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.

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