordance with the insurance laws of
2-7 this state, if the commissioner finds that the registrant:
2-8 (1) has wilfully violated any provision of this code,
2-9 the laws of this state, or a rule of the commissioner;
2-10 (2) has been guilty of fraudulent or dishonest acts;
2-11 (3) has materially misrepresented the terms and
2-12 conditions of any insurance policies or contracts;
2-13 (4) has made or issued, or caused to be made or
2-14 issued, any statement misrepresenting or making incomplete
2-15 comparisons regarding the terms or conditions of any insurance
2-16 contract legally issued by an insurance carrier for the purpose of
2-17 inducing or attempting to induce the owner of such contract to
2-18 forfeit or surrender such contract or allow it to expire for the
2-19 purpose of replacing such contract with another;
2-20 (5) is guilty of rebating any insurance premium or
2-21 discriminating as between insureds; or
2-22 (6) has been convicted of a felony involving fraud or
2-23 breach of fiduciary duty.
2-24 (d) Registrants under this section shall disclose such
2-25 registration when making an oral, written, or electronic
2-26 communication to solicit or receive an application for the sale of
2-27 insurance.
2-28 (e) The commissioner shall adopt rules to implement the
2-29 provisions of this section.
2-30 SECTION 3. Chapter 21, Insurance Code, is amended by adding
2-31 Article 21.15-7 to read as follows:
2-32 Art. 21.15-7. INTERIM STUDY OF AGENTS AND AGENTS' LICENSES
2-33 STATUTES BY COMMISSIONER. The commissioner shall review and
2-34 evaluate the current agents and agents' licenses statutes in
2-35 Subchapter A of this chapter and report to the legislature on the
2-36 findings no later than January 1, 1999. In the review and
2-37 evaluation of such statutes the commissioner shall determine any
2-38 changes needed: to address new methods of marketing insurance,
2-39 including new technologies such as the Internet and telemarketing;
2-40 to reduce the number and types of agents' licenses and streamline
2-41 and combine such licenses where feasible; to determine which
2-42 provisions of these statutes should consistently apply to all
2-43 licenses to be granted under Subchapter A of this chapter; and to
2-44 address other problems which exist or may be occurring with agents'
2-45 licensing requirements. In performing the review and evaluation,
2-46 the commissioner shall appoint an advisory committee to assist in
2-47 the evaluation and to obtain input from the various interested
2-48 parties. The advisory committee shall include independent agents,
2-49 captive agents, insurers (including direct writers and insurers
2-50 that utilize agents), consumers, banks, and others who the
2-51 commissioner believes could contribute to the evaluation.
2-52 SECTION 4. This Act takes effect September 1, 1997.
2-53 SECTION 5. The importance of this legislation and the
2-54 crowded condition of the calendars in both houses create an
2-55 emergency and an imperative public necessity that the
2-56 constitutional rule requiring bills to be read on three several
2-57 days in each house be suspended, and this rule is hereby suspended.
2-58 * * * * *