By: Madla S.B. No. 956
A BILL TO BE ENTITLED
AN ACT
1-1 relating to the regulation of certain insurance agents and to the
1-2 consolidation of insurance agent licenses; providing penalties.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 ARTICLE 1. GENERAL PROVISIONS APPLICABLE TO
1-5 ALL INSURANCE AGENTS
1-6 SECTION 1.01. Article 21.01, Insurance Code, is amended to
1-7 read as follows:
1-8 Art. 21.01. PURPOSE; CONSOLIDATION OF LICENSES; APPLICATION;
1-9 CERTIFICATE OF AUTHORITY OR LICENSE REQUIRED; RULEMAKING AUTHORITY
1-10 Sec. 1. PURPOSE. It is the intent of the legislature to
1-11 simplify and reform the regulation of insurance agents in this
1-12 state by consolidating the types of licenses issued to insurance
1-13 agents under this subchapter. This subchapter is also intended to
1-14 promote uniformity in the licensing, examination, continuing
1-15 education, and disciplinary requirements for agents.
1-16 Sec. 2. CERTIFICATE OF AUTHORITY OR LICENSE REQUIRED. It
1-17 shall not be lawful for any person to act [within this State], as
1-18 an agent or otherwise, in soliciting or receiving applications for
1-19 insurance of any kind whatever in this state, or in any manner to
1-20 aid in the transaction of the business of any insurance company
1-21 incorporated in this state [State], or out of it, without first
1-22 procuring a license or certificate of authority from the department
1-23 [Board].
1-24 Sec. 3. APPLICATION. (a) Except as otherwise provided by
2-1 this code, this subchapter applies to each person licensed in
2-2 accordance with:
2-3 (1) Section 4, Article 1.14-2, of this code;
2-4 (2) Section 7, Article 3.75, of this code;
2-5 (3) Subsection (c), Article 5.13-1, of this code;
2-6 (4) Article 10.37-3 of this code;
2-7 (5) Article 16.24A of this code;
2-8 (6) Section 9, Article 17.25, of this code;
2-9 (7) Article 21.07 of this code;
2-10 (8) Article 21.07-1 of this code;
2-11 (9) Chapter 29, Acts of the 54th Legislature, Regular
2-12 Session, 1955 (Article 21.07-2, Vernon's Texas Insurance Code);
2-13 (10) the Managing General Agents' Licensing Act
2-14 (Article 21.07-3, Vernon's Texas Insurance Code);
2-15 (11) Chapter 407, Acts of the 63rd Legislature,
2-16 Regular Session, 1973 (Article 21.07-4, Vernon's Texas Insurance
2-17 Code);
2-18 (12) Article 21.07-6 of this code;
2-19 (13) Article 21.07-7 of this code;
2-20 (14) Article 21.11 of this code;
2-21 (15) Article 21.14 of this code;
2-22 (16) Article 21.14-1 of this code;
2-23 (17) Article 21.14-2 of this code;
2-24 (18) Article 23.23A of this code; or
2-25 (19) a specialty license program established by the
2-26 department.
3-1 (b) Except as otherwise provided by law, each reference in
3-2 this code and other laws of this state to a particular type of
3-3 license authorizing an agent to engage in the business of insurance
3-4 in this state means a license designation as made by amendment,
3-5 enactment, or reenactment of or to Subchapter A, Chapter 21, of
3-6 this code by the 76th Legislature, Regular Session, 1999, or
3-7 subsequent amendments to that subchapter. A reference in this
3-8 subchapter to a statutory provision applies to all reenactments,
3-9 revisions, or amendments of that provision.
3-10 Sec. 4. RULES. The commissioner may adopt rules as
3-11 necessary to implement this subchapter and to meet the minimum
3-12 requirements of federal law and regulations.
3-13 SECTION 1.02. Article 21.01-1, Insurance Code, is amended to
3-14 read as follows:
3-15 Art. 21.01-1. AGENTS' QUALIFYING EXAMINATION; CONTINUING
3-16 EDUCATION REQUIREMENTS FOR AGENTS
3-17 Sec. 1. EXAMINATION ADMINISTRATION. (a) The commissioner
3-18 [State Board of Insurance] may[, at its discretion,] accept
3-19 examinations administered by a testing service as satisfying the
3-20 examination requirements of persons seeking license as agents,
3-21 [solicitors,] counselors, or adjusters under this code. The
3-22 commissioner [State Board of Insurance] may negotiate agreements
3-23 with such testing services to include performance of examination
3-24 development, test scheduling, examination site arrangements, and
3-25 test administration, grading, reporting and analysis. The
3-26 commissioner [State Board of Insurance] may require such testing
4-1 services to correspond directly with the applicants with regard to
4-2 the administration of such examinations and that such testing
4-3 services collect fees for administering such examinations directly
4-4 from the applicants. The commissioner [State Board of Insurance]
4-5 may stipulate that any agreements with such testing services
4-6 provide for the administration of examinations in specific locales
4-7 and at specified frequencies. The commissioner [State Board of
4-8 Insurance] shall retain the authority to establish the scope and
4-9 type of all examinations. Prior to negotiating and making any
4-10 agreement with any testing service as authorized hereby, the
4-11 commissioner [State Board of Insurance] shall hold a public hearing
4-12 [thereon] in accordance with Chapter 2001, Government Code [the
4-13 provisions of Section 5 of the Administrative Procedure and Texas
4-14 Register Act (Article 6252-13a, Vernon's Texas Civil Statutes)],
4-15 and shall adopt such rules[, regulations,] and standards as may be
4-16 deemed appropriate by the commissioner [Board] to implement the
4-17 authority granted in this article [Article].
4-18 (b) The commissioner may appoint advisory boards consisting
4-19 of any of the following persons: persons holding a license for
4-20 which the respective examinations are intended, persons who are
4-21 employed by insurance companies appointing such licensees, persons
4-22 acting as general agents or managers, persons teaching insurance at
4-23 an accredited college or university in Texas, persons who are
4-24 citizens of the State of Texas but who are not of any of the
4-25 preceding descriptions, or any combination of such persons. The
4-26 function of such advisory boards will be to make recommendations to
5-1 the commissioner [State Board of Insurance] or the testing service
5-2 with respect to the scope, type, and conduct of such examinations
5-3 and the times and places within the state where they shall be held.
5-4 The members of such advisory boards shall serve without pay but
5-5 shall be reimbursed for their reasonable expenses in attending
5-6 meetings of their respective advisory boards.
5-7 (c) In the absence of an agreement with a testing service,
5-8 the department [State Board of Insurance] shall administer any
5-9 required qualifying examination in accordance with this article
5-10 [the provisions of the respective statutes governing the issuance
5-11 of the license sought by the applicant]. The commissioner may
5-12 adopt rules relating to the scope, type, and conduct of the written
5-13 examinations and the times and places in this state at which the
5-14 examinations will be conducted. The commissioner's rules may
5-15 designate textbooks, manuals, and other materials to be studied by
5-16 applicants in preparation for examinations conducted under this
5-17 subsection. Those textbooks, manuals, or other materials may
5-18 consist of material available to an applicant by purchase from the
5-19 publisher or of material prepared at the direction of the
5-20 commissioner and distributed to an applicant on request and on
5-21 payment of the reasonable cost of the material. All examination
5-22 questions shall be prepared from the contents of the textbooks,
5-23 manuals, and other materials designated or prepared by the
5-24 commissioner under this subsection.
5-25 (d) Not later than the 30th day after the date on which a
5-26 licensing examination is administered under this code, the
6-1 department shall notify each examinee of the results of the
6-2 examination. However, if an examination is graded or reviewed by a
6-3 testing service, the department shall notify each examinee
6-4 [examinees] of the results of the examination not later than the
6-5 14th day after the date on which the department receives the
6-6 results from the testing service. If the notice of examination
6-7 results graded or reviewed by a testing service will be delayed for
6-8 longer than 90 days after the examination date, the department
6-9 shall notify the examinee of the reason for the delay before the
6-10 90th day. The department may require a testing service to notify
6-11 examinees of the results of an examination.
6-12 (e) If requested in writing by a person who fails a
6-13 licensing examination administered under this code, the department
6-14 shall furnish the person with an analysis of the person's
6-15 performance on the examination.
6-16 Sec. 2. EXAMINATION OF LICENSE APPLICANT. (a) Except as
6-17 provided by Subsection (c) of this section, each applicant for a
6-18 license to act as an insurance agent in this state must submit to a
6-19 personal written examination that is prescribed by the department
6-20 and must pass the examination to the satisfaction of the
6-21 department. The examination shall determine the applicant's
6-22 competence with respect to:
6-23 (1) the type of insurance contracts for which the
6-24 applicant seeks a license;
6-25 (2) the laws of this state regulating the business of
6-26 insurance; and
7-1 (3) the ethical obligations and duties of an insurance
7-2 agent.
7-3 (b) The department shall charge each applicant an
7-4 examination fee in an amount determined by the department as
7-5 necessary for administration of the examination. The fee must
7-6 accompany each application to take the examination. The fee is
7-7 nonrefundable other than for failure of the applicant to appear and
7-8 take the examination after the applicant has given at least 24
7-9 hours' notice of an emergency situation to the department and
7-10 received the department's approval of refund of the fee.
7-11 (c) The commissioner shall prescribe a limited written
7-12 licensing examination for applicants for a limited license under
7-13 Article 21.07-1 or Article 21.14 of this code. A limited
7-14 examination shall be administered according to the provisions of
7-15 this article and shall determine the applicant's competence and
7-16 understanding of:
7-17 (1) the general principles of insurance contracts;
7-18 (2) the laws of this state regulating the business of
7-19 insurance; and
7-20 (3) the ethical obligations and duties of an insurance
7-21 agent.
7-22 (d) The department may not require a person to take an
7-23 examination under this article if the person is:
7-24 (1) an applicant for the renewal of a license issued
7-25 by the department, and the applicant obtained the license by
7-26 successful completion of a written examination;
8-1 (2) an applicant whose Texas insurance license expired
8-2 less than one year before the date of the application, if the
8-3 previous license was not denied, revoked, or suspended by the
8-4 commissioner;
8-5 (3) a partnership, corporation, or bank;
8-6 (4) an applicant for a life, accident, and health
8-7 license who has attained the designation of chartered life
8-8 underwriter (CLU);
8-9 (5) an applicant for a life and health insurance
8-10 counselor license who has attained the designation of chartered
8-11 life underwriter (CLU), chartered financial consultant (ChFC), or
8-12 certified financial planner (CFP);
8-13 (6) an applicant for a property and casualty license
8-14 who has attained the designation of chartered property and casualty
8-15 underwriter (CPCU);
8-16 (7) an applicant for a specialty license issued by the
8-17 department;
8-18 (8) a nonresident individual who is exempt from the
8-19 examination requirement under Article 21.11 of this code; or
8-20 (9) an applicant for a general life, accident, and
8-21 health license who was authorized to solicit insurance on behalf of
8-22 a fraternal benefit society on September 1, 1999, if the applicant:
8-23 (A) had actually solicited insurance on behalf
8-24 of the fraternal benefit society for at least 24 months preceding
8-25 September 1, 1999;
8-26 (B) does not solicit insurance for any other
9-1 insurer or a different fraternal benefit society on or after
9-2 September 1, 1999;
9-3 (C) limits insurance solicitations on or after
9-4 September 1, 1999, to eligible members of the fraternal benefit
9-5 society; and
9-6 (D) does not solicit interest-sensitive life
9-7 insurance certificates with face amounts exceeding $35,000 on or
9-8 after September 1, 1999, unless the applicant has obtained the
9-9 designation of "Fraternal Insurance Counselor."
9-10 (e) A license to which the exemption authorized under
9-11 Subsection (d)(9) of this section applies must be held by the
9-12 applicant in an individual capacity and is not transferable.
9-13 (f) Each examination administered under this article shall
9-14 be offered in English and Spanish.
9-15 Sec. 3. CONTINUING EDUCATION REQUIREMENTS. (a) The
9-16 department has exclusive jurisdiction for all matters relating to
9-17 the continuing education of insurance agents who are licensed under
9-18 this code.
9-19 (b) Except as provided by Subsection (d) of this section,
9-20 each individual who holds a license issued by the department shall
9-21 complete continuing education. All required continuing education
9-22 hours must be completed before the expiration date of the
9-23 individual's license. An individual who holds a life, accident,
9-24 and health license, a life and health insurance counselor license,
9-25 or a property and casualty license shall complete 15 hours of
9-26 continuing education annually. The agent may not be required to
10-1 complete more than 15 continuing education hours annually as a
10-2 result of holding more than one license for which continuing
10-3 education is required. An individual who holds a limited life,
10-4 accident, and health license or a limited property and casualty
10-5 license shall complete five hours of continuing education annually.
10-6 Each individual who holds a license issued by the department shall
10-7 complete four hours of continuing education in ethics during each
10-8 license renewal period. At least 50 percent of all required
10-9 continuing education hours must be completed in a classroom setting
10-10 or a classroom equivalent setting approved by the department. The
10-11 department may grant reciprocity to license holders who complete
10-12 continuing education requirements in other professions or in
10-13 association with professional designations in an insurance-related
10-14 field.
10-15 (c) On a timely written request of an agent, the department
10-16 may extend the time for the agent to comply with the continuing
10-17 education requirements of this section or may exempt the agent from
10-18 some or all of the requirements for a licensing period if the
10-19 department finds that the agent is unable to comply with the
10-20 requirements because of illness, medical disability, or another
10-21 extenuating circumstance beyond the control of the agent. The
10-22 commissioner by rule shall prescribe the criteria for an exemption
10-23 or extension under this subsection.
10-24 (d) An individual who has continuously held a license issued
10-25 under this code to operate as an insurance agent for the 20 years
10-26 preceding September 1, 1999, is exempt from the continuing
11-1 education requirements of this section. The commissioner by rule
11-2 may provide for other reasonable exemptions.
11-3 (e) The department shall certify continuing education
11-4 programs for agents. Only a program that satisfies the criteria
11-5 established by rule by the commissioner may receive certification.
11-6 The certification criteria shall be designed to ensure that
11-7 continuing education programs enhance the knowledge, understanding,
11-8 and professional competence of the license holder. A nonrefundable
11-9 certification fee, in an amount set by the commissioner as
11-10 necessary for administering the program, must accompany each
11-11 application for certification of a continuing education program.
11-12 The fee shall be established by rule and based on a graduated scale
11-13 according to the number of hours required to complete the program.
11-14 (f) Each continuing education course provider shall register
11-15 with the department as a course provider. The department shall
11-16 assess a registration fee for each application for registration as
11-17 a provider, set by the commissioner in an amount necessary for the
11-18 proper administration of this section. The commissioner may adopt
11-19 rules establishing the requirements for continuing education course
11-20 providers. The department may negotiate agreements with
11-21 independent contractors under which the independent contractor
11-22 certifies and registers continuing education courses and providers.
11-23 The department may require those independent contractors to
11-24 correspond directly with providers with regard to the
11-25 administration of continuing education courses, and the contractors
11-26 may collect fees from the providers for administration of the
12-1 courses. The department retains the authority to establish the
12-2 scope and type of continuing education requirements for each type
12-3 of license.
12-4 (g) The commissioner may appoint an advisory council to
12-5 furnish the commissioner with information and assistance in the
12-6 conduct of the continuing education program for agents licensed
12-7 under this subchapter. If an advisory council is appointed, it
12-8 must be composed of nine members, four of whom must be public
12-9 members. The public members are entitled to reimbursement for
12-10 their reasonable travel expenses in attending meetings of the
12-11 advisory council, subject to any applicable limit in the General
12-12 Appropriations Act. A public member may not:
12-13 (1) be an officer, director, or employee of an
12-14 insurance company, insurance agency, agent, broker, adjuster, or
12-15 any other business entity regulated by the department;
12-16 (2) be a person required to register with the Texas
12-17 Ethics Commission under Chapter 305, Government Code; or
12-18 (3) be related to a person described by Subdivision
12-19 (1) or (2) of this subsection within the second degree by affinity
12-20 or consanguinity, as determined under Chapter 573, Government Code.
12-21 SECTION 1.03. Section 2, Article 21.01-2, Insurance Code, is
12-22 redesignated as Section 1A, Article 21.01-2, Insurance Code, and
12-23 amended to read as follows:
12-24 Sec. 1A [2]. EXPIRATION AND RENEWAL OF LICENSES.
12-25 (a) Except as provided by a staggered renewal system adopted under
12-26 Subsection (h) of this section, each agent license issued by the
13-1 department expires on the fifth anniversary of the date of
13-2 issuance unless suspended or revoked by the commissioner. A person
13-3 may renew a [an unexpired] license that has not expired or has not
13-4 been suspended or revoked by filing a properly completed renewal
13-5 application with the department in the form prescribed by the
13-6 department and paying to the department before the expiration date
13-7 of the license the required renewal fee. A renewal fee paid under
13-8 this section is nonrefundable.
13-9 (b) On the filing of a completed renewal application not
13-10 later than the expiration date of the license accompanied by the
13-11 renewal fee set by the commissioner, the original license continues
13-12 in force until:
13-13 (1) the department issues the renewal license; or
13-14 (2) the commissioner issues an order revoking the
13-15 license.
13-16 (c) If a person's license has been expired for 90 days or
13-17 less, the person may renew the license by filing a renewal
13-18 application with the department in the form prescribed by the
13-19 department and paying to the department the required renewal fee
13-20 and an additional [a] fee that is equal to one-half of the renewal
13-21 [license] fee[, if any,] for the license.
13-22 (d) If a person's license has been expired for more than 90
13-23 days but less than one year, the person may not renew the license,
13-24 but is entitled to a new license without taking the applicable
13-25 examination if the person submits to the department a new
13-26 application, the license fee, and an additional fee equal to
14-1 one-half of the license fee.
14-2 (e) [(c)] If a person's license has been expired for one
14-3 year or more [longer than 90 days], the person may not renew the
14-4 license. The person may obtain a new license by submitting to
14-5 reexamination, if examination is required for original issuance of
14-6 the license, and complying with the requirements and procedures for
14-7 obtaining an original license.
14-8 (f) The [However, the] department may renew without
14-9 reexamination an expired license of a person who was licensed in
14-10 this state, moved to another state, and is currently licensed and
14-11 has been in continual practice in the other state for the period
14-12 [two years] preceding application. The person must pay to the
14-13 department a fee that is equal to the license fee.
14-14 (g) [(d)] At least 30 days before the expiration of a
14-15 person's license, the department shall send written notice of the
14-16 impending license expiration to the person at the person's last
14-17 known mailing address according to the records of the department.
14-18 (h) [(e)] The commissioner by rule may adopt a system under
14-19 which licenses expire on various dates during a licensing period.
14-20 For the licensing period in which the license expiration is
14-21 changed, license fees shall be prorated [on a monthly basis] so
14-22 that each license holder shall pay only that portion of the license
14-23 fee that is allocable to the period [number of months] during which
14-24 the license is valid. On renewal of the license on the new
14-25 expiration date, the total license renewal fee is payable. The
14-26 commissioner shall adopt a system under which a person who holds
15-1 more than one license may renew all the licenses held in a single
15-2 process.
15-3 (i) [(f)] This section is not applicable to a license issued
15-4 under Article 21.07-6 or 21.07-7 of this code.
15-5 SECTION 1.04. Article 21.01-2, Insurance Code, is amended by
15-6 adding Section 2A to read as follows:
15-7 Sec. 2A. PROHIBITED ACTIVITIES. (a) A person licensed
15-8 under this code who receives a commission or other consideration
15-9 for services as an insurance agent may not receive an additional
15-10 fee for those services provided to the same client except for a fee
15-11 described by Article 21.35A or 21.35B of this code.
15-12 (b) An insurer or licensed insurance agent engaged in the
15-13 business of insurance in this state may not pay, directly or
15-14 indirectly, and may not accept, any commission or other valuable
15-15 consideration to or from any person for services performed by that
15-16 person as an insurance agent in this state unless the person holds
15-17 a license to act as an insurance agent as required by the laws of
15-18 this state. This subsection does not prevent the payment or
15-19 receipt of renewal or other deferred commissions to or by any
15-20 person solely because the person has ceased to hold a license to
15-21 act as an insurance agent.
15-22 (c) An insurance agent licensed under this code may not pay,
15-23 allow, or give, or offer to pay, allow, or give, directly or
15-24 indirectly, to any person who is not a licensed insurance agent,
15-25 any rebate of premiums payable, commission, paid employment, or
15-26 contract for service, or any other valuable consideration or
16-1 inducement, that is not specified in the policy or contract of
16-2 insurance for or on account of the solicitation or negotiation of
16-3 contracts of insurance.
16-4 (d) In addition to any other penalty imposed under this
16-5 code, a person who is determined by the department to have
16-6 committed conduct described by this subsection is barred from
16-7 receiving a license as an insurance agent before the fifth
16-8 anniversary of the date of the determination. This subsection
16-9 applies to a person who:
16-10 (1) acts as an insurance agent without holding a
16-11 license under this code;
16-12 (2) solicits a contract of insurance or acts as an
16-13 insurance agent without having been appointed or designated by an
16-14 authorized insurance company, association, or organization to do so
16-15 as provided by this code;
16-16 (3) solicits any contract of insurance or acts as an
16-17 agent for a person, including an insurance company, association, or
16-18 organization, not authorized to engage in the business of insurance
16-19 in this state without holding a license issued under Article 1.14-2
16-20 of this code; or
16-21 (4) as an officer or representative of an insurance
16-22 company, knowingly contracts with or appoints as an agent a person
16-23 who does not hold a valid and outstanding license.
16-24 (e) A person who has had an insurance license revoked in
16-25 this state or any other state may not solicit or otherwise transact
16-26 business under Chapter 10 of this code unless it is determined by
17-1 the department to be in the public interest, for good cause shown,
17-2 to allow the person to act in that capacity.
17-3 (f) A person who has had an insurance license revoked in
17-4 this state or any other state may not act as an officer, director,
17-5 member, manager, or partner, or as a shareholder with a controlling
17-6 interest, of an entity licensed under this subchapter unless it is
17-7 determined by the department to be in the public interest, for good
17-8 cause shown, to allow the person to act in that capacity.
17-9 (g) A property and casualty agent may not knowingly grant,
17-10 write, or permit a greater amount of insurance against loss by fire
17-11 than the reasonable value of the subject of the insurance.
17-12 (h) This section does not apply to a person who is licensed
17-13 under, or holds a certificate of authority issued under, Chapter 9
17-14 of this code.
17-15 SECTION 1.05. Section 5, Article 21.01-2, Insurance Code, is
17-16 redesignated as Section 3A, Article 21.01-2, Insurance Code, and
17-17 amended to read as follows:
17-18 Sec. 3A [5]. DENIAL OR REFUSAL OF LICENSE APPLICATION;
17-19 SUSPENSION OR REVOCATION OF LICENSES; DISCIPLINE OF LICENSE
17-20 HOLDERS. (a) In addition to any other remedy available under
17-21 Section 7, Article 1.10, of this code, the [The] department may
17-22 [shall] refuse to issue an original license, revoke, suspend, or
17-23 refuse to renew a license, place on probation a person whose
17-24 license has been suspended, assess an administrative penalty, or
17-25 reprimand a license holder for a violation of this code, another
17-26 insurance law of this state, or a rule of the commissioner [or the
18-1 board]. If a license suspension is probated, the commissioner may
18-2 require the person to:
18-3 (1) report regularly to the department on matters that
18-4 are the basis of the probation;
18-5 (2) limit the person's practice to the areas
18-6 prescribed by the department; or
18-7 (3) continue or review professional education until
18-8 the person attains a degree of skill satisfactory to the
18-9 commissioner in those areas that are the basis of the probation.
18-10 (b) If the department proposes to refuse to issue an
18-11 original license, or to suspend, revoke, or refuse to renew a
18-12 license, the person affected is entitled to a hearing conducted by
18-13 the State Office of Administrative Hearings in accordance with
18-14 Article 1.33B of this code. Notice of the hearing shall be
18-15 provided to the person and to any insurance carrier appearing on
18-16 the application as desiring that the license be issued.
18-17 (c) The department may discipline a license holder or deny a
18-18 license application under this article if the department determines
18-19 that the applicant or license holder, individually or through any
18-20 officer, director, or shareholder:
18-21 (1) has wilfully violated any provision of the
18-22 insurance laws of this state;
18-23 (2) has intentionally made a material misstatement in
18-24 the license application;
18-25 (3) has obtained, or attempted to obtain, a license by
18-26 fraud or misrepresentation;
19-1 (4) has misappropriated, converted to the applicant's
19-2 or holder's own use, or illegally withheld money belonging to:
19-3 (A) an insurer;
19-4 (B) a health maintenance organization; or
19-5 (C) an insured, enrollee, or beneficiary;
19-6 (5) has engaged in fraudulent or dishonest acts or
19-7 practices;
19-8 (6) has materially misrepresented the terms and
19-9 conditions of an insurance policy or contract, including a contract
19-10 relating to membership in a health maintenance organization;
19-11 (7) has made or issued, or caused to be made or
19-12 issued, any statement misrepresenting or making incomplete
19-13 comparisons regarding the terms or conditions of an insurance or
19-14 annuity contract legally issued by an insurer or a membership
19-15 issued by a health maintenance organization to induce the owner of
19-16 the contract or membership to forfeit or surrender the contract or
19-17 membership or allow it to lapse for the purpose of replacing the
19-18 contract or membership with another;
19-19 (8) is convicted of a felony;
19-20 (9) has offered or given a rebate of an insurance
19-21 premium or commission to an insured or enrollee;
19-22 (10) is not actively engaged in the soliciting or
19-23 writing of insurance for the public generally as required by
19-24 Section 2(c), Article 21.07, of this code; or
19-25 (11) has obtained or attempted to obtain a license,
19-26 not for the purpose of holding the license holder or applicant out
20-1 to the general public as an agent, but primarily for the purpose of
20-2 soliciting, negotiating, or procuring insurance or annuity
20-3 contracts or memberships covering:
20-4 (A) the applicant or license holder;
20-5 (B) a member of the applicant's or license
20-6 holder's family; or
20-7 (C) a business associate of the applicant or
20-8 license holder.
20-9 (d) An individual whose license application is denied or
20-10 whose license has been revoked under this article may not apply for
20-11 any license as an insurance agent before the fifth anniversary of:
20-12 (1) the effective date of the denial or revocation; or
20-13 (2) if the applicant or license holder seeks judicial
20-14 review of the department's action, the date of the final court
20-15 order or decree affirming that action.
20-16 (e) The commissioner may deny a timely application filed
20-17 under Subsection (d) of this section if the applicant does not show
20-18 good cause why the denial or revocation of the previous license
20-19 application or license should not be considered a bar to the
20-20 issuance of a new license. This subsection does not apply to an
20-21 applicant whose license application was denied for failure to:
20-22 (1) pass a required written examination; or
20-23 (2) submit a properly completed license application.
20-24 (f) Instead of or in addition to taking disciplinary action
20-25 under this section, the department may order that a license holder
20-26 who is currently afflicted with a disability be placed on
21-1 disability probation under the terms and conditions specified under
21-2 Article 21.15-6 of this code and department rules.
21-3 (g) Subsections (c)-(f) of this section do not apply to a
21-4 person who is licensed under, or holds a certificate of authority
21-5 issued under, Chapter 9 of this code. [The commissioner shall
21-6 prescribe procedures by which all decisions to deny, suspend, or
21-7 revoke a license, or to refuse to renew a license, are made by or
21-8 are appealable to the commissioner.]
21-9 SECTION 1.06. Article 21.01-2, Insurance Code, is amended by
21-10 adding Sections 4A, 5A, and 6A to read as follows:
21-11 Sec. 4A. JUDICIAL REVIEW. A license applicant or license
21-12 holder may appeal as provided by Article 1.04 of this code if:
21-13 (1) the commissioner:
21-14 (A) refuses an application for a license as
21-15 provided by this article; or
21-16 (B) suspends, revokes, or refuses to renew a
21-17 license at a hearing as provided by this article; or
21-18 (2) the applicant or license holder is dissatisfied
21-19 with another action of the commissioner.
21-20 Sec. 5A. AUTOMATIC FINES. (a) To expedite the department's
21-21 processing of certain violations of this code, the commissioner may
21-22 establish by rule monetary fines for certain violations.
21-23 Violations for which the fines may be assessed include a failure
21-24 to:
21-25 (1) obtain the total number of continuing education
21-26 hours before the renewal date of the license;
22-1 (2) timely report a change of address to the
22-2 department; or
22-3 (3) notify the department of an administrative action
22-4 taken against the agent by another state's insurance regulator.
22-5 (b) This section may not be construed to limit the
22-6 department's authority to take any other disciplinary action
22-7 against a license holder as provided under another provision of
22-8 this code.
22-9 (c) If a person disputes the assessment of a fine under this
22-10 section, the matter is a contested case subject to Chapter 2001,
22-11 Government Code.
22-12 Sec. 6A. ENFORCEMENT OF SUBCHAPTER. The attorney general, a
22-13 district or county attorney, or the department acting through the
22-14 commissioner may institute an injunction proceeding or any other
22-15 proceeding to enforce this subchapter and to enjoin any person,
22-16 firm, corporation, or bank from engaging or attempting to engage in
22-17 the business of insurance in violation of this code or any other
22-18 insurance law of this state. The provisions of this section are
22-19 cumulative of the other penalties or remedies provided by this
22-20 article.
22-21 SECTION 1.07. Article 21.04, Insurance Code, is amended to
22-22 read as follows:
22-23 Art. 21.04. LICENSE HOLDER [SOLICITOR] DEEMED COMPANY'S
22-24 AGENT. Any person who solicits an application for life, accident,
22-25 or health insurance, or property or casualty insurance, shall, in
22-26 any controversy between the insured or the insured's beneficiary
23-1 and the company issuing any policy upon such application or between
23-2 the insured or the insured's dependents and that company, be
23-3 regarded as the agent of the company, and not the agent of the
23-4 insured, but such agent shall not have the power to waive, change
23-5 or alter any of the terms or conditions of the application or
23-6 policy.
23-7 SECTION 1.08. Article 21.06, Insurance Code, is amended to
23-8 read as follows:
23-9 Art. 21.06. AUTHORITY TO APPOINT [CERTIFICATES FOR] AGENTS.
23-10 Each [such] foreign or domestic insurance company shall, by
23-11 resolution of its board of directors, designate an [some] officer
23-12 or agent who is empowered to appoint or employ its agents [or
23-13 solicitors] in this State, and such officer or agent shall promptly
23-14 notify the department [Board] in writing of the name, title, and
23-15 address of each person so appointed or employed. The authority of
23-16 that designee to act on behalf of the insurance company continues
23-17 in force [Upon receipt of this notice, the Board shall issue to him
23-18 a certificate which shall include a copy of the certificate of
23-19 authority authorizing the company requesting it to do business in
23-20 this State, and the name and title of the person to whom the
23-21 certificate is issued. Such certificate], unless sooner revoked by
23-22 the commissioner [Board] for cause or cancelled at the request of
23-23 the insurance company, [employing the holder thereof, shall
23-24 continue in force] until the first day of March next after its
23-25 issuance, and must be renewed annually.
23-26 SECTION 1.09. Section 1, Article 21.07, Insurance Code, is
24-1 amended to read as follows:
24-2 Sec. 1. APPLICABILITY OF ARTICLE [ACT]. (a) No person[,
24-3 corporation, or bank] shall act as an agent of any insurance
24-4 company, health maintenance organization, or [(i) local mutual aid
24-5 association, (ii) local mutual burial association, (iii) statewide
24-6 mutual assessment corporation, (iv) stipulated premium company,
24-7 (v) county mutual insurance company, (vi) casualty company writing
24-8 accident and health insurance, or (vii) any] other type of
24-9 insurance carrier licensed to do business in the State of Texas and
24-10 which insurance carrier's agents are required to be licensed under
24-11 the provisions of this subchapter [Article, on the date that this
24-12 Act shall become effective,] unless that person [individual or
24-13 entity] shall have first procured a license from the department as
24-14 [in this Article is] provided by this subchapter, and no such
24-15 insurance carrier shall appoint any person[, corporation, or bank]
24-16 to act as its agent unless such person[, corporation, or bank]
24-17 shall have obtained a license under the provisions of this
24-18 subchapter [Article], and no such person[, corporation, or bank]
24-19 who obtains a license shall engage in business as an agent until
24-20 that person [individual or entity] shall have been appointed to act
24-21 as an agent by some duly authorized insurance carrier designated by
24-22 the provisions of this code [Article] and authorized to do business
24-23 in the State of Texas. [Any person, corporation, or bank desiring
24-24 to act as an agent of any insurance carrier licensed to do business
24-25 in the State of Texas and writing health and accident insurance may
24-26 obtain a separate license as an agent to write health and accident
25-1 insurance provided such person, corporation, or bank complies with
25-2 the provisions of this Article and has been appointed to act as an
25-3 agent by some duly authorized insurance carrier authorized to do
25-4 health and accident insurance business in the State of Texas.]
25-5 (b) The provisions of this subchapter do not apply to:
25-6 (1) an actual full-time home office salaried employee
25-7 of an insurance carrier licensed to do business in this state,
25-8 other than an employee who solicits or receives an application for
25-9 the sale of insurance through an oral, written, or electronic
25-10 communication in accordance with Article 21.14 of this code;
25-11 (2) an actual attorney in fact or the actual traveling
25-12 salaried representative of a reciprocal exchange or interinsurance
25-13 exchange admitted to do business in this state as to business
25-14 transacted through the attorney in fact or salaried representative;
25-15 (3) the actual attorney in fact for a Lloyd's
25-16 association;
25-17 (4) the group motor vehicle insurance business or the
25-18 group motor vehicle department of companies engaged in that
25-19 business; or
25-20 (5) a salaried employee who is not involved in the
25-21 solicitation or negotiation of insurance in the office of a
25-22 licensed agent who devotes the employee's full time to clerical and
25-23 administrative services, including the incidental taking of
25-24 information from customers and receipt of premiums in the office of
25-25 a licensed agent, if the employee does not receive any commissions
25-26 and the employee's compensation is not varied by the volume of
26-1 premiums taken and received. [No insurer or licensed insurance
26-2 agent doing business in this State shall pay directly or indirectly
26-3 any commission, or other valuable consideration, to any person,
26-4 corporation, or bank for services as an insurance agent within this
26-5 State, unless such person, corporation, or bank shall hold a
26-6 currently valid license to act as an insurance agent as required by
26-7 the laws of this State; nor shall any person, corporation, or bank
26-8 other than a duly licensed insurance agent, accept any such
26-9 commission or other valuable consideration; provided, however, that
26-10 the provisions of this Section shall not prevent the payment or
26-11 receipt of renewal or other deferred commissions to or by any
26-12 person solely because such person, corporation, or bank has ceased
26-13 to hold a license to act as an insurance agent.]
26-14 [(c) A person who has had a license revoked under Section 10
26-15 of this Article may not solicit or otherwise transact business
26-16 under Chapter 10 of this code.]
26-17 SECTION 1.10. Section 1A, Article 21.07, Insurance Code, is
26-18 amended to read as follows:
26-19 Sec. 1A. DEFINITIONS. Unless the context clearly indicates
26-20 otherwise, in [In] this subchapter:
26-21 (1) "Agent" means a person who is an authorized agent
26-22 of an insurance company or health maintenance organization, any
26-23 person who is a sub-agent of an agent, and any other person who
26-24 performs the acts of an agent, whether through an oral, written, or
26-25 electronic communication or otherwise, in the solicitation of,
26-26 negotiation for, procurement of, or collection of premiums on an
27-1 insurance or annuity contract, or who represents or purports to
27-2 represent a health maintenance organization, including a health
27-3 maintenance organization offering only a single health care service
27-4 plan, in the solicitation of, negotiation for, procurement of, or
27-5 effectuation of membership in the health maintenance organization.
27-6 The term does not include:
27-7 (A) a regular salaried officer or employee of an
27-8 insurance company, health maintenance organization, or insurance
27-9 agent who:
27-10 (i) devotes substantially all of the
27-11 officer's or employee's time to activities other than the
27-12 solicitation of applications for insurance, annuity contracts, or
27-13 memberships;
27-14 (ii) does not receive a commission or
27-15 other compensation directly dependent on the business obtained; and
27-16 (iii) does not solicit or accept from the
27-17 public applications for insurance, annuity contracts, or
27-18 memberships;
27-19 (B) an employer or an employer's officers or
27-20 employees or the trustees of an employee benefit plan, to the
27-21 extent that those employers, officers, employees, or trustees are
27-22 engaged in the administration or operation of any program of
27-23 employee benefits involving the use of insurance or annuities
27-24 issued by an insurance company or memberships issued by a health
27-25 maintenance organization, if those employers, officers, employees,
27-26 or trustees are not compensated, directly or indirectly, by the
28-1 insurance company or health maintenance organization issuing the
28-2 insurance or annuity contracts or memberships;
28-3 (C) except as otherwise provided by this code, a
28-4 bank, a savings and loan association, or a credit union, or the
28-5 officers and employees of banks, savings and loan associations, or
28-6 credit unions, to the extent that those banks, savings and loan
28-7 associations, credit unions, or officers and employees collect and
28-8 remit premiums or charges by charging those premiums or charges
28-9 against accounts of depositors on the orders of those depositors;
28-10 or
28-11 (D) a person or the employee of a person who has
28-12 contracted to provide administrative, management, or health care
28-13 services to a health maintenance organization and who is
28-14 compensated for those services by the payment of an amount computed
28-15 as a percentage of the revenues, net income, or profit of the
28-16 health maintenance organization, if that method of compensation is
28-17 the sole basis for subjecting that person or the employee of the
28-18 person to this article.
28-19 (2) "Bank" means:
28-20 (A) a national banking association organized and
28-21 existing under the National Bank Act (12 U.S.C. Section 21 et
28-22 seq.), as amended;
28-23 (B) a state bank organized and existing under
28-24 Subtitle A, Title 3, Finance Code;
28-25 (C) a state savings bank organized and existing
28-26 under Subtitle C, Title 3, Finance Code;
29-1 (D) a bank branch; or
29-2 (E) a bank operating subsidiary, as defined by
29-3 state or federal law.
29-4 (3) "Control" means the power to direct or cause the
29-5 direction of the management and policies of a license holder,
29-6 whether directly or indirectly. For the purposes of this
29-7 subchapter, a person is considered to control:
29-8 (A) a corporate license holder if the person,
29-9 individually or acting with others, directly or indirectly, holds
29-10 with the power to vote, owns, or controls, or holds proxies
29-11 representing, at least 10 percent of the voting stock or voting
29-12 rights of the corporate license holder; or
29-13 (B) a partnership if the person through a right
29-14 to vote or through any other right or power exercises rights in the
29-15 management, direction, or conduct of the business of the
29-16 partnership.
29-17 (4) "Corporation" means a legal entity that is
29-18 organized under the business corporations laws or limited liability
29-19 company laws of this state, another state, or a territory of the
29-20 United States and that has as one of its purposes the authority to
29-21 act as an insurance agent. The licensing and regulation of a
29-22 limited liability company is subject to all provisions of this
29-23 subchapter that apply to a corporation licensed under this
29-24 subchapter.
29-25 (5) "Individual" means a natural person. The term
29-26 includes a resident or a nonresident of this state.
30-1 (6) "Insurance company," "insurance carrier," or
30-2 "insurer" means an insurance company regulated by the department.
30-3 The term includes:
30-4 (A) any domestic or foreign, stock and mutual,
30-5 life, health, or accident insurance company;
30-6 (B) any domestic or foreign, stock and mutual,
30-7 fire and casualty insurance company;
30-8 (C) a Mexican casualty company;
30-9 (D) a domestic or foreign Lloyd's plan insurer;
30-10 (E) a domestic or foreign reciprocal or
30-11 interinsurance exchange;
30-12 (F) a domestic or foreign fraternal benefit
30-13 society;
30-14 (G) a stipulated premium insurance company;
30-15 (H) a nonprofit or for-profit legal service
30-16 corporation;
30-17 (I) a statewide mutual assessment company;
30-18 (J) a local mutual aid association;
30-19 (K) a local mutual burial association;
30-20 (L) an exempt association under Article 14.17 of
30-21 this code;
30-22 (M) a nonprofit hospital, medical, or dental
30-23 service corporation, including a company subject to Chapter 20 of
30-24 this code;
30-25 (N) a health maintenance organization;
30-26 (O) a county mutual insurance company; or
31-1 (P) a farm mutual insurance company.
31-2 (7) "Partnership" means an association of two or more
31-3 persons organized under the partnership laws or limited liability
31-4 partnership laws of this state, another state, or a territory of
31-5 the United States. The term includes a general partnership,
31-6 limited partnership, limited liability partnership, and limited
31-7 liability limited partnership.
31-8 (8) "Person" means an individual, partnership,
31-9 corporation, or bank.
31-10 (9) "Sub-agent" means any person, other than a
31-11 regular salaried officer or employee of an insurance company,
31-12 insurance carrier, or health maintenance organization, or of an
31-13 agent, engaging in activities described under Subdivision (1) of
31-14 this section who acts for or on behalf of an agent, whether through
31-15 an oral, written, or electronic communication or otherwise, in the
31-16 solicitation of, negotiation for, or procurement of an insurance or
31-17 annuity contract or health maintenance organization membership, or
31-18 the collection of premiums or charges on an insurance or annuity
31-19 contract or health maintenance organization membership, whether or
31-20 not the sub-agent is designated by the agent as a sub-agent or by
31-21 any other title. A sub-agent is an agent, for all purposes of this
31-22 subchapter, and wherever the term "agent" is used in this chapter,
31-23 it includes sub-agents whether or not a sub-agent is specifically
31-24 mentioned. A sub-agent must hold at least one of the licenses
31-25 issued to the agent for whom the sub-agent acts, but is not
31-26 required to hold each of those licenses. However, the sub-agent
32-1 must be properly licensed to write each type of insurance that the
32-2 sub-agent is employed to write [Article, "person" means an
32-3 individual or a general partnership composed of two or more
32-4 individuals or a limited liability partnership registered with the
32-5 Secretary of State under Section 3.08, Texas Revised Partnership
32-6 Act (Article 6132b-3.08, Vernon's Texas Civil Statutes). The term
32-7 "partnership" or "agency partnership" as used in this Article means
32-8 a general partnership or a registered limited liability
32-9 partnership].
32-10 SECTION 1.11. Section 2, Article 21.07, Insurance Code, is
32-11 amended to read as follows:
32-12 Sec. 2. APPLICATION FOR LICENSE; TO WHOM LICENSE MAY BE
32-13 ISSUED. (a) Any person[, corporation, or bank] that desires to
32-14 become an agent for an [a local mutual aid association, a local
32-15 mutual burial association, a statewide mutual assessment
32-16 corporation, a stipulated premium company, a county mutual]
32-17 insurance company or health maintenance organization[, a casualty
32-18 company writing accident and health insurance, or any other type of
32-19 insurance carrier licensed to do business in the State of Texas],
32-20 the agents of which are required to be licensed under this
32-21 subchapter [Article], shall submit to the department an application
32-22 for a license in the form required by the department.
32-23 (b) Each applicant for a license to act as an insurance
32-24 agent in this state shall file with the commissioner a completed
32-25 application on forms developed by the department. The commissioner
32-26 shall establish by rule the requirements for a properly completed
33-1 application.
33-2 (c) The commissioner may not grant a license as an insurance
33-3 agent to write any form of insurance unless the department finds
33-4 that:
33-5 (1) the applicant is or intends to be actively engaged
33-6 in the soliciting or writing of insurance for the public generally
33-7 and is to be actively engaged in the business of insurance; and
33-8 (2) the application is not made to evade the laws
33-9 against rebating and discrimination, either for the applicant or
33-10 for some other person.
33-11 (d) This section does not prohibit an applicant insuring
33-12 property that the applicant owns or in which the applicant has an
33-13 interest, but it is the intent of this section to prohibit coercion
33-14 of insurance and to preserve to each individual the right to choose
33-15 that individual's own agent or insurance company, and to prohibit
33-16 the licensing of a person to engage in the insurance business
33-17 principally to handle business that the applicant controls only
33-18 through ownership, mortgage or sale, family relationship, or
33-19 employment. An applicant for an original license must have a bona
33-20 fide intention to engage in business in which, in any calendar
33-21 year, at least 25 percent of the total volume of premiums is
33-22 derived from persons other than the applicant and from property
33-23 other than that on which the applicant controls the placing of
33-24 insurance through ownership, mortgage, sale, family relationship,
33-25 or employment.
33-26 (e) The department may not deny a license application solely
34-1 on the ground that the applicant will act only part-time as an
34-2 agent.
34-3 (f) The [application must bear a signed endorsement by an
34-4 officer or properly authorized representative of the insurance
34-5 carrier that the individual applicant or each member of the
34-6 partnership or each officer, director, and shareholder of the
34-7 corporation or the responsible officer and employee of the bank is
34-8 qualified to hold that individual or the partnership, the
34-9 corporation, or the bank out in good faith to the general public as
34-10 an insurance agent, and that the insurance carrier desires that the
34-11 applicant act as an insurance agent to represent it in this State.]
34-12 [(c) The] department shall issue a license to an individual
34-13 to engage [or to a general partnership engaging] in the business of
34-14 insurance if the department finds that the individual:
34-15 (1) is at least 18 years of age;
34-16 (2) has passed the licensing examination required
34-17 under Article 21.01-1 of this code within the past 12 months;
34-18 (3) has not committed an act for which a license may
34-19 be denied under Article 21.01-2 of this code; and
34-20 (4) has submitted the application, appropriate fees,
34-21 and any other information required by the department.
34-22 (g) An individual agent licensed under Section 2, Article
34-23 21.07-1, of this code or Section 2, Article 21.14, of this code who
34-24 is operating as an individual agent and who is not covered by an
34-25 errors and omissions insurance policy of a general agency or
34-26 corporation shall certify to the department that the agent will
35-1 maintain the ability to pay any amount that the individual agent
35-2 might become legally obligated to pay due to any claim made against
35-3 the agent by a customer and caused by a negligent act, error, or
35-4 omission of the individual agent or any person for whose acts the
35-5 individual agent is legally liable in the conduct of business under
35-6 this code. For purposes of this subsection, the term "customer"
35-7 means a person, including a firm or corporation, to whom the
35-8 individual agent sells or attempts to sell a policy of insurance,
35-9 or from whom the individual agent accepts an application for
35-10 insurance. The individual agent shall maintain proof of the
35-11 ability to pay the amount through:
35-12 (1) an errors and omissions policy insuring the
35-13 individual agent against errors and omissions in at least the sum
35-14 of $250,000 with a deductible of not more than 10 percent of the
35-15 face amount of the policy issued by an insurance company licensed
35-16 to do business in this state, or, if a policy cannot be obtained
35-17 from a company licensed to do business in this state, through a
35-18 properly obtained surplus lines policy; or
35-19 (2) a bond executed by the individual agent as
35-20 principal and a surety company authorized to do business in this
35-21 state, as surety, in the principal sum of $25,000, payable to the
35-22 department for the use and benefit of customers of the individual
35-23 agent, and conditioned that the individual agent shall pay any
35-24 final judgment recovered against the agent by a customer.
35-25 (h) A binding commitment to issue a policy or bond described
35-26 by Subsection (g) of this section is sufficient in connection with
36-1 an application for a license. An individual agent licensed under
36-2 both Articles 21.07-1 and 21.14 of this code is only required to
36-3 maintain one errors and omissions policy or bond to comply with
36-4 Subsection (g) of this section.
36-5 (i) An individual engaging in the business of insurance as a
36-6 sole proprietorship under the authority of a license issued under
36-7 this subchapter may incorporate, but the corporation does not have
36-8 greater license authority than that granted to the license holder
36-9 in the holder's individual capacity.
36-10 (j) Each individual license holder shall notify the
36-11 department on a monthly basis of:
36-12 (1) a change of the license holder's mailing address;
36-13 (2) a conviction of the license holder of a felony; or
36-14 (3) an administrative action taken against the license
36-15 holder by the insurance regulator of another state [partner in the
36-16 partnership must be licensed individually as an agent under this
36-17 Article].
36-18 (k) [(d)] The department shall issue a license to a
36-19 corporation or partnership if the department finds that:
36-20 (1) [That] the corporation or partnership is:
36-21 (A) organized under the laws of this state or
36-22 any other state or territory of the United States;
36-23 (B) admitted to conduct business in this state
36-24 by the secretary of state, if so required; and
36-25 (C) authorized by its articles of incorporation
36-26 or its partnership agreement to act as an insurance agent [a Texas
37-1 corporation organized or existing under the Texas Business
37-2 Corporation Act or the Texas Professional Corporation Act (Article
37-3 1528e, Vernon's Texas Civil Statutes) having its principal place of
37-4 business in the State of Texas and having as one of its purposes
37-5 the authority to act as an agent covered by this Article];
37-6 (2) the corporation or partnership meets the
37-7 definition of that entity adopted under Section 1A of this article;
37-8 [That every officer, director, and shareholder of the corporation
37-9 is individually licensed under the provisions of this Article, or
37-10 that every officer and director of the corporation is individually
37-11 licensed under this Article, that the corporation is a wholly owned
37-12 subsidiary of a parent corporation that is licensed under this
37-13 Article, and that every shareholder of the parent corporation is
37-14 individually licensed under this Article; and]
37-15 (3) at least one officer of the corporation or one
37-16 active partner of the partnership and all other persons performing
37-17 any acts of an agent on behalf of the corporation or partnership in
37-18 this state are individually licensed by the department separately
37-19 from the corporation or partnership;
37-20 (4) the [That such] corporation or partnership will
37-21 have the ability to pay any sums up to $25,000 which it might
37-22 become legally obligated to pay on account of any claim made
37-23 against it by any customer and caused by any negligent act, error,
37-24 or omission of the corporation or partnership or any person for
37-25 whose acts the corporation or partnership is legally liable in the
37-26 conduct of its business under this code [Article]. The term
38-1 "customer" means any person, firm, or corporation to whom such
38-2 corporation or partnership sells or attempts to sell a policy of
38-3 insurance, or from whom such corporation or partnership accepts an
38-4 application for insurance. Such ability shall be maintained
38-5 [proven] in one of the following ways:
38-6 (A) an errors and omissions policy insuring such
38-7 corporation or partnership against errors and omissions in at least
38-8 the sum of $250,000 [$100,000] with no more than a $10,000
38-9 deductible feature issued by an insurance company licensed to do
38-10 business in this state [the State of Texas] or, if a policy cannot
38-11 be obtained from a company licensed to do business in this state
38-12 [Texas], a policy issued by a company not licensed to do business
38-13 in this state after [Texas on] filing an affidavit with the
38-14 department stating the inability to obtain coverage and receiving
38-15 the commissioner's approval; or
38-16 (B) a bond executed by such corporation or
38-17 partnership as principal and a surety company authorized to do
38-18 business in this state [State], as surety, in the principal sum of
38-19 $25,000, payable to the department for the use and benefit of
38-20 customers of such corporation or partnership, conditioned that such
38-21 corporation or partnership shall pay any final judgment recovered
38-22 against it by any customer[; or]
38-23 [(C) a deposit of cash or securities of the
38-24 class authorized by Articles 2.08 and 2.10, Insurance Code, as
38-25 amended, having a fair market value of $25,000 with the
38-26 comptroller. The comptroller is directed to accept and receive
39-1 such deposit and hold it exclusively for the protection of any
39-2 customer of such corporation recovering a final judgment against
39-3 such corporation. Such deposit may be withdrawn only upon filing
39-4 with the department evidence satisfactory to it that the
39-5 corporation has withdrawn from business and has no unsecured
39-6 liabilities outstanding, or that such corporation has provided for
39-7 the protection of its customers by furnishing an errors and
39-8 omissions policy or a bond as provided. Securities so deposited
39-9 may be exchanged from time to time for other qualified securities].
39-10 A binding commitment to issue such a policy or bond[, or the tender
39-11 of such securities,] shall be sufficient in connection with any
39-12 application for license;
39-13 (5) the corporation or partnership intends to be
39-14 actively engaged in the business of insurance as required under
39-15 Subsection (c) of this section;
39-16 (6) each location from which the corporation or
39-17 partnership will conduct its Texas business under authority of an
39-18 insurance license is separately registered with the department;
39-19 (7) the corporation or partnership has submitted the
39-20 application, appropriate fees, and any other information required
39-21 by the department; and
39-22 (8) an officer, director, member, manager, partner, or
39-23 any other person who has the right or ability to control the
39-24 license holder has not:
39-25 (A) had a license suspended or revoked or been
39-26 the subject of any other disciplinary action by the insurance
40-1 regulator of this or any other state; or
40-2 (B) committed an act for which a license may be
40-3 denied under Article 21.01-2 of this code.
40-4 (l) Nothing contained in this section [herein] shall be
40-5 construed to permit any unlicensed employee or agent of any
40-6 corporation or partnership to perform any act of an agent under
40-7 this subchapter [Article] without obtaining a license.
40-8 (m) [If at any time, any corporation holding an agent's
40-9 license does not maintain the qualifications necessary to obtain a
40-10 license, the license of such corporation to act as an agent shall
40-11 be cancelled or denied in accordance with the provisions of
40-12 Sections 10 and 11 of this Article; provided, however, that should
40-13 any person who is not a licensed agent under this Article acquire
40-14 shares in such a corporation by devise or descent, that person
40-15 shall have a period of 90 days from date of acquisition within
40-16 which to obtain a license or to dispose of the shares to a person
40-17 licensed under this Article.]
40-18 [Should such an unlicensed person acquire shares in a
40-19 corporation and not dispose of them within a period of 90 days to a
40-20 licensed agent, then they must be purchased by the corporation for
40-21 their book value, that is, the value of said shares of stock as
40-22 reflected by the regular books and records of said corporation, as
40-23 of the date of the acquisition of said shares by said unlicensed
40-24 person. Should the corporation fail or refuse to so purchase such
40-25 shares, its license shall be cancelled.]
40-26 [Any such corporation shall have the power to redeem the
41-1 shares of any shareholder, or the shares of a deceased shareholder,
41-2 upon such terms as may be agreed upon by the board of directors and
41-3 such shareholder or such shareholder's personal representative, or
41-4 at a price and upon such terms as may be provided in the articles
41-5 of incorporation, the bylaws, or an existing contract entered into
41-6 between the shareholders of the corporation.]
41-7 Each corporation or partnership licensed as an agent under
41-8 this subchapter [Article] shall file, under oath, on a form
41-9 developed by the department, biographical information for each [a
41-10 list of the names and addresses of all] of its executive officers
41-11 and[,] directors or unlicensed partners who administer the entity's
41-12 operations in this state, and shareholders who are in control of
41-13 the corporation, or any other partners who have the right or
41-14 ability to control the partnership. If any corporation or
41-15 partnership is owned, in whole or in part, by another entity, a
41-16 biographical form is required for each individual who is in control
41-17 of the parent entity[, and shareholders with its application for
41-18 renewal license].
41-19 (n) Each corporation or partnership shall notify the
41-20 department on a monthly basis of:
41-21 (1) the addition or removal of licensed agents
41-22 employed by the corporation or partnership to perform any act of an
41-23 agent in this state;
41-24 (2) a felony conviction of a licensed agent of the
41-25 entity or any individual associated with the corporation or
41-26 partnership who is required to file biographical information with
42-1 the department;
42-2 (3) an event that would require notification under
42-3 Article 1.30 of this code; and
42-4 (4) the addition or removal of an officer, director,
42-5 partner, member, or manager.
42-6 (o) The department shall issue a license to a bank in the
42-7 manner provided for the licensing of a corporation under this
42-8 section.
42-9 (p) A person may not acquire in any manner any ownership
42-10 interest in an entity licensed as an agent under this subchapter if
42-11 the person is, or after the acquisition would be, directly or
42-12 indirectly, in control of the license holder, or otherwise acquire
42-13 control of or exercise any control over the license holder, unless
42-14 the person has filed the following information with the department
42-15 under oath:
42-16 (1) a biographical form for each person by whom or on
42-17 whose behalf the acquisition of control is to be effected;
42-18 (2) a statement certifying that no person who is
42-19 acquiring an ownership interest in or control of the license holder
42-20 has been the subject of a disciplinary action taken by any state
42-21 insurance regulator;
42-22 (3) a statement certifying that, immediately on the
42-23 change of control, the license holder will be able to satisfy the
42-24 requirements for the issuance of the license to solicit the line or
42-25 lines of insurance for which it is licensed; and
42-26 (4) any additional information that the commissioner
43-1 may by rule prescribe as necessary or appropriate to the protection
43-2 of the insurance consumers of this state or as in the public
43-3 interest.
43-4 (q) If a person required to file a statement under
43-5 Subsection (p) of this section is a partnership, limited
43-6 partnership, syndicate, or other group, the commissioner may
43-7 require that the information required by Subdivisions (1)-(4) of
43-8 that subsection for an individual be provided regarding each
43-9 partner of the partnership or limited partnership, each member of
43-10 the syndicate or group, and each person who controls the partner or
43-11 member. If the partner, member, or person is a corporation or the
43-12 person required to file the statement under Subsection (p) of this
43-13 section is a corporation, the commissioner may require that the
43-14 information required by Subdivisions (1)-(4) of that subsection be
43-15 provided regarding:
43-16 (1) the corporation;
43-17 (2) each individual who is an executive officer or
43-18 director of the corporation; and
43-19 (3) each person who is directly or indirectly the
43-20 beneficial owner of more than 10 percent of the outstanding voting
43-21 securities of the corporation.
43-22 (r) The department may disapprove an acquisition of control
43-23 if, after notice and opportunity for hearing, the commissioner
43-24 determines that:
43-25 (1) immediately on the change of control the license
43-26 holder would not be able to satisfy the requirements for the
44-1 issuance of the license to solicit the line or lines of insurance
44-2 for which it is presently licensed;
44-3 (2) the competence, trustworthiness, experience, and
44-4 integrity of the persons who would control the operation of the
44-5 license holder are such that it would not be in the interest of the
44-6 insurance consumers of this state to permit the acquisition of
44-7 control; or
44-8 (3) the acquisition of control would violate this code
44-9 or another law of this state, another state, or the United States.
44-10 (s) Notwithstanding Subsection (q) of this section, a change
44-11 in control is considered approved if the department has not
44-12 proposed to deny the requested change before the 91st day after the
44-13 date of receipt by the department of all information required by
44-14 this section.
44-15 (t) The commissioner shall be the corporation's or
44-16 partnership's attorney for service of process on whom all lawful
44-17 process, notice, or demand may be served in any legal proceeding
44-18 against the corporation or partnership if:
44-19 (1) the corporation or partnership licensed to
44-20 transact business in this state fails to appoint or maintain an
44-21 attorney for service in this state;
44-22 (2) an attorney for service cannot with reasonable
44-23 diligence be found; or
44-24 (3) the license of a corporation or partnership is
44-25 revoked.
44-26 (u) If a corporation or partnership that holds an agent's
45-1 license does not maintain the qualifications necessary for issuance
45-2 of the license, the department shall deny, revoke, or suspend the
45-3 license of the corporation or partnership to act as an agent as
45-4 provided by Article 21.01-2 of this code.
45-5 [Each corporation shall notify the department upon any change
45-6 in its officers, directors, or shareholders not later than the 30th
45-7 day after the date on which the change becomes effective.]
45-8 [Except as provided by Subdivision (2) of this subsection, a
45-9 corporation may not own any interest in another corporation
45-10 licensed under this Article, and each owner of an interest in a
45-11 corporation licensed under this Article shall be a natural person
45-12 who holds a valid license issued under this Article.]
45-13 [(e) The department shall issue a license to a bank if the
45-14 department finds that:]
45-15 [(1) the bank satisfies the definition of Section 1C
45-16 of this Article;]
45-17 [(2) at least one officer of the bank and each
45-18 individual who will be performing any acts as an agent for the bank
45-19 are individually licensed under this Article; and]
45-20 [(3) the bank will have the ability to pay any sums up
45-21 to $25,000 that it might become legally obligated to pay on account
45-22 of any claim made against it by a customer and caused by a
45-23 negligent act, error, or omission of the bank or any person for
45-24 whose acts the bank is legally liable in the conduct of its
45-25 business under this Article. The term "customer" means any person,
45-26 firm, or corporation to whom the bank sells or attempts to sell a
46-1 policy of insurance or from whom the bank accepts an application
46-2 for insurance. That ability shall be proven through:]
46-3 [(A) an errors and omissions policy insuring the
46-4 bank against errors and omissions in at least the sum of $100,000
46-5 with not more than a $10,000 deductible feature, issued by an
46-6 insurance company licensed to do business in this state or, if a
46-7 policy cannot be obtained from a company licensed to do business in
46-8 this state, a policy issued by a company not licensed to do
46-9 business in this state on filing an affidavit with the department
46-10 stating the inability to obtain coverage and receiving the
46-11 department's approval;]
46-12 [(B) a bond executed by the bank as principal
46-13 and a surety company authorized to do business in this state, as
46-14 surety, in the principal sum of $25,000, payable to the department
46-15 for the use and benefit of customers of the bank, conditioned that
46-16 the bank shall pay any final judgment recovered against it by a
46-17 customer; or]
46-18 [(C) a deposit with the comptroller of cash or
46-19 securities of the class authorized by Articles 2.08 and 2.10 of
46-20 this code, with a fair market value of $25,000. The comptroller
46-21 shall accept and receive the deposit and hold it exclusively for
46-22 the protection of a customer of the bank who recovers a final
46-23 judgment against the bank. The deposit may be withdrawn only on
46-24 filing with the department satisfactory evidence that the bank has
46-25 withdrawn from the business of insurance and has no unsecured
46-26 liabilities outstanding or that the bank has provided for the
47-1 protection of its customers by furnishing an errors and omissions
47-2 policy or a bond as provided by this subdivision. Securities so
47-3 deposited may be exchanged from time to time for other qualified
47-4 securities.]
47-5 [A binding commitment to issue such a policy or bond, or the
47-6 tender of applicable securities, is sufficient in connection with
47-7 an application for license.]
47-8 [Nothing in this subsection permits an unlicensed employee or
47-9 agent of a bank to perform any act of an agent under this Article
47-10 without obtaining a license.]
47-11 [A bank licensed as an agent under this Article may have
47-12 additional offices from which the business of insurance is
47-13 conducted only in a place with a population of 5,000 or less and
47-14 must comply with the department's regulations regarding additional
47-15 offices.]
47-16 [A bank licensed as an agent under this Article must maintain
47-17 the insurance records of the bank, including all files relating to
47-18 customer complaints, separate from records relating to the banking
47-19 transactions of the bank.]
47-20 [If at any time, a bank that holds an agent's license does
47-21 not maintain the qualifications necessary to obtain a license, the
47-22 license of that bank to act as an agent shall be canceled or denied
47-23 in accordance with Sections 10 and 11 of this Article.]
47-24 [Each bank licensed as an agent under this Article shall file
47-25 under oath with its application for license renewal a list of the
47-26 name and address of each individual who will be acting as an agent
48-1 on behalf of the bank and of each officer and director of the bank,
48-2 as defined by Article 21.02 of this code, and other biographical
48-3 information as required by the department.]
48-4 [Each bank shall notify the department of any change in its
48-5 officers and directors, and any change in other persons who will be
48-6 acting as agents, as defined by Article 21.02 of this code, and
48-7 submit biographical information on those officers, directors, and
48-8 persons as required by the department not later than the 30th day
48-9 after the date on which the change takes effect.]
48-10 SECTION 1.12. Article 21.07, Insurance Code, is amended by
48-11 adding Section 3A to read as follows:
48-12 Sec. 3A. TEMPORARY LICENSE. (a) The department may issue a
48-13 temporary agent's license to an applicant for a license under
48-14 Section 2 of this article who is being considered for appointment
48-15 as an agent by an insurer or health maintenance organization. An
48-16 applicant for a temporary license is not required to pass a written
48-17 examination. A temporary license is valid for the 90 days after
48-18 the date of issuance. The department shall issue a temporary
48-19 license immediately on receipt by the department of a properly
48-20 completed application executed by the person in the form required
48-21 by Section 2 of this article, accompanied by the nonrefundable
48-22 filing fee set by the department and a certificate signed by an
48-23 officer or properly authorized representative of the insurer or
48-24 health maintenance organization stating that:
48-25 (1) the applicant is being considered for appointment
48-26 by the insurer or health maintenance organization as its full-time
49-1 agent;
49-2 (2) the insurer or health maintenance organization
49-3 desires that the applicant be issued a temporary license; and
49-4 (3) the applicant will complete, under the insurer's
49-5 or health maintenance organization's supervision, at least 40 hours
49-6 of training as prescribed by Subsection (h) of this section not
49-7 later than the 14th day after the date on which the application,
49-8 certificate, and nonrefundable fee are delivered or mailed to the
49-9 department.
49-10 (b) If the temporary license is not received from the
49-11 department before the eighth day after the date on which the
49-12 application, certificate, and nonrefundable fee are delivered or
49-13 mailed to the department and the insurer or health maintenance
49-14 organization has not been notified that the application is denied,
49-15 the insurer or health maintenance organization may assume that the
49-16 temporary license will be issued in due course and the applicant
49-17 may proceed to act as an agent.
49-18 (c) A temporary license may not be renewed or issued more
49-19 than once in a consecutive six-month period to the same applicant.
49-20 (d) A temporary license may not be granted to a person who
49-21 does not intend to apply for a license to sell insurance or
49-22 memberships to the public generally.
49-23 (e) A temporary license may not be used to obtain
49-24 commissions from sales made to persons who have family, employment,
49-25 or business relationships with the temporary license holder. An
49-26 insurer or health maintenance organization may not knowingly pay,
50-1 directly or indirectly, to the holder of a temporary license under
50-2 this section, and a temporary license holder may not receive or
50-3 accept, a commission on the sale of a contract of insurance or
50-4 membership covering:
50-5 (1) the temporary license holder;
50-6 (2) a person related to the temporary license holder
50-7 by consanguinity or affinity;
50-8 (3) a person who is or has been during the past six
50-9 months the temporary license holder's employer, either as an
50-10 individual or as a member of a partnership, association, firm, or
50-11 corporation; or
50-12 (4) a person who is or who has been during the past
50-13 six months the employee of the temporary license holder.
50-14 (f) A person who has been issued a temporary license under
50-15 this section and is acting under the authority of the temporary
50-16 license may not engage in any insurance solicitation, sale, or
50-17 other agency transaction that results in or is intended to result
50-18 in the replacement of any existing individual life insurance policy
50-19 form or annuity contract that is in force, or receive, directly or
50-20 indirectly, any commission or other compensation that may or does
50-21 result from such a solicitation, sale, or other agency transaction.
50-22 A person who holds a permanent license may not circumvent or
50-23 attempt to circumvent the intent of this subsection by acting for
50-24 or with a person holding a temporary license. As used in this
50-25 subsection, "replacement" means a transaction in which a new life
50-26 insurance or annuity contract is to be purchased, and it is known
51-1 or should be known to the temporary agent that by reason of the
51-2 solicitation, sale, or other transaction the existing life
51-3 insurance or annuity contract has been or is to be:
51-4 (1) lapsed, forfeited, surrendered, or otherwise
51-5 terminated;
51-6 (2) converted to reduced paid-up insurance, continued
51-7 as extended term insurance, or otherwise reduced in value by the
51-8 use of nonforfeiture benefits or other policy values;
51-9 (3) amended so as to effect either a reduction in
51-10 benefits or in the term for which coverage would otherwise remain
51-11 in force or for which benefits would be paid;
51-12 (4) reissued with any reduction in cash value; or
51-13 (5) pledged as collateral or subjected to borrowing,
51-14 whether in a single loan or under a schedule of borrowing over a
51-15 period of time, for amounts in the aggregate exceeding 25 percent
51-16 of the loan value set forth in the policy.
51-17 (g) The department may cancel, suspend, or revoke the
51-18 temporary appointment powers of an insurer or health maintenance
51-19 organization if, after notice and opportunity for hearing, the
51-20 commissioner finds that that insurer or health maintenance
51-21 organization has abused the temporary appointment powers. An
51-22 appeal from the department's decision is subject to Article 1.04 of
51-23 this code. In considering whether abuse has occurred, the
51-24 department may consider:
51-25 (1) the number of temporary appointments made;
51-26 (2) the percentage of appointees sitting for
52-1 examination as agents under this article, as provided by Subsection
52-2 (j) of this section; and
52-3 (3) the number of appointees who pass the examination.
52-4 (h) The insurer or health maintenance organization shall
52-5 administer at least 40 hours of training to each applicant for a
52-6 temporary license not later than the 14th day after the date on
52-7 which the application, certificate, and nonrefundable fee are
52-8 delivered or mailed to the department. At least 10 hours must be
52-9 taught in a classroom setting, including an accredited college,
52-10 university, junior college, or community college, a business
52-11 school, or a private institute or classes sponsored by the insurer
52-12 or health maintenance organization and especially established for
52-13 this purpose. The training program must be designed to provide an
52-14 applicant with basic knowledge of:
52-15 (1) the broad principles of insurance, including the
52-16 licensing and regulatory laws of this state;
52-17 (2) the broad principles of health maintenance
52-18 organizations, including membership requirements and related
52-19 licensing and regulatory laws of this state; and
52-20 (3) the ethical obligations and duties of an agent.
52-21 (i) If the commissioner finds under Subsection (g) of this
52-22 section that an abuse of temporary appointment powers has occurred,
52-23 the commissioner may require the affected insurer or health
52-24 maintenance organization to file with the department a description
52-25 of the insurer's or health maintenance organization's training
52-26 program and may require the insurer or health maintenance
53-1 organization to obtain the approval of the department before
53-2 continuing to use the training program.
53-3 (j) Each insurer or health maintenance organization shall
53-4 ensure that, during any two consecutive calendar quarters, at least
53-5 70 percent of the insurer's or health maintenance organization's
53-6 applicants for temporary licenses sit for the required licensing
53-7 examination. At least 50 percent of the applicants taking the
53-8 examination must pass during that period.
53-9 (k) An insurer or health maintenance organization may not
53-10 make more than 250 appointments of temporary license holders during
53-11 a calendar year.
53-12 SECTION 1.13. Section 6, Article 21.07, Insurance Code, is
53-13 amended to read as follows:
53-14 Sec. 6. FILING OF [AGENT MAY BE LICENSED TO REPRESENT]
53-15 ADDITIONAL APPOINTMENTS [INSURERS]. (a) Except as specifically
53-16 prohibited by another provision of this code, an [Any] agent
53-17 licensed under this subchapter [Article] may represent and act as
53-18 an agent for more than one insurance carrier at any time while the
53-19 agent's license is in force, if the agent so desires. Any such
53-20 agent and the insurance carrier involved shall file with the
53-21 department [must give notice to the State Board of Insurance of]
53-22 any additional appointment [or appointments] authorizing the agent
53-23 to act as agent for an additional insurance carrier or carriers not
53-24 later than the 30th day after the effective date of the
53-25 appointment. The filing [Such notice] must include:
53-26 (1) [be accompanied by] a certificate from the [each]
54-1 insurance carrier to be named in the [each] additional appointment
54-2 that states[, and must state] that the [said] insurance company
54-3 desires to appoint the applicant as its agent;
54-4 (2) [. This notice shall also contain such] other
54-5 information as the commissioner [State Board of Insurance] may
54-6 require; and
54-7 (3) [. The agent shall be required to pay] a
54-8 nonrefundable fee in an amount [not to exceed $16 as] determined by
54-9 the commissioner [State Board of Insurance] for each additional
54-10 appointment for which the insurance carrier applies [applied for,
54-11 which fee shall accompany the notice. If approval of the
54-12 additional appointment is not received from the State Board of
54-13 Insurance before the eighth day after the date on which the
54-14 completed application and fee were received by the Board, the agent
54-15 and the insurance carrier, in the absence of notice of disapproval,
54-16 may assume that the Board approves the application, and the agent
54-17 may act for the insurance carrier].
54-18 (b) An appointment made under this Article to authorize an
54-19 agent to act as an agent for an insurance carrier continues in
54-20 effect without the necessity of renewal until it is terminated or
54-21 [and] withdrawn by the insurance carrier or agent. If the agent is
54-22 terminated for cause, the insurance carrier shall follow the
54-23 procedures established under Section 6B of [as provided by this
54-24 section or is otherwise terminated in accordance with] this
54-25 Article. Each renewal license issued to the agent authorizes the
54-26 agent to represent and act for the insurance carriers for which the
55-1 agent holds an appointment until the appointment is terminated or
55-2 withdrawn, and that agent is considered to be the agent of the
55-3 appointing insurance carriers for the purposes of this code
55-4 [Article].
55-5 (c) An agent appointed under this section may act on behalf
55-6 of the appointing carrier before the department receives the filing
55-7 made under this section.
55-8 (d) A person acting as a sub-agent is not required to be
55-9 separately appointed by each insurance carrier that has appointed
55-10 the licensed person who has designated the sub-agent in writing to
55-11 the department. Termination of the sub-agent by the licensed
55-12 person shall be reported promptly to the department and terminates
55-13 the sub-agent's authority to act for the licensed person and that
55-14 person's insurance carriers.
55-15 SECTION 1.14. Article 21.07, Insurance Code, is amended by
55-16 adding Sections 6B, 6C, 6D, and 6E to read as follows:
55-17 Sec. 6B. INSURANCE CARRIER TO NOTIFY DEPARTMENT OF
55-18 TERMINATION OF CONTRACT; COMMUNICATION PRIVILEGED. (a) Each
55-19 insurance carrier shall, on termination of the appointment of an
55-20 agent for cause, immediately file with the department a statement
55-21 of the facts relating to the termination of the appointment and
55-22 the date and cause of the termination. On receipt of the statement
55-23 the department shall record the termination of the appointment of
55-24 that agent to represent the insurance carrier in this state.
55-25 (b) A document, record, statement, or other information
55-26 required to be made or disclosed to the department under this
56-1 section is a privileged and confidential communication and is not
56-2 admissible in evidence in any court action or proceeding except
56-3 under a subpoena issued by a court of record.
56-4 (c) An insurance carrier, an employee or agent of the
56-5 carrier, or any other person, acting without malice, is not liable
56-6 for providing the information required to be disclosed under this
56-7 section.
56-8 Sec. 6C. FEES; USE OF FUNDS. (a) The department shall
56-9 collect from each agent of an insurance carrier writing insurance
56-10 in this state under this code a nonrefundable license fee and a
56-11 nonrefundable appointment fee for each appointment by an insurance
56-12 carrier. These fees, together with examination fees, license fees,
56-13 and license renewal fees, shall be deposited to the credit of the
56-14 Texas Department of Insurance operating fund.
56-15 (b) The department may use any portion of the fees collected
56-16 to enforce this subchapter, may employ persons as it considers
56-17 necessary to investigate and make reports regarding alleged
56-18 violations of this code and misconduct on the part of agents, and
56-19 may pay the salaries and expenses of those persons and office
56-20 employees and other expenses necessary to enforce this subchapter
56-21 from the fees collected. A person employed by the department under
56-22 this section may administer the oath and examine under oath any
56-23 person considered necessary in gathering information and evidence
56-24 and may have that information and evidence reduced to writing if
56-25 considered necessary, and all such expenses shall be paid from the
56-26 fees.
57-1 (c) The department shall set the fees in amounts reasonable
57-2 and necessary to implement this subchapter.
57-3 Sec. 6D. DUPLICATE LICENSE FEE. The department shall
57-4 collect in advance from an agent requesting a duplicate license a
57-5 fee in an amount set by the department. The fee collected under
57-6 this section shall be deposited to the credit of the Texas
57-7 Department of Insurance operating fund.
57-8 Sec. 6E. REQUIREMENT TO APPOINT SUB-AGENT. If a general
57-9 life, accident, and health agent or general property and casualty
57-10 agent who has been appointed by an insurance carrier that has a
57-11 permit to do business in this state desires to appoint a sub-agent
57-12 in the operation of an insurance business, the general agent shall
57-13 submit to the department in writing, in the form prescribed by the
57-14 department, notice of the sub-agent's appointment. The notice must
57-15 be accompanied by a nonrefundable fee in an amount determined by
57-16 the commissioner.
57-17 ARTICLE 2. LIFE, ACCIDENT, AND HEALTH LICENSES
57-18 SECTION 2.01. Subchapter A, Chapter 21, Insurance Code, is
57-19 amended by adding Article 21.07-1 to read as follows:
57-20 Art. 21.07-1. TEXAS LIFE, ACCIDENT, AND HEALTH AGENTS
57-21 LICENSE ACT
57-22 Sec. 1. SHORT TITLE; APPLICATION. (a) This article may be
57-23 cited as the Texas Life, Accident, and Health Agents License Act.
57-24 (b) Each agent of an insurance company authorized to provide
57-25 life, accident, and health insurance coverage in this state is
57-26 subject to this article. This article applies to each person who:
58-1 (1) performs the acts of an agent, as defined by
58-2 Article 21.02 of this code, whether through oral, written, or
58-3 electronic communications or otherwise, by the solicitation of,
58-4 negotiation for, procurement of, or collection of premiums on an
58-5 insurance or annuity contract offered by any type of insurance
58-6 carrier authorized to sell life, accident, and health insurance
58-7 products in this state; or
58-8 (2) represents or purports to represent a health
58-9 maintenance organization in the solicitation, negotiation,
58-10 procurement, or effectuation of membership in the health
58-11 maintenance organization.
58-12 Sec. 2. GENERAL LIFE, ACCIDENT, AND HEALTH LICENSE; LICENSE
58-13 REQUIRED. (a) A general life, accident, and health license is
58-14 required for each person who acts as:
58-15 (1) an agent writing life, accident, and health
58-16 insurance for a life insurance company;
58-17 (2) an agent writing only accident and health
58-18 insurance;
58-19 (3) an agent representing a health maintenance
58-20 organization;
58-21 (4) an agent writing fixed or variable annuity
58-22 contracts or variable life contracts;
58-23 (5) an industrial life insurance agent for an
58-24 industrial company that writes only weekly premium life insurance
58-25 on a debit basis under Article 3.52 of this code;
58-26 (6) an agent writing:
59-1 (A) only life insurance in excess of $15,000 on
59-2 any one life for a stipulated premium insurance company;
59-3 (B) only accident and health insurance for a
59-4 stipulated premium insurance company; or
59-5 (C) both types of insurance described by
59-6 Paragraphs (A) and (B) of this subdivision;
59-7 (7) an agent writing life, accident, and health
59-8 insurance for any type of authorized life insurance company,
59-9 including a legal reserve life insurance company, domiciled in this
59-10 state, representing the insurer in a foreign country or territory
59-11 and either on a United States military installation or with United
59-12 States military personnel; or
59-13 (8) an agent writing any other type of insurance as
59-14 required by the commissioner for the protection of the insurance
59-15 consumers of this state.
59-16 (b) For the purposes of this subsection, a "combination
59-17 company" is an insurer that writes weekly premium life insurance or
59-18 monthly ordinary life insurance on a debit basis. A general life,
59-19 accident, and health license is required for each person who acts
59-20 as a combination life insurance agent for a combination company. A
59-21 combination company and a combination life insurance agent may also
59-22 write ordinary contracts of life insurance.
59-23 (c) Except as otherwise provided by this subsection, a
59-24 general life, accident, and health license is required for an agent
59-25 writing life, accident, and health insurance for a fraternal
59-26 benefit society under Chapter 10 of this code. A license is not
60-1 required for an agent, regularly salaried officer, employee,
60-2 representative, or member of a fraternal benefit society who
60-3 devotes less than 50 percent of the person's time to the
60-4 solicitation or procurement of insurance contracts for the society.
60-5 A person who, in the preceding calendar year, has solicited or
60-6 procured the following amounts on any of the following contracts of
60-7 insurance on behalf of a fraternal benefit society is presumed to
60-8 have devoted 50 percent or more of the person's time to the
60-9 solicitation or procurement of insurance contracts:
60-10 (1) life insurance contracts that generate, in the
60-11 aggregate, more than $20,000 of direct premium for all lives
60-12 insured for the preceding calendar year, if no interest-sensitive
60-13 life insurance certificate is solicited or procured with a face
60-14 amount of insurance that exceeds $35,000 unless the person has
60-15 obtained the designation of "Fraternal Insurance Counselor";
60-16 (2) an insurance contract, other than a life insurance
60-17 contract, that the fraternal benefit society may write that insures
60-18 the individual lives of more than 25 persons; or
60-19 (3) a variable life insurance or variable annuity
60-20 contract.
60-21 Sec. 3. AUTHORITY TO WRITE ADDITIONAL PRODUCT LINES. A
60-22 person who holds a general life, accident, and health license
60-23 issued under the requirements of this subchapter may write
60-24 additional types of insurance contracts as provided under Section 5
60-25 of this article or under a specialty license program established by
60-26 the department without obtaining an additional license.
61-1 Sec. 4. LIMITED LIFE, ACCIDENT, AND HEALTH LICENSE. (a) In
61-2 this section:
61-3 (1) "Funeral prearrangement life insurance agent"
61-4 means an insurance agent who, subject to the limitations of this
61-5 section, writes only life insurance policies and fixed annuity
61-6 contracts to secure the delivery of funeral services and
61-7 merchandise under prepaid funeral contracts regulated by the Texas
61-8 Department of Banking under Chapter 154, Finance Code.
61-9 (2) "Job protection insurance" has the meaning
61-10 assigned by Article 25.01 of this code.
61-11 (b) This section applies to:
61-12 (1) a funeral prearrangement life insurance agent;
61-13 (2) an agent for an insurance company that writes only
61-14 job protection insurance;
61-15 (3) an agent for a stipulated premium company who
61-16 writes life insurance not to exceed $15,000 on any one life, except
61-17 that a license is not required under this section for an agent for
61-18 a stipulated premium company who wrote policies that generated, in
61-19 the aggregate, less than $20,000 in direct premium for the
61-20 preceding calendar year;
61-21 (4) an agent for a local mutual aid association, a
61-22 local mutual burial association, or a statewide mutual aid
61-23 association;
61-24 (5) an agent writing policies or riders to policies
61-25 that provide only:
61-26 (A) lump-sum cash benefits in the event of
62-1 accidental death, death by accidental means, or dismemberment; or
62-2 (B) ambulance expense benefits in the event of
62-3 accident or sickness;
62-4 (6) an agent writing prepaid legal services contracts
62-5 under Article 5.13-1 or Chapter 23 of this code;
62-6 (7) the marketing, offering for sale, or delivery of
62-7 credit insurance products for use by a person, regardless of
62-8 whether the person holds a specialty license issued by the
62-9 department under this code, who is:
62-10 (A) a retail distributor of goods;
62-11 (B) an automobile dealer;
62-12 (C) a bank, state or federal savings and loan,
62-13 or state or federal credit union;
62-14 (D) a finance company;
62-15 (E) a production credit association; or
62-16 (F) a retailer of manufactured housing,
62-17 including mobile homes; and
62-18 (8) an agent writing any other type of insurance
62-19 required by the commissioner to be licensed for the protection of
62-20 the insurance consumers of this state.
62-21 (c) A person to whom this section applies must hold a
62-22 limited life, health, and accident license under this section. The
62-23 commissioner may adopt rules as necessary to implement this
62-24 section.
62-25 (d) Notwithstanding this section or any other law, a funeral
62-26 prearrangement life insurance agent may not:
63-1 (1) act as an agent for an insurance company unless
63-2 the agent acts under the supervision of a person, including a
63-3 corporation, who:
63-4 (A) holds a general life, accident, and health
63-5 license; and
63-6 (B) holds or is an authorized representative of
63-7 a holder of a permit issued by the Texas Department of Banking to
63-8 sell prepaid funeral benefits under Chapter 154, Finance Code;
63-9 (2) write any coverage or combination of coverages
63-10 with an initial guaranteed death benefit in excess of $15,000 on
63-11 any life; or
63-12 (3) act as an agent for more than one insurance
63-13 company.
63-14 (e) A person who holds a limited life, accident, and health
63-15 license issued under this section may write only the types of
63-16 insurance products described by this section.
63-17 (f) An applicant for a limited life, accident, and health
63-18 license is not eligible for a temporary license under Section 3A,
63-19 Article 21.07, of this code.
63-20 ARTICLE 3. PROPERTY AND CASUALTY LICENSES
63-21 SECTION 3.01. Article 21.14, Insurance Code, is amended to
63-22 read as follows:
63-23 Art. 21.14. TEXAS PROPERTY AND CASUALTY AGENTS LICENSE ACT
63-24 Sec. 1. SHORT TITLE; APPLICATION. (a) This article may be
63-25 cited as the Texas Property and Casualty Agents License Act.
63-26 (b) Each agent of an insurance company authorized to provide
64-1 property and casualty insurance coverage in this state is subject
64-2 to this article. This article applies to each person who performs
64-3 the acts of an agent, as defined by Article 21.02 of this code,
64-4 whether through oral, written, or electronic communications or
64-5 otherwise, by the solicitation of, negotiation for, procurement of,
64-6 or collection of premiums on an insurance contract offered by any
64-7 type of insurance carrier authorized to sell property and casualty
64-8 insurance products in this state, including:
64-9 (1) a fidelity or surety company;
64-10 (2) an interinsurance exchange;
64-11 (3) a mutual company, including a farm mutual or a
64-12 county mutual;
64-13 (4) a reciprocal exchange; or
64-14 (5) a Lloyd's plan.
64-15 Sec. 2. GENERAL PROPERTY AND CASUALTY LICENSE; LICENSE
64-16 REQUIRED. A general property and casualty license is required for
64-17 each person who acts as:
64-18 (1) an agent writing property and casualty insurance
64-19 for an insurance carrier authorized to provide property and
64-20 casualty insurance coverage in this state;
64-21 (2) a sub-agent of a person licensed as an agent under
64-22 this article who solicits and binds insurance risks on behalf of
64-23 that agent;
64-24 (3) an agent writing property and casualty insurance
64-25 for a county mutual insurance company; or
64-26 (4) an agent writing any other type of insurance as
65-1 required by the commissioner for the protection of the insurance
65-2 consumers of this state.
65-3 Sec. 3. AUTHORITY TO WRITE ADDITIONAL PRODUCT LINES. A
65-4 person who holds a general property and casualty license issued
65-5 under this subchapter may write additional types of insurance
65-6 contracts as provided under Section 6 of this article or under a
65-7 specialty license program established by the department.
65-8 Sec. 4. AUTHORITY TO WRITE ACCIDENT AND HEALTH INSURANCE. A
65-9 person who holds a general property and casualty license issued
65-10 under this subchapter may write health and accident insurance for a
65-11 property and casualty insurer authorized to sell those insurance
65-12 products in this state without holding a license issued under
65-13 Article 21.07-1 of this code.
65-14 Sec. 5. EMERGENCY LICENSE WITHOUT EXAMINATION. In the event
65-15 of the death or disability of a property and casualty agent or if a
65-16 property and casualty agent is found to be insolvent and unable to
65-17 pay for premiums as they become due to an insurer, the department
65-18 may issue to an applicant for a property and casualty license an
65-19 emergency property and casualty license without examination if it
65-20 is established to the satisfaction of the department that the
65-21 emergency license is necessary for the preservation of the agency
65-22 assets of a deceased, disabled, or insolvent property and casualty
65-23 agent. An emergency license is valid for 90 days in any 12
65-24 consecutive months and may be renewed by the department for an
65-25 additional 90 days during the 12-month period if the other
65-26 requirements of this subchapter are met.
66-1 Sec. 6. LIMITED PROPERTY AND CASUALTY LICENSE.
66-2 (a) Notwithstanding any other law, a limited property and casualty
66-3 license is required for each person who desires to act as an agent
66-4 writing:
66-5 (1) insurance only on growing crops under Article
66-6 21.14-2 of this code;
66-7 (2) any form of insurance authorized under Chapter 16
66-8 of this code for a farm mutual insurance company, except that a
66-9 license is not required under this subsection for a person who
66-10 wrote policies that generated, in the aggregate, less than $50,000
66-11 in direct premium for the preceding calendar year;
66-12 (3) exclusively all forms of insurance authorized to
66-13 be solicited and written in this state that cover the ownership,
66-14 operation, maintenance, or use of a motor vehicle that is designed
66-15 for use on the public highways, including a trailer or semitrailer,
66-16 and the motor vehicle's accessories or equipment;
66-17 (4) prepaid legal services contracts under Article
66-18 5.13-1 or Chapter 23 of this code;
66-19 (5) only industrial fire insurance policies covering
66-20 dwellings, household goods, and wearing apparel on a weekly,
66-21 monthly, or quarterly basis on a continuous premium payment plan
66-22 written for an insurance company whose business is devoted
66-23 exclusively to that business as described by Article 17.02 of this
66-24 code, except that a license is not required under this subsection
66-25 for a person who wrote industrial fire insurance policies that
66-26 generated, in the aggregate, less than $20,000 in direct premium
67-1 for the preceding calendar year;
67-2 (6) the marketing, offering for sale, or delivery of
67-3 credit insurance products for use by a person, regardless of
67-4 whether the person holds a specialty license issued by the
67-5 department under this code, who is:
67-6 (A) a retail distributor of goods;
67-7 (B) an automobile dealer;
67-8 (C) a bank, state or federal savings and loan,
67-9 or state or federal credit union;
67-10 (D) a finance company;
67-11 (E) a production credit association; or
67-12 (F) a retailer of manufactured housing,
67-13 including mobile homes; and
67-14 (7) any other type of insurance as required by the
67-15 commissioner for the protection of the insurance consumers of this
67-16 state.
67-17 (b) Subsection (a)(1) of this section applies to a
67-18 production credit association or bank for a cooperative, as
67-19 provided under the farm credit system under 12 U.S.C. 2001 et seq.,
67-20 as amended.
67-21 (c) A person who holds a limited property and casualty
67-22 license issued under this subchapter may write only the types of
67-23 insurance products designated on the license by the department.
67-24 Sec. 7. FULL-TIME HOME OFFICE EMPLOYEES: MANDATORY
67-25 REGISTRATION, CONTINUING EDUCATION REQUIREMENTS, AND NOTIFICATION
67-26 TO CONSUMERS; DISCIPLINARY ACTIONS. (a) Each actual full-time
68-1 home office salaried employee of an insurance carrier licensed to
68-2 do business in this state who solicits or receives an application
68-3 for the sale of insurance through an oral, written, or electronic
68-4 communication shall register with the commissioner.
68-5 (b) An insurance carrier licensed to do business in this
68-6 state whose general plan of operation includes the use of employees
68-7 described by Subsection (a) of this section shall certify to the
68-8 commissioner that each of those employees receives at least 15
68-9 hours of continuing education annually. Each continuing education
68-10 course provided by the insurance carrier shall be submitted to the
68-11 department for approval as provided by Section 3, Article 21.01-1,
68-12 of this code. A person registered under this section shall comply
68-13 with the continuing education requirements adopted under Section 3,
68-14 Article 21.01-1, of this code, as if the person were a licensed
68-15 agent. The continuing education must be designed to give the
68-16 employee:
68-17 (1) reasonable familiarity with:
68-18 (A) the broad principles of insurance;
68-19 (B) insurance licensing and regulatory laws; and
68-20 (C) the terms and conditions of the insurance
68-21 that the registrant transacts; and
68-22 (2) a fair and general understanding of the duties of
68-23 an insurer to an insured, including training in ethical
68-24 considerations.
68-25 (c) The registration of an actual full-time home office
68-26 salaried employee shall be suspended and the employer insurance
69-1 carrier may be disciplined for any act for which an agent may be
69-2 disciplined under Article 21.01-2 of this code.
69-3 (d) Each registrant under this section shall disclose the
69-4 fact of the registration when making an oral, written, or
69-5 electronic communication to solicit or receive an application for
69-6 the sale of insurance.
69-7 (e) Each person who registers under this section shall
69-8 submit a nonrefundable registration fee in an amount determined by
69-9 the department.
69-10 Sec. 8. INSURANCE SERVICE REPRESENTATIVE LICENSE. (a) An
69-11 insurance service representative license is required for each
69-12 person who is employed on a salaried basis to perform assigned
69-13 duties only within the office of a property and casualty agent.
69-14 Those duties may include the issuance of insurance binders only
69-15 with the express approval of the property and casualty agent who
69-16 supervises the insurance service representative.
69-17 (b) The provisions of Subchapter A of this chapter that
69-18 apply to a general license apply to a license issued under this
69-19 section, except that proof of financial responsibility is not
69-20 required of a person licensed only as an insurance service
69-21 representative. [LICENSING OF LOCAL RECORDING AGENTS AND
69-22 SOLICITORS; LIFE, HEALTH AND ACCIDENT INSURANCE EXCEPTED; OTHER
69-23 EXCEPTIONS]
69-24 [Sec. 1. CLASSES OF AGENTS. Insurance agents, as that term
69-25 is defined in the laws of this State, shall for the purpose of this
69-26 article be divided into two classes: Local Recording Agents and
70-1 Solicitors.]
70-2 [Sec. 2. DEFINITIONS; CERTAIN ORDERS, SOCIETIES OR
70-3 ASSOCIATIONS NOT AFFECTED. (a) In this article:]
70-4 [(1) "Local Recording Agent" means a person or firm
70-5 engaged in soliciting and writing insurance, being authorized by an
70-6 insurance company or insurance carrier, including fidelity and
70-7 surety companies, to solicit business and to write, sign, execute,
70-8 and deliver policies of insurance, and to bind companies on
70-9 insurance risks, and who maintain an office and a record of such
70-10 business and the transactions which are involved, who collect
70-11 premiums on such business and otherwise perform the customary
70-12 duties of a local recording agent representing an insurance carrier
70-13 in its relation with the public; or a person or firm engaged in
70-14 soliciting and writing insurance, being authorized by an insurance
70-15 company or insurance carrier, including fidelity and surety
70-16 companies, to solicit business, and to forward applications for
70-17 insurance to the home office of the insurance companies and
70-18 insurance carriers, where the insurance company's and insurance
70-19 carrier's general plan of operation in this State provides for the
70-20 appointment and compensation of agents for insurance and for the
70-21 execution of policies of insurance by the home office of the
70-22 insurance company or insurance carrier, or by a supervisory office
70-23 of such insurance company or insurance carrier, and who maintain an
70-24 office and a record of such business and the transactions which are
70-25 involved, and who collect premiums on such business and otherwise
70-26 qualify and perform the customary duties of a local recording agent
71-1 representing an insurance carrier in its relation with the public.]
71-2 [(2) "Solicitor" means a person who is a bona fide
71-3 solicitor and engaged in the business of soliciting and binding
71-4 insurance risks on behalf of a local recording agent, and who
71-5 offices with such local recording agent, and who does not sign and
71-6 execute policies of insurance, and who does not maintain company
71-7 records of such transactions. This shall not be construed to make
71-8 a solicitor of a local recording agent, who places business of a
71-9 class which the rules of the company or carrier require to be
71-10 placed on application or to be written in a supervisory office. A
71-11 solicitor may bind insurance risks only with the express prior
71-12 approval of the local recording agent for whom the solicitor works.]
71-13 [(3) "Board" means the State Board of Insurance.]
71-14 [(4) "Company" or "Carrier" means any insurance
71-15 company, corporation, inter-insurance exchange, mutual, reciprocal,
71-16 association, Lloyds or other insurance carrier licensed to transact
71-17 business in the State of Texas other than as excepted herein.]
71-18 [(5) "Insurance service representative" means a
71-19 solicitor employed on a salaried basis who performs assigned duties
71-20 only within the office of a local recording agent, which may
71-21 include binding insurance risks, but only with the express prior
71-22 approval of the local recording agent for whom the representative
71-23 works.]
71-24 [(b) Nothing contained in this article shall be so construed
71-25 as to affect or apply to orders, societies, or associations which
71-26 admit to membership only persons engaged in one or more crafts or
72-1 hazardous occupations in the same or similar lines of business, and
72-2 the ladies' societies, or ladies' auxiliary to such orders,
72-3 societies or associations, or any secretary of a Labor Union or
72-4 organization, or any secretary or agent of any fraternal benefit
72-5 society, which does not operate at a profit, except that a person
72-6 who has had a license revoked under Section 16 of this article may
72-7 not solicit or otherwise transact business under Chapter 10 of this
72-8 code.]
72-9 [Sec. 3. APPLICATION FOR LICENSE; TO WHOM LICENSE MAY BE
72-10 ISSUED. (a) When any person, partnership, registered limited
72-11 liability partnership, limited liability company, corporation, or
72-12 bank shall desire to engage in business as a local recording agent
72-13 for an insurance company, or insurance carrier, that person or
72-14 entity shall make application for a license to the Texas Department
72-15 of Insurance, in such form as the Department may require. Such
72-16 application shall bear a signed endorsement by a general, state or
72-17 special agent of a qualified insurance company, or insurance
72-18 carrier that applicant or each member of the partnership or each
72-19 stockholder of the corporation or each member of the limited
72-20 liability company is a resident of this state.]
72-21 [(b) The Department shall issue a license to an individual
72-22 or a general partnership or a limited liability partnership
72-23 registered with the Secretary of State under Section 3.08, Texas
72-24 Revised Partnership Act (Article 6132b-3.08, Vernon's Texas Civil
72-25 Statutes), engaging in the business of insurance. The Department
72-26 may not issue a license to a partnership if an inactive partner who
73-1 is not subject to Section 3a of this article has an interest in the
73-2 partnership principally to have written and be compensated therefor
73-3 for insurance on property controlled through ownership, mortgage or
73-4 sale, family relationship, or employment; and provided further,
73-5 that all licensed agents must be residents of Texas. Provided,
73-6 that a person who resides in a town through which the state line
73-7 runs and whose residence is in the town in the adjoining state may
73-8 be licensed, if the person's business office is being maintained in
73-9 this state. All persons acting as agent or solicitor for health
73-10 and accident insurance within the provisions hereof, and who
73-11 represent only fire and casualty companies, and not life insurance
73-12 companies, shall be required to procure only one license, and such
73-13 license as is required under the provisions of this article.]
73-14 [(c) The Department shall issue a license to a corporation
73-15 if the Department finds:]
73-16 [(1) That the corporation is a Texas corporation
73-17 organized or existing under the Texas Business Corporation Act or
73-18 the Texas Professional Corporation Act having its principal place
73-19 of business in the State of Texas and having as one of its purposes
73-20 the authority to act as a local recording agent; and]
73-21 [(2) That every officer, director and shareholder of
73-22 the corporation is individually licensed as a local recording agent
73-23 under the provisions of this Insurance Code, except as may be
73-24 otherwise permitted by this Section or Section 3a of this article,
73-25 or that every officer and director of the corporation is
73-26 individually licensed as a local recording agent under this
74-1 Insurance Code, that the corporation is a wholly owned subsidiary
74-2 of a parent corporation that is licensed as a local recording agent
74-3 under this Insurance Code, and that every shareholder of the parent
74-4 corporation is individually licensed as a local recording agent
74-5 under this Insurance Code, and except as specifically provided by
74-6 this article, that no shareholder of the corporation is a corporate
74-7 entity; and]
74-8 [(3) That such corporation will have the ability to
74-9 pay any sums up to $25,000 which it might become legally obligated
74-10 to pay on account of any claim made against it by any customer and
74-11 caused by any negligent act, error or omission of the corporation
74-12 or any person for whose acts the corporation is legally liable in
74-13 the conduct of its business as a local recording agent. The term
74-14 "customer" as used herein shall mean any person, firm or
74-15 corporation to whom such corporation sells or attempts to sell a
74-16 policy of insurance, or from whom such corporation accepts an
74-17 application for insurance. Such ability shall be proven in one of
74-18 the following ways:]
74-19 [(A) An errors and omissions policy insuring
74-20 such corporation against errors and omissions, in at least the sum
74-21 of $100,000 with no more than a $10,000 deductible feature or the
74-22 sum of at least $300,000 with no more than a $25,000 deductible
74-23 feature, issued by an insurance company licensed to do business in
74-24 the State of Texas or, if a policy cannot be obtained from a
74-25 company licensed to do business in Texas, a policy issued by a
74-26 company not licensed to do business in Texas, on filing an
75-1 affidavit with the Texas Department of Insurance stating the
75-2 inability to obtain coverage and receiving the Department's
75-3 approval; or]
75-4 [(B) A bond executed by such corporation as
75-5 principal and a surety company authorized to do business in this
75-6 state, as surety, in the principal sum of $25,000, payable to the
75-7 Texas Department of Insurance for the use and benefit of customers
75-8 of such corporation, conditioned that such corporation shall pay
75-9 any final judgment recovered against it by any customer; or]
75-10 [(C) A deposit of cash or securities of the
75-11 class authorized by Articles 2.08 and 2.10 of this Code, having a
75-12 fair market value of $25,000 with the comptroller. The comptroller
75-13 is hereby authorized and directed to accept and receive such
75-14 deposit and hold it exclusively for the protection of any customer
75-15 of such corporation recovering a final judgment against such
75-16 corporation. Such deposit may be withdrawn only upon filing with
75-17 the Department evidence satisfactory to it that the corporation has
75-18 withdrawn from business, and has no unsecured liabilities
75-19 outstanding, or that such corporation has provided for the
75-20 protection of its customers by furnishing an errors and omissions
75-21 policy or a bond as hereinbefore provided. Securities so deposited
75-22 may be exchanged from time to time for other qualified securities.]
75-23 [A binding commitment to issue such a policy or bond, or the
75-24 tender of such securities, shall be sufficient in connection with
75-25 any application for license.]
75-26 [Nothing contained herein shall be construed to permit any
76-1 unlicensed employee or agent of any corporation to perform any act
76-2 of a local recording agent without obtaining a local recording
76-3 agent's license. The Department shall not require a corporation to
76-4 take the examination provided in Section 6 of this Article 21.14.]
76-5 [If at any time, any corporation holding a local recording
76-6 agent's license does not maintain the qualifications necessary to
76-7 obtain a license, the license of such corporation to act as a local
76-8 recording agent shall be cancelled or denied in accordance with the
76-9 provisions of Sections 16, 17 and 18 of this Article 21.14;
76-10 provided, however, that should any person who is not a licensed
76-11 local recording agent acquire shares in such a corporation by
76-12 devise or descent, they shall have a period of 90 days from date of
76-13 acquisition within which to obtain a license as a local recording
76-14 agent or to dispose of the shares to a licensed local recording
76-15 agent except as may be permitted by Section 3a of this article.]
76-16 [Should such an unlicensed person, except as may be permitted
76-17 by Section 3a of this article, acquire shares in such a corporation
76-18 and not dispose of them within said period of 90 days to a licensed
76-19 local recording agent, then they must be purchased by the
76-20 corporation for their book value, that is, the value of said shares
76-21 of stock as reflected by the regular books and records of said
76-22 corporation, as of the date of the acquisition of said shares by
76-23 said unlicensed person. Should the corporation fail or refuse to
76-24 so purchase such shares, its license shall be cancelled.]
76-25 [Any such corporation shall have the power to redeem the
76-26 shares of any shareholder, or the shares of a deceased shareholder,
77-1 upon such terms as may be agreed upon by the Board of Directors and
77-2 such shareholder or his personal representative, or at such price
77-3 and upon such terms as may be provided in the Articles of
77-4 Incorporation, the Bylaws, or an existing contract entered into
77-5 between the shareholders of the corporation.]
77-6 [Each corporation licensed as a local recording agent shall
77-7 file, under oath, a list of the names and addresses of all of its
77-8 officers, directors and shareholders with its application for
77-9 renewal license.]
77-10 [Each corporation licensed as a local recording agent shall
77-11 notify the Texas Department of Insurance upon any change in its
77-12 officers, directors or shareholders not later than the 30th day
77-13 after the date on which the change became effective.]
77-14 [The term "firm" as it applies to local recording agents in
77-15 Sections 2, 12 and 16 of this Article 21.14 shall be construed to
77-16 include corporations.]
77-17 [(d) The department shall issue a license to a bank if the
77-18 department finds that:]
77-19 [(1) the bank is a national banking association
77-20 organized and existing under the National Bank Acts (12 U.S.C.
77-21 Section 21 et seq.), a state bank organized and existing under the
77-22 Texas Banking Act (Article 342-1.001 et seq., Vernon's Texas Civil
77-23 Statutes), a state savings bank organized and existing under the
77-24 Texas Savings Bank Act (Article 489e, Vernon's Texas Civil
77-25 Statutes), or a bank operating subsidiary, as defined by state or
77-26 federal law, that is located and doing business in this state in a
78-1 place with a population of 5,000 or less;]
78-2 [(2) at least one officer of the bank and each
78-3 individual who will be performing any acts of an agent for the bank
78-4 are individually licensed under this Article; and]
78-5 [(3) the bank will have the ability to pay any sums up
78-6 to $25,000 that it might become legally obligated to pay on account
78-7 of any claim made against it by a customer and caused by a
78-8 negligent act, error, or omission of the bank or any person for
78-9 whose acts the bank is legally liable in the conduct of its
78-10 business as a local recording agent. The term "customer" means any
78-11 person, firm, or corporation to whom the bank sells or attempts to
78-12 sell a policy of insurance or from whom the bank accepts an
78-13 application for insurance. That ability shall be proven through:]
78-14 [(A) an errors and omissions policy insuring the
78-15 bank against errors and omissions, in at least the sum of $100,000
78-16 with not more than a $10,000 deductible feature, or the sum of at
78-17 least $300,000 with not more than a $25,000 deductible feature,
78-18 issued by an insurance company licensed to do business in this
78-19 state or, if a policy cannot be obtained from a company licensed to
78-20 do business in this state, a policy issued by a company not
78-21 licensed to do business in this state, on filing an affidavit with
78-22 the department stating the inability to obtain coverage and
78-23 receiving the department's approval;]
78-24 [(B) a bond executed by the bank as principal
78-25 and a surety company authorized to do business in this state, as
78-26 surety, in the principal sum of $25,000, payable to the department
79-1 for the use and benefit of customers of the bank, conditioned that
79-2 the bank shall pay any final judgment recovered against it by a
79-3 customer; or]
79-4 [(C) a deposit with the comptroller of cash or
79-5 securities of the class authorized by Articles 2.08 and 2.10 of
79-6 this code, with a fair market value of $25,000. The comptroller
79-7 shall accept and receive the deposit and hold it exclusively for
79-8 the protection of a customer of the bank who recovers a final
79-9 judgment against the bank. The deposit may be withdrawn only on
79-10 filing with the department satisfactory evidence that the bank has
79-11 withdrawn from the business of insurance and has no unsecured
79-12 liabilities outstanding or that the bank has provided for the
79-13 protection of its customers by furnishing an errors and omissions
79-14 policy or a bond as provided by this subsection. Securities so
79-15 deposited may be exchanged from time to time for other qualified
79-16 securities.]
79-17 [A binding commitment to issue such a policy or bond, or the
79-18 tender of applicable securities, is sufficient in connection with
79-19 an application for license.]
79-20 [Nothing in this subsection shall be construed to permit an
79-21 unlicensed employee or agent of a bank to perform any act of a
79-22 local recording agent without obtaining a local recording agent's
79-23 license. The department may not require a bank to take the
79-24 examination provided by Section 6 of this Article.]
79-25 [A bank licensed as an agent under this Article may have
79-26 additional offices from which the business of insurance is
80-1 conducted only in a place with a population of 5,000 or less and
80-2 must comply with the department's regulations regarding additional
80-3 offices.]
80-4 [A bank licensed as an agent under this article must maintain
80-5 its insurance records, including all files relating to and
80-6 reflecting customer complaints, separate from records relating to
80-7 banking transactions of the bank.]
80-8 [If a bank that holds a local recording agent's license does
80-9 not maintain the qualifications necessary to obtain a license, the
80-10 license of that bank to act as a local recording agent shall be
80-11 canceled or denied in accordance with Sections 16 and 18 of this
80-12 article.]
80-13 [Each bank licensed as a local recording agent shall file
80-14 under oath with its application for license renewal a list of the
80-15 name and address of each individual who will be acting as an agent
80-16 on behalf of the bank and of each officer and director of the bank,
80-17 as defined by Article 21.02 of this code, and other biographical
80-18 information as required by the department.]
80-19 [Each bank licensed as a local recording agent shall notify
80-20 the department of any change in its officers and directors and any
80-21 change in other persons who will be performing any acts of an
80-22 agent, as defined by Article 21.02 of this code, and submit
80-23 biographical information on those officers, directors, and persons
80-24 as required by the department not later than the 30th day after the
80-25 date on which the change takes effect.]
80-26 [The term "firm," as that term applies to local recording
81-1 agents in Sections 2, 12, and 16 of this article, includes
81-2 corporations and banks.]
81-3 [(e) The term "partnership" or "agency partnership" as used
81-4 in this Article means a general partnership or a registered limited
81-5 liability partnership domiciled in Texas.]
81-6 [(f) In this Article, the term "corporation" or
81-7 "corporations" shall mean a corporation organized under the Texas
81-8 Business Corporation Act, The Texas Professional Corporation Act
81-9 (Article 1528e, Vernon's Texas Civil Statutes), or a Texas
81-10 domiciled limited liability company organized or existing under the
81-11 Texas Limited Liability Company Act (Article 1528n, Vernon's Texas
81-12 Civil Statutes) having its principal place of business in this
81-13 state and having as one of its purposes the authority to act as an
81-14 insurance agent. Each officer, manager, and member of a limited
81-15 liability company must be licensed under this Article. The
81-16 licensing and regulation of a limited liability company shall be
81-17 subject to the same provisions and requirements of this Article
81-18 that are applicable to corporations licensed under this Article.]
81-19 [(g) In this article, the term "bank" means a national
81-20 banking association organized and existing under the National Bank
81-21 Acts (12 U.S.C. Section 21 et seq.), a state bank organized and
81-22 existing under the Texas Banking Act (Article 342-1.001 et seq.,
81-23 Vernon's Texas Civil Statutes), a state savings bank organized and
81-24 existing under the Texas Savings Bank Act (Article 489e, Vernon's
81-25 Texas Civil Statutes), a bank branch, or a bank operating
81-26 subsidiary, as defined by state or federal law, that is located and
82-1 doing business in this state in a place with a population of 5,000
82-2 or less. A bank operating subsidiary, as defined by state or
82-3 federal law, located and doing business in a place in this state
82-4 with a population of 5,000 or less may own a licensed corporate
82-5 agent that is also located and doing business in a place with a
82-6 population of 5,000 or less, and is subject to Section 3a(5) of
82-7 this Article.]
82-8 [Sec. 3a. PERSONS OTHER THAN LICENSED LOCAL RECORDING AGENTS
82-9 WHO MAY SHARE IN PROFITS OF LOCAL RECORDING AGENT. (1) Upon the
82-10 death of a duly licensed local recording agent who is a member of
82-11 an agency partnership, the surviving spouse and children, if any,
82-12 of such deceased partner, or a trust for such surviving spouse and
82-13 children, may share in the profits of such agency partnership
82-14 during the lifetime of such surviving spouse or such children, as
82-15 the case may be, if and as provided by a written partnership
82-16 agreement, or in the absence of any written agreement, if and as
82-17 agreed by the surviving partner or partners and the surviving
82-18 spouse, the trustee, and the legal representative of the surviving
82-19 child or children. Such surviving spouse and any such surviving
82-20 children or trusts shall not be required to qualify as local
82-21 recording agents to participate in such profits, but shall not do
82-22 or perform any act of a local recording agent on behalf of such
82-23 partnership without having qualified as a local recording agent;
82-24 provided, however, that a duly licensed local recording agent who
82-25 is a member of an agency partnership may, with the approval of the
82-26 other members of the partnership, transfer an interest in the
83-1 agency partnership to his children or a trust for same, and may
83-2 operate such interest for their use and benefit; and such children
83-3 or trusts may share in the profits of such agency partnership.
83-4 Such child or children or trusts shall not be required to qualify
83-5 as a local recording agent to participate in such profits, but
83-6 shall not do or perform any act of a local recording agent on
83-7 behalf of such partnership without having qualified as a local
83-8 recording agent.]
83-9 [(2) Upon the death of a duly licensed local recording
83-10 agent, who is a sole proprietorship, unless otherwise provided by
83-11 the last will of such deceased agent, the surviving spouse and
83-12 children, if any, of such deceased agent, or a trust for such
83-13 spouse or children, may share in the profits of the continuance of
83-14 the agency business of said deceased agent, provided such agency
83-15 business is continued by a duly licensed local recording agent.
83-16 Said surviving spouse, trusts or children, may participate in such
83-17 profits during the lifetime of such surviving spouse and said
83-18 children. Said surviving spouse, trusts or children shall not be
83-19 required to qualify as local recording agents in order to
83-20 participate in the profits of such agency, but shall not do or
83-21 perform any act of a local recording agent in connection with the
83-22 continuance of such agency business without first having been duly
83-23 licensed as a local recording agent; provided, however, that a duly
83-24 licensed local recording agent who is a sole proprietorship may
83-25 transfer an interest in his agency to his children, or a trust for
83-26 same, and may operate such interest for their use and benefit; and
84-1 such children may share in the profits of such local recording
84-2 agency during their lifetime, and during such time shall not be
84-3 required to qualify as a local recording agent in order to
84-4 participate in such profits, but shall not do or perform any act of
84-5 a local recording agent in connection with such agency business
84-6 without first having been duly licensed as a local recording agent.]
84-7 [(3) Upon the death of a shareholder in a corporate licensed
84-8 local recording agency, the surviving spouse and children, if any,
84-9 of such deceased shareholder, or a trust for such surviving spouse
84-10 and children, may share in the profits of such corporate agency
84-11 during the lifetime of such surviving spouse or children, as the
84-12 case may be, if and as provided by a contract entered into by and
84-13 between all of the shareholders and the corporation. Any such
84-14 surviving spouse, surviving children, or trusts shall not be
84-15 required to individually qualify as a local recording agent in
84-16 order to participate in such profits, but shall not do or perform
84-17 any act of a local recording agency on behalf of such corporation
84-18 without having qualified as a local recording agent; provided,
84-19 however, that a shareholder in a corporate licensed local recording
84-20 agent, may, if provided by a contract entered into by and between
84-21 all of the shareholders and the corporation, transfer an interest
84-22 in the agency to his children or a trust for same, and such
84-23 children or trusts may share in the profits of such agency to the
84-24 extent of such interest during their lifetime. Such children or
84-25 trusts shall not be required to qualify as a local recording agent
84-26 to participate in such profits, but shall not do or perform any act
85-1 of a local recording agent on behalf of such corporation without
85-2 having qualified as a local recording agent.]
85-3 [(4) Except as provided in Subsections (1), (2), and (3)
85-4 above, and as may be provided in Section 6a, Article 21.14 of the
85-5 Insurance Code, no person shall be entitled to perform any act of a
85-6 local recording agent nor in any way participate as a partner or
85-7 corporate shareholder in the profits of any local recording agent,
85-8 without first having qualified as a duly licensed local recording
85-9 agent and having successfully passed the examination required by
85-10 the Insurance Code; provided, however, that all persons, or trusts
85-11 for any person, that received licenses before March 1, 1963, as
85-12 silent, inactive, or non-active partners, or who are silent,
85-13 inactive, or non-active partners in an agency which was so
85-14 qualified before such date, shall continue to receive licenses, or
85-15 renewals thereof, as partners in such agency or in any successor
85-16 agency, providing: (a) that such persons are members of an agency
85-17 in which there is at least one partner who has qualified as a duly
85-18 licensed local recording agent; (b) that such non-active partner
85-19 or partners do not actively solicit insurance; and (c) that such
85-20 agency is not a limited partnership.]
85-21 [(5) Notwithstanding any provision of this article or this
85-22 code to the contrary, a bank located and doing business in a place
85-23 with a population of 5,000 or less that owns a licensed bank
85-24 operating subsidiary, as defined by state or federal law, that is
85-25 also located and doing business in a place with a population of
85-26 5,000 or less may receive profits from the licensed bank operating
86-1 subsidiary. To advertise under the bank name or participate in the
86-2 insurance operation other than by receiving profits from the
86-3 insurance business, the bank must hold an agent license. Nothing
86-4 in this section permits a bank or any affiliate to pay commissions
86-5 or other valuable consideration to any nonlicensed employees, and a
86-6 bank may not pay, credit, or otherwise reward particular
86-7 nonlicensed units or geographic locations of the bank or any of its
86-8 affiliates with a portion of the commission.]
86-9 [Sec. 4. ACTING WITHOUT LICENSE FORBIDDEN. (a) It shall be
86-10 unlawful for any person, firm, partnership, corporation or bank, or
86-11 any partner, officer, director, employee, or shareholder of a
86-12 corporation, or any officer, director, or employee of a bank to act
86-13 as a local recording agent or solicitor in procuring business for
86-14 any insurance company, corporation, interinsurance exchange,
86-15 mutual, reciprocal, association, Lloyds or other insurance carrier,
86-16 until that person or entity shall have in force the license
86-17 provided for herein.]
86-18 [(b) No insurer doing business in this state shall pay
86-19 directly or indirectly any commission, or other valuable
86-20 consideration, to any person, firm, partnership, corporation, or
86-21 bank for services as a local recording agent within this state,
86-22 unless such person, firm, partnership, corporation, or bank shall
86-23 hold a currently valid license and appointment to act as a local
86-24 recording agent as required by the laws of this state; nor shall
86-25 any person, firm, partnership, corporation, or bank other than a
86-26 duly licensed and appointed local recording agent accept any such
87-1 commission or other valuable consideration; provided, however, that
87-2 nothing contained in this subsection shall prohibit an assigned
87-3 risk pool or assigned risk plan, duly authorized to operate by the
87-4 laws of this state, from paying commissions, or other valuable
87-5 consideration, to a duly licensed person, firm, partnership,
87-6 corporation, or bank for services as a local recording agent.]
87-7 [(c) No licensed local recording agent, managing general
87-8 agent, or surplus lines agent doing business in this state shall
87-9 pay directly or indirectly any commission, or other valuable
87-10 consideration, to any person, firm, partnership, corporation, or
87-11 bank for services as a local recording agent within this state,
87-12 unless such person, firm, partnership, corporation, or bank shall
87-13 hold a currently valid license to act as a local recording agent as
87-14 required by the laws of this state; nor shall any person, firm,
87-15 partnership, corporation, or bank other than a duly licensed local
87-16 recording agent accept any such commission or other valuable
87-17 consideration.]
87-18 [(d) No local recording agent doing business in this state
87-19 shall pay directly or indirectly any commission, or other valuable
87-20 consideration, to any person for services as a solicitor within
87-21 this state, unless such person shall hold a currently valid license
87-22 and appointment to act as a solicitor for such local recording
87-23 agent as required by the laws of this state; nor shall any person
87-24 other than a duly licensed and appointed solicitor accept any such
87-25 commission or other valuable consideration.]
87-26 [Sec. 5. ACTIVE AGENTS OR SOLICITORS ONLY TO BE LICENSED.
88-1 No license shall be granted to any person, firm, partnership,
88-2 corporation, or bank as a local recording agent or to a person as a
88-3 solicitor, for the purpose of writing any form of insurance, unless
88-4 it is found by the department that such person, firm, partnership,
88-5 corporation, or bank is or intends to be, actively engaged in the
88-6 soliciting or writing of insurance for the public generally; that
88-7 each person or individual of a firm is a resident of Texas and is
88-8 to be actively engaged in good faith in the business of insurance,
88-9 and that the application is not being made in order to evade the
88-10 laws against rebating and discrimination either for the applicant
88-11 or for some other person, firm, partnership, corporation, or bank.
88-12 Nothing herein contained shall prohibit an applicant insuring
88-13 property which the applicant owns or in which the applicant has an
88-14 interest; but it is the intent of this Section to prohibit coercion
88-15 of insurance and to preserve to each citizen the right to choose
88-16 that individual's own agent or insurance carrier, and to prohibit
88-17 the licensing of an individual, firm, partnership, corporation, or
88-18 bank to engage in the insurance business principally to handle
88-19 business which the applicant controls only through ownership,
88-20 mortgage or sale, family relationship or employment, which shall be
88-21 taken to mean that an applicant who is making an original
88-22 application for license shall show the department that the
88-23 applicant has a bona fide intention to engage in business in which,
88-24 in any calendar year, at least twenty-five per cent (25%) of the
88-25 total volume of premiums shall be derived from persons or
88-26 organizations other than applicant and from property other than
89-1 that on which the applicant shall control the placing of insurance
89-2 through ownership, mortgage, sale, family relationship or
89-3 employment. Nothing herein contained shall be construed to
89-4 authorize a partnership, corporation, or bank to receive a license
89-5 as a solicitor.]
89-6 [Sec. 5a. REQUIREMENTS AS TO KNOWLEDGE OR INSTRUCTION FOR
89-7 LOCAL RECORDING AGENT'S LICENSE. (a) Every applicant for local
89-8 recording agent's license from and after October 1, 1971, shall
89-9 upon the successful passage of the examination for local recording
89-10 agent's license as promulgated by the State Board of Insurance
89-11 pursuant to the provisions of this Article 21.14 be issued a
89-12 temporary local recording agent's license. The holder of a
89-13 temporary local recording agent's license shall have the same
89-14 authority and be subject to the same provisions of the law as local
89-15 recording agents until such temporary license shall expire. Each
89-16 such temporary license so issued shall expire upon the happening of
89-17 any one of the following, whichever shall first occur, to wit:]
89-18 [(i) The issuance of a local recording agent's license
89-19 to such person;]
89-20 [(ii) One year from date of issuance of the temporary
89-21 local recording agent's license.]
89-22 [Each such person receiving a temporary license as set out
89-23 above shall within one (1) year from the issue date of such
89-24 temporary license complete to the satisfaction of the State Board
89-25 of Insurance one of the following courses of study:]
89-26 [(i) Classroom courses in insurance satisfactory to
90-1 the State Board of Insurance at a school, college, junior college
90-2 or extension thereof; or]
90-3 [(ii) An insurance company or agents' association
90-4 school approved by the State Board of Insurance; or]
90-5 [(iii) A correspondence course in insurance approved
90-6 by the State Board of Insurance.]
90-7 [Upon the successful completion of any one of the above
90-8 courses of study within the one year period, the temporary agent
90-9 shall then be entitled to receive from the State Board of Insurance
90-10 his local recording agent's license.]
90-11 [(b) Provided, however, none of the provisions of this
90-12 section shall apply to the following:]
90-13 [(1) To any person holding a license as a local
90-14 recording agent upon the effective date of this Act.]
90-15 [(2) To any person applying for an emergency local
90-16 recording agent's license under the provisions of Section 6a of
90-17 Article 21.14 of the Insurance Code of Texas.]
90-18 [(3) To any person who holds the designation Chartered
90-19 Property and Casualty Underwriter (C.P.C.U.) from the American
90-20 Institute for C.P.C.U., the designation Certified Insurance
90-21 Counselor (C.I.C.) from the national Society of Certified Insurance
90-22 Counselors, or the designation Accredited Adviser in Insurance
90-23 (A.A.I.) from the Insurance Institute of America.]
90-24 [(4) To any person who has a bachelor's degree from a
90-25 four-year accredited college or university with a major in
90-26 insurance.]
91-1 [(5) To any person who within two (2) years
91-2 immediately preceding the filing of an application was a licensed
91-3 agent in good standing in the state from which the person moved to
91-4 Texas, provided such state makes similar provision for those agents
91-5 who may move from Texas to such state.]
91-6 [(6) To any person desiring to apply for a license to
91-7 solicit and write exclusively all forms of insurance authorized to
91-8 be solicited and written in Texas covering the ownership,
91-9 operation, maintenance or use of any motor vehicle, its accessories
91-10 and equipment, designed for use upon the public highways, including
91-11 trailers and semitrailers. Such person shall continue to apply for
91-12 and qualify to be licensed under the other provisions of Article
91-13 21.14 of the Insurance Code of Texas. Provided, such applicant
91-14 shall be required to take and pass, to the satisfaction of the
91-15 Texas Department of Insurance, an examination, promulgated by said
91-16 department, covering only those forms of insurance referred to in
91-17 this paragraph. Provided, when such a person so applies and
91-18 qualifies, the person shall be issued a license which shall contain
91-19 on the face of said license the following language: "Motor vehicle
91-20 insurance only." An agent holding such a limited license hereby
91-21 created shall solicit only those forms of insurance hereinabove
91-22 provided, but shall be subject to all other laws relating to local
91-23 recording agents.]
91-24 [(c) There is hereby created an Agents' Education Advisory
91-25 Board whose duties shall be to advise with and make recommendations
91-26 to the State Board of Insurance concerning the curriculum, course
92-1 content and schools to be approved under Subsection (a) above. The
92-2 members of said Advisory Board shall be appointed by the chairman
92-3 of the State Board of Insurance and shall serve for one year, from
92-4 September 1 to August 31, or until their successors are appointed.
92-5 Said Advisory Board shall be composed of the following persons:
92-6 Two (2) members, each of whom shall be a resident of Texas and have
92-7 a minimum of ten (10) years' experience as an executive of a fire
92-8 and casualty company doing business in Texas and whose company
92-9 operates an agents' school; two (2) members, each of whom shall be
92-10 a licensed local recording agent in Texas with a minimum of ten
92-11 (10) years' experience as an agent; and one (1) member who shall be
92-12 a teacher of insurance at a four-year accredited college or
92-13 university in Texas. Said Advisory Board shall meet at the offices
92-14 of the State Board of Insurance upon call of the chairman of the
92-15 State Board of Insurance and the members of said Advisory Board
92-16 shall be paid out of the Recording Agents License Fund for their
92-17 actual and necessary expenses incurred in connection with their
92-18 attendance at said meetings.]
92-19 [Sec. 5b. CONTINUING EDUCATION. (a) The State Board of
92-20 Insurance shall adopt a procedure for certifying and shall certify
92-21 continuing education programs for agents. Participation in the
92-22 programs is mandatory for all agents licensed under this article.
92-23 The State Board of Insurance shall exempt agents who have been
92-24 licensed for 20 years or more on or after September 1, 1992, and
92-25 shall have the rulemaking authority to provide for other reasonable
92-26 exemptions. No agent shall be required to complete more than 15
93-1 hours of continuing education per year. An agent licensed under
93-2 both Articles 21.07-1 and 21.14 of this code and any subsequent
93-3 amendments may elect to satisfy the continuing education
93-4 requirements of either article and shall not be required to
93-5 complete a total of more than 15 hours of continuing education per
93-6 year.]
93-7 [(b) On written request of the agent, the State Board of
93-8 Insurance may extend the time for the agent to comply with the
93-9 continuing education requirements of this section or may exempt the
93-10 agent from some or all of the requirements for a licensing period
93-11 if the board finds that the agent is unable to comply with the
93-12 requirements because of illness, medical disability, or another
93-13 extenuating circumstance beyond the control of the agent. The
93-14 criteria for such exemptions and extensions shall be established by
93-15 rule.]
93-16 [Sec. 5c. ADVISORY COUNCIL. (a) An advisory council of
93-17 nine members shall be appointed by the State Board of Insurance to
93-18 furnish the Board with information and assistance in the conduct of
93-19 the continuing education program for agents licensed under Articles
93-20 21.07-1 and 21.14.]
93-21 [(b) Four of the members of the advisory council must be
93-22 representatives of the general public. A public representative may
93-23 not be:]
93-24 [(1) an officer, director, or employee of an insurance
93-25 company, insurance agency, agent, broker, solicitor, adjuster, or
93-26 any other business entity regulated by the State Board of
94-1 Insurance;]
94-2 [(2) a person required to register with the secretary
94-3 of state under Chapter 305, Government Code; or]
94-4 [(3) related to a person described by Subdivision (1)
94-5 or (2) of this subsection within the second degree of affinity or
94-6 consanguinity.]
94-7 [Sec. 5d. JURISDICTION FOR CONTINUING EDUCATION.
94-8 Notwithstanding the rules or regulations of any other state agency,
94-9 the board has sole jurisdiction for all matters relating to the
94-10 continuing education of insurance agents who are licensed under
94-11 this Article.]
94-12 [Sec. 6. EXAMINATION REQUIRED; EXCEPTIONS. (a) If
94-13 applicant for a local recording agent's license has not prior to
94-14 date of such application, been licensed as a local recording agent,
94-15 or if the applicant for a solicitor's license has not been licensed
94-16 as a local recording agent or as a solicitor prior to date of such
94-17 application, the Board shall require such applicant to submit to a
94-18 written examination covering all kinds of insurance or contracts,
94-19 which license if granted, will permit the applicant to solicit.]
94-20 [(b) Any applicant for local recording agent's license who
94-21 has prior to the date of such application been licensed as a local
94-22 recording agent, shall be entitled to a local recording agent's
94-23 license without examination, provided the other requirements of
94-24 this article are met. Any applicant for solicitor's license who
94-25 has been licensed as a local recording agent or as a solicitor
94-26 prior to date of such application, shall be entitled to a
95-1 solicitor's license without an examination, provided the other
95-2 requirements of this article are met.]
95-3 [(c) The Board by rule shall apply different examination
95-4 standards to a solicitor employed as an insurance service
95-5 representative than those applied to other solicitors.]
95-6 [Sec. 6a. DEATH, DISABILITY OR INSOLVENCY; EMERGENCY LICENSE
95-7 WITHOUT EXAMINATION. In event of death or disability of a local
95-8 recording agent or in event a local recording agent is found to be
95-9 insolvent and unable to pay for premiums coming to his hands as
95-10 such local recording agent, the Board may issue to an applicant for
95-11 local recording agent's license an emergency local recording
95-12 agent's license for a period of ninety (90) days in any twelve (12)
95-13 consecutive months and at the Board's option, an additional period
95-14 up to ninety (90) days without an examination provided the other
95-15 requirements of this article are met and if it is established to
95-16 the satisfaction of the Board that such emergency license is
95-17 necessary for the preservation of the agency assets of a deceased
95-18 or disabled local recording agent or of an insolvent local
95-19 recording agent.]
95-20 [Sec. 7. CONDUCT OF EXAMINATIONS; NOTICE; MANUAL OF
95-21 QUESTIONS AND ANSWERS. Unless the State Board of Insurance accepts
95-22 a qualifying examination administered by a testing service, as
95-23 provided under Article 21.01-1, Insurance Code, as amended, all
95-24 examinations provided by this article shall be conducted by the
95-25 State Board of Insurance, and shall be held not less frequently
95-26 than one each sixty (60) days every year at times and places
96-1 prescribed by the State Board of Insurance, of which applicants
96-2 shall be notified by the State Board of Insurance in writing ten
96-3 (10) days prior to the date of such examinations, and shall be
96-4 conducted in writing in either the English or Spanish language.
96-5 Provided, further, that printed copies of a manual of questions and
96-6 answers thereto pertaining to the examination published under the
96-7 direction of the State Board of Insurance shall be made available
96-8 to all companies, general agents, and managers for the use of their
96-9 prospective agents, to all agents for the use of their prospective
96-10 solicitors in preparing for such examination. The questions to be
96-11 asked on such examination shall be based upon the questions and
96-12 answers contained in the manual.]
96-13 [Sec. 8. EXPIRATION OF LICENSE; RENEWAL. Except as may be
96-14 provided by a staggered renewal system adopted under Article
96-15 21.01-2 of this code, every license issued to a local recording
96-16 agent or a solicitor shall expire two years from the date of its
96-17 issue, unless a completed application to qualify for the renewal of
96-18 any such license shall be filed with the State Board of Insurance
96-19 and a nonrefundable fee paid on or before such date, in which event
96-20 the license sought to be renewed shall continue in full force and
96-21 effect until renewed or renewal is denied.]
96-22 [Sec. 9. FEES PAYABLE BEFORE EXAMINATION. Unless the State
96-23 Board of Insurance accepts a qualifying examination administered by
96-24 a testing service, as provided under Article 21.01-1, Insurance
96-25 Code, as amended, applicants required to be examined shall, at time
96-26 and place of examination, pay prior to being examined the following
97-1 fees: For a local recording agent's license a fee in an amount not
97-2 to exceed $50 as determined by the State Board of Insurance and for
97-3 a solicitor's license a fee in an amount not to exceed $20 as
97-4 determined by the State Board of Insurance. The fees paid under
97-5 this section shall not be returned for any reason other than
97-6 failure to appear and take the examination after the applicant has
97-7 given at least 24 hours' notice of an emergency situation to the
97-8 State Board of Insurance and received board approval. A new fee
97-9 shall be paid before each and every examination.]
97-10 [Sec. 10. RENEWAL FEES. (a) An applicant for the renewal
97-11 of a local recording agent's license shall pay, at the time the
97-12 renewal application is filed, a fee in an amount not to exceed $50
97-13 as determined by the State Board of Insurance. An applicant for
97-14 the renewal of a solicitor's license shall pay, at the time the
97-15 renewal application is filed, a fee in an amount not to exceed $20
97-16 as determined by the State Board of Insurance.]
97-17 [Sec. 11. ISSUANCE OF LICENSE. (a) Whenever the provisions
97-18 of this article have been complied with, the Board shall issue to
97-19 any applicant the license applied for where such applicant shall
97-20 have satisfactorily passed the examination prescribed by the State
97-21 Board of Insurance, and who shall possess the other qualifications
97-22 required by this article.]
97-23 [(b) The Commissioner of Insurance shall collect in advance
97-24 from agents requesting duplicate licenses a fee not to exceed $20.
97-25 The State Board of Insurance shall determine the amount of the fee.]
97-26 [Sec. 12. NOTICE TO COMMISSIONER OF INSURANCE OF APPOINTMENT
98-1 OF LOCAL RECORDING AGENT BY INSURANCE COMPANY. (a) After a person
98-2 or firm shall be granted a license as a local recording agent in
98-3 this state, that person or firm shall be authorized to act as such
98-4 local recording agent in this state, only after and during the time
98-5 such person or firm has been authorized so to do, by an insurance
98-6 company having a permit to do business in this state; and when so
98-7 authorized each company or carrier or its general or state or
98-8 special agent making the appointment shall immediately notify the
98-9 Commissioner of Insurance, on such form as the Commissioner may
98-10 require, of the appointment. If approval of an additional
98-11 appointment is not received from the Commissioner before the eighth
98-12 day after the date on which the completed application and fee were
98-13 received by the Commissioner, the agent and the insurance company
98-14 may assume that the Commissioner approves the application, and the
98-15 agent may act for the insurance company. The agent shall be
98-16 required to pay a nonrefundable fee of $16.00 for each appointment
98-17 applied for, which fee shall accompany the notice, and such person
98-18 or firm shall be presumed to be the agent for such company in this
98-19 state until such company or its general or state or special agent
98-20 shall have delivered written notice to the Commissioner of
98-21 Insurance that such appointment has been withdrawn.]
98-22 [(b) Every insurance carrier shall, upon termination for
98-23 cause of the appointment of any agent, immediately file with the
98-24 State Board of Insurance a statement of the facts relative to the
98-25 termination of the appointment and the date and cause thereof. The
98-26 Board shall thereupon record the termination of the appointment of
99-1 such agent to represent such insurance carrier in this state. The
99-2 agent terminated for cause shall receive from the insurance carrier
99-3 a copy of the notice sent to the State Board of Insurance.]
99-4 [(c) Any information, document, record or statement required
99-5 to be made or disclosed to the Board pursuant to this Article shall
99-6 be deemed confidential and privileged unless or until introduced as
99-7 evidence in an administrative hearing.]
99-8 [(d) No liability may be imposed on any insurance carrier,
99-9 its employees or agents, or any other person, acting without
99-10 malice, providing the information required to be disclosed pursuant
99-11 to this section.]
99-12 [Sec. 13. APPLICATION FOR SOLICITOR'S LICENSE. When any
99-13 local recording agent who has been appointed by an insurance
99-14 carrier having a permit to do business in this State shall desire
99-15 to appoint a solicitor in the operation of his business, he and a
99-16 company jointly shall make application for a license for such
99-17 solicitor to the Board of Insurance Commissioners, in such form as
99-18 the Board may require.]
99-19 [Sec. 14. NOTICE TO INSURANCE COMMISSIONERS OF SOLICITOR'S
99-20 APPOINTMENT; AUTHORITY TO SOLICIT. (a) No solicitor shall be
99-21 authorized to solicit insurance until after the State Board of
99-22 Insurance shall have been notified by a local recording agent of
99-23 his appointment, and no local recording agent shall accept business
99-24 tendered by a solicitor until such local recording agent has given
99-25 notice to the State Board of Insurance of such solicitor's
99-26 appointment as such, and until such solicitor has been licensed by
100-1 the State Board of Insurance. No solicitor shall have outstanding
100-2 at any time a notification of appointment from more than one local
100-3 recording agent, and a solicitor shall solicit insurance only in
100-4 the name of and for the account of the local recording agent by
100-5 whom he has been appointed.]
100-6 [(b) If approval of an appointment of a currently licensed
100-7 solicitor is not received from the Commissioner before the eighth
100-8 day after the date on which the completed application and
100-9 nonrefundable fee were received by the Commissioner, the solicitor
100-10 and local recording agent may assume that the Commissioner approves
100-11 the application, and the solicitor may act for the local recording
100-12 agent.]
100-13 [(c) A licensed solicitor's appointment may be terminated
100-14 either by the local recording agent who appointed the solicitor or
100-15 by the solicitor on the filing of notice with the Board of the
100-16 termination.]
100-17 [(d) Upon termination for cause of the appointment of any
100-18 solicitor, the local recording agent shall immediately file with
100-19 the State Board of Insurance a statement of the facts relative to
100-20 the termination of the appointment and the date and cause thereof.
100-21 The Board shall thereupon record the termination of the appointment
100-22 of such solicitor to represent such local recording agent. The
100-23 solicitor terminated for cause shall receive from the local
100-24 recording agent a copy of the notice sent to the State Board of
100-25 Insurance.]
100-26 [(e) Any information, document, record or statement required
101-1 to be made or disclosed to the Board pursuant to this Article shall
101-2 be deemed privileged and confidential unless or until introduced
101-3 into evidence in an administrative hearing.]
101-4 [(f) No liability may be imposed on any insurance carrier,
101-5 its employees or agents, or any other person, acting without
101-6 malice, providing the information required to be disclosed pursuant
101-7 to this section.]
101-8 [Sec. 15. FIRE INSURANCE IN EXCESS OF VALUE, WRITING OF
101-9 FORBIDDEN. It shall be unlawful for any local recording agent or
101-10 solicitor for an insurance company or insurance carrier knowingly
101-11 to grant, write or permit a greater amount of insurance against
101-12 loss by fire than the reasonable value of the subject of insurance.]
101-13 [Sec. 16. SUSPENSION OR REVOCATION OF LICENSE. (a) The
101-14 license of any local recording agent shall be suspended during a
101-15 period in which the agent does not have outstanding a valid
101-16 appointment to act as an agent for an insurance company. The Board
101-17 shall end the suspension on receipt of evidence satisfactory to the
101-18 board that the agent has a valid appointment. The Board shall
101-19 cancel the license of a solicitor if the solicitor does not have
101-20 outstanding a valid appointment to act as a solicitor for a local
101-21 recording agent, and shall suspend the license during a period that
101-22 the solicitor's local recording agent does not have outstanding a
101-23 valid appointment to act as an agent under this Article.]
101-24 [(b) The department may discipline any local recording agent
101-25 or solicitor or deny an application under Section 5, Article
101-26 21.01-2, of this code if it finds that the applicant, individually
102-1 or through any officer, director, or shareholder, for or holder of
102-2 such license:]
102-3 [(1) Has wilfully violated any provision of the
102-4 insurance laws of this state;]
102-5 [(2) Has intentionally made a material misstatement in
102-6 the application for such license;]
102-7 [(3) Has obtained, or attempted to obtain, such
102-8 license by fraud or misrepresentation;]
102-9 [(4) Has misappropriated or converted to the
102-10 applicant's or licensee's own use or illegally withheld money
102-11 belonging to an insurer or an insured or beneficiary;]
102-12 [(5) Has been guilty of fraudulent or dishonest acts;]
102-13 [(6) Has materially misrepresented the terms and
102-14 conditions of any insurance policies or contracts;]
102-15 [(7) Has made or issued, or caused to be made or
102-16 issued, any statement misrepresenting or making incomplete
102-17 comparisons regarding the terms or conditions of any insurance
102-18 contract legally issued by an insurance carrier for the purpose of
102-19 inducing or attempting to induce the owner of such contract to
102-20 forfeit or surrender such contract or allow it to expire for the
102-21 purpose of replacing such contract with another;]
102-22 [(8) Is convicted of a felony;]
102-23 [(9) Is guilty of rebating any insurance premium or
102-24 discriminating as between insureds;]
102-25 [(10) Is not engaged in the soliciting or writing of
102-26 insurance for the public generally as required by Section 5 of this
103-1 Article; or]
103-2 [(11) Is afflicted with a disability as that term is
103-3 defined by Subsection (a) of Article 21.15-6 of this code.]
103-4 [(c) The State Board of Insurance may order that a local
103-5 recording agent or solicitor who is afflicted with a disability be
103-6 placed on disability probation under the terms and conditions
103-7 specified under Article 21.15-6 of this code instead of taking
103-8 disciplinary action under Subsection (b) of this section.]
103-9 [(d) A license applicant or licensee whose license
103-10 application or license has been denied, refused, or revoked under
103-11 this section may not apply for any license as an insurance agent
103-12 before the first anniversary of the effective date of the denial,
103-13 refusal, or revocation, or, if the applicant or licensee seeks
103-14 judicial review of the denial, refusal, or revocation before the
103-15 first anniversary of the date of the final court order or decree
103-16 affirming that action. The Commissioner may deny an application
103-17 timely filed if the applicant does not show good cause why the
103-18 denial, refusal, or revocation of the previous license application
103-19 or license should not be considered a bar to the issuance of a new
103-20 license. This subsection does not apply to an applicant whose
103-21 license application was denied for failure to pass a required
103-22 written examination.]
103-23 [Sec. 18. APPEAL. If the Commissioner refuses an
103-24 application for license as provided by this article, or suspends,
103-25 revokes, or refuses to renew any license at a hearing as provided
103-26 by this article, and if the applicant or accused is dissatisfied
104-1 with the action of the Commissioner, the applicant or accused may
104-2 appeal from the action in accordance with Article 1.04 of this
104-3 Code.]
104-4 [Sec. 19. NOTICE TO LAST ADDRESS. Where notice to the
104-5 applicant or accused is provided for in any part of this article,
104-6 notice by registered mail to his last known address shall be
104-7 sufficient.]
104-8 [Sec. 20. LIFE, HEALTH AND ACCIDENT INSURANCE, INAPPLICABLE
104-9 TO; OTHER EXCEPTIONS. The provisions of this article do not apply
104-10 to the Life, Health and Accident Insurance business or the Life,
104-11 Health and Accident Department of the companies engaged therein,
104-12 nor shall it apply to any of the following, namely:]
104-13 [(a) Any actual full-time home office salaried
104-14 employee of any insurance carrier licensed to do business in Texas,
104-15 other than an employee who solicits or receives an application for
104-16 the sale of insurance through an oral, written, or electronic
104-17 communication in accordance with Section 20A of this article.]
104-18 [(b) Any actual attorney in fact and its actual
104-19 traveling salaried representative as to business transacted through
104-20 such attorney in fact or salaried representative of any reciprocal
104-21 exchange or interinsurance exchange admitted to do business in
104-22 Texas.]
104-23 [(c) Any adjuster of losses, and/or inspector of
104-24 risks, for an insurance carrier licensed to do business in Texas.]
104-25 [(d) Any General Agent or State Agent or Branch
104-26 Manager representing an admitted and licensed insurance company or
105-1 carrier, or insurance companies or carriers, in a supervisory
105-2 capacity.]
105-3 [(e) The actual attorney in fact for any Lloyds.]
105-4 [(f) All incorporated or unincorporated mutual
105-5 insurance companies, their agents and representatives, organized
105-6 and/or operating under and by authority of Chapters 16 and 17 of
105-7 this code.]
105-8 [(g) Nothing in this entire article shall ever be
105-9 construed to apply to any member, agent, employee, or
105-10 representative of any county or farm mutual insurance company as
105-11 exempted under Chapters 16 and 17 of this code.]
105-12 [(h) Nothing in this article shall apply to the group
105-13 motor vehicle insurance business or the group motor vehicle
105-14 department of the companies engaged in that business.]
105-15 [(i) Salaried employees not involved in solicitation
105-16 or negotiation of insurance in the office of a local recording
105-17 agent who devote their full time to clerical and administrative
105-18 services, including the incidental taking of information from
105-19 customers and receipt of premiums in the office of a local
105-20 recording agent, provided the employees do not receive any
105-21 commissions and their compensation is not varied by the volume of
105-22 premiums taken and received.]
105-23 [Sec. 20A. FULL-TIME HOME OFFICE SOLICITORS: MANDATORY
105-24 REGISTRATION, CONTINUING EDUCATION, AND NOTIFICATION TO CONSUMERS;
105-25 DISCIPLINARY ACTIONS. (a) Any actual full-time home office
105-26 salaried employee of any insurance carrier licensed to do business
106-1 in Texas who solicits or receives an application for the sale of
106-2 insurance through an oral, written, or electronic communication
106-3 shall register with the commissioner.]
106-4 [(b) Any insurance carrier licensed to do business in Texas
106-5 whose general plan of operation includes the use of employees
106-6 described in Subsection (a) of this section shall certify to the
106-7 commissioner that such employees receive continuing education of
106-8 not less than 15 hours per year designed to give such employees:]
106-9 [(1) reasonable familiarity with the broad principles
106-10 of insurance, with licensing and regulatory laws, and with
106-11 provisions, terms, and conditions of the insurance which the
106-12 registrant transacts; and]
106-13 [(2) a fair and general understanding of the
106-14 obligations and duties of an insurer to an insured, including
106-15 training in ethical considerations.]
106-16 [(c) The registration of any actual full-time home office
106-17 salaried employee shall be suspended and the employer insurance
106-18 carrier may be disciplined in accordance with the insurance laws of
106-19 this state, if the commissioner finds that the registrant:]
106-20 [(1) has wilfully violated any provision of this code,
106-21 the laws of this state, or a rule of the commissioner;]
106-22 [(2) has been guilty of fraudulent or dishonest acts;]
106-23 [(3) has materially misrepresented the terms and
106-24 conditions of any insurance policies or contracts;]
106-25 [(4) has made or issued, or caused to be made or
106-26 issued, any statement misrepresenting or making incomplete
107-1 comparisons regarding the terms or conditions of any insurance
107-2 contract legally issued by an insurance carrier for the purpose of
107-3 inducing or attempting to induce the owner of such contract to
107-4 forfeit or surrender such contract or allow it to expire for the
107-5 purpose of replacing such contract with another;]
107-6 [(5) is guilty of rebating any insurance premium or
107-7 discriminating as between insureds; or]
107-8 [(6) has been convicted of a felony involving fraud or
107-9 breach of fiduciary duty.]
107-10 [(d) Registrants under this section shall disclose such
107-11 registration when making an oral, written, or electronic
107-12 communication to solicit or receive an application for the sale of
107-13 insurance.]
107-14 [(e) The commissioner shall adopt rules to implement the
107-15 provisions of this section.]
107-16 [Sec. 21. FEES, DISPOSITION OF; APPROPRIATIONS. The fees
107-17 herein provided for, when collected, shall be deposited in the
107-18 State Treasury to the credit of the State Board of Insurance
107-19 operating fund; provided that no expenditures shall be made from
107-20 said fund except under authority of the Legislature as set forth in
107-21 the General Appropriation Bill; provided further that no
107-22 appropriation shall ever be made out of the General Revenue Fund
107-23 for the purpose of administering this article or any provision
107-24 thereof.]
107-25 [Sec. 22. REBATES OR INDUCEMENTS FORBIDDEN. It shall be
107-26 unlawful for any local recording agent to pay, allow, give or offer
108-1 to pay, allow or give, directly or indirectly, any rebate of
108-2 premiums payable, any commission, or any paid employment or
108-3 contract for service of any kind or anything of value whatsoever,
108-4 or any valuable consideration or inducement whatever, not specified
108-5 in the policy or contract of insurance for or on account of the
108-6 solicitation or negotiation of contracts of insurance on property
108-7 or risks in this State to any person, firm or corporation, other
108-8 than a duly licensed solicitor appointed by such local recording
108-9 agent, or to another local recording agent.]
108-10 [It shall be unlawful for any solicitor to pay, allow or give
108-11 or offer to pay, allow or give, directly or indirectly, any rebate
108-12 of premiums payable, any commission, or any paid employment or
108-13 contract for service of any kind, or anything of value whatsoever,
108-14 or any valuable consideration or inducement whatever, not specified
108-15 in the policy or contract of insurance, for or on account of the
108-16 solicitation or negotiation of contracts of insurance on property
108-17 or risks in this State to any person, firm or corporation.]
108-18 [Sec. 23. REPEAL; LAWS NOT IN CONFLICT NOT AFFECTED; ACT
108-19 CUMULATIVE. All laws or parts of laws pertaining to any phase of
108-20 the insurance business, which are in conflict with this article,
108-21 shall be and the same are hereby repealed; but all laws, Civil and
108-22 Criminal, affecting insurance agents, and/or insurance companies or
108-23 insurance carriers or the insurance business, which are not in
108-24 conflict herewith, shall not be affected by the provisions of this
108-25 article; but this article shall be deemed cumulative of such laws.]
108-26 [Sec. 24. VIOLATION OF ACT. Any person or any member of any
109-1 firm, or any corporation or bank, or any officer, director,
109-2 shareholder or employee of any corporation or bank who violates any
109-3 of the provisions of Sections 4, 15 and 22 of this Article shall be
109-4 guilty of a misdemeanor, and on conviction in a court of competent
109-5 jurisdiction, shall be punished by a fine of not less than One
109-6 Dollar ($1.00) nor more than One Hundred Dollars ($100.00).]
109-7 [Sec. 25. ENFORCEMENT OF ARTICLE. The Attorney General, or
109-8 any District or County Attorney, or the Board of Insurance
109-9 Commissioners, may institute any injunction proceeding or such
109-10 other proceeding to enforce the provisions of this article, and to
109-11 enjoin any person, firm or corporation from engaging or attempting
109-12 to engage in any of the business in violation of this article or
109-13 any of the provisions thereof. The provisions of this section are
109-14 cumulative of the other penalties or remedies provided for in this
109-15 article.]
109-16 [Sec. 26. ADMINISTRATION OF ARTICLE. The administration of
109-17 the provision of this article shall be vested in the Board of
109-18 Insurance Commissioners, and of the administrative officer of the
109-19 various counties in which the violation of any provision of this
109-20 article may occur; and the personnel charged with the direct
109-21 supervision of the article, except the regularly elected law
109-22 enforcement officers and their appointees, shall be responsible to
109-23 and serve at the will of the Board of Insurance Commissioners. It
109-24 shall be the duty of the Board of Insurance Commissioners and the
109-25 Attorney General, and of the District and County Attorneys in
109-26 counties where violations of this article may occur, to see that
110-1 its provisions are at all times obeyed, and to make such
110-2 investigations as will prevent or detect the violation of any
110-3 provision thereof. The Board of Insurance Commissioners shall at
110-4 once lay before the District or County Attorney of the proper
110-5 county, any evidence which shall come to its knowledge, of
110-6 criminality or threatened criminality under this article. In the
110-7 event of the neglect or refusal of such Attorney to institute and
110-8 prosecute such violation, or to enforce the other remedies provided
110-9 by this article, the Board shall submit such evidence to the
110-10 Attorney General, who is hereby authorized to proceed therein with
110-11 all the rights, privileges and powers conferred by law upon
110-12 District or County Attorneys. Provided, any person having
110-13 knowledge of the violation of the provisions of this article may
110-14 file a complaint for such violation with the proper officers as in
110-15 other misdemeanor cases. The Board of Insurance Commissioners is
110-16 given the power and authority, as a requisite for granting or
110-17 renewing a license to insurance companies or insurance carriers,
110-18 their local recording agents or solicitors, to require answers
110-19 under oath to any questions propounded by the said Board or under
110-20 its authority, and touching any phase of insurance business in the
110-21 State of Texas in which said insurance company or insurance
110-22 carrier, or such person or firm, shall be engaged, and to require
110-23 such person or firm seeking appointment as local recording agent to
110-24 submit his books, records, and accounts, insofar as they may be
110-25 material to any phase of insurance business, to examination and
110-26 inspection by the Board or any person acting under its authority.]
111-1 [Sec. 27. RULES. In addition to other rules required or
111-2 authorized by this article, the commissioner may adopt rules in
111-3 accordance with federal law applicable to the regulation of the
111-4 sale of insurance that are necessary and proper to carry out the
111-5 provisions of this article.]
111-6 ARTICLE 4. NONRESIDENT AGENT LICENSE
111-7 SECTION 4.01. Section 1, Article 21.11, Insurance Code, is
111-8 amended to read as follows:
111-9 Sec. 1. NONRESIDENT AGENT LICENSE. (a) The
111-10 [Notwithstanding Sections 3(a) and (b), Article 21.14, of this
111-11 code, the] department shall license a person who is not a resident
111-12 of this state to act as a nonresident agent if the department finds
111-13 that:
111-14 (1) the state in which the person resides accords the
111-15 same privilege to a person who is a resident of this state;
111-16 (2) the applicant for the nonresident license:
111-17 (A) if an individual:
111-18 (i) holds a license as an agent in the
111-19 state of residence and either obtained the license by passing a
111-20 written examination or held the license before the time a written
111-21 examination was required to obtain the license; or
111-22 (ii) subject to Subsection (b) of this
111-23 section, has passed the examination for an agent's license required
111-24 under Article 21.01-1 of this code and satisfies the requirements
111-25 adopted under Section 2, Article 21.07, of this code for licensing
111-26 of an individual; or
112-1 (B) if a corporation or partnership:
112-2 (i) has provided evidence of the authority
112-3 or ability to act as an agent in the entity's state of domicile;
112-4 (ii) has satisfied the requirements
112-5 adopted under Section 2, Article 21.07, of this code for licensing
112-6 of a corporation or partnership; and
112-7 (iii) is domiciled in a state that has
112-8 entered into a reciprocal agreement with the commissioner as
112-9 provided by Subsection (b) of this section; and
112-10 (3) the applicant or any officer, director,
112-11 shareholder, member, or partner of an applicant that is a business
112-12 entity, required to file biographical information with the
112-13 department under Article 21.07 of this code, has not:
112-14 (A) committed an act that constitutes grounds
112-15 for denial, suspension, or revocation of a license under Article
112-16 21.01-2 of this code; or
112-17 (B) had an insurance license suspended or
112-18 revoked by the department or the insurance regulator of another
112-19 state.
112-20 (b) The commissioner may enter into a reciprocal agreement
112-21 with the appropriate official of another state waiving the written
112-22 examination requirement for an applicant who is a resident of that
112-23 state if:
112-24 (1) a written examination is required of applicants
112-25 for an agent's license in the other state;
112-26 (2) the appropriate official of the other state
113-1 certifies that the applicant holds a license as an agent in the
113-2 other state and either passed a written examination to obtain the
113-3 license or was the holder of an agent's license before the time a
113-4 written examination was required; and
113-5 (3) in the other state, a resident of this state is
113-6 entitled to obtain an agent's license under the same conditions and
113-7 without discrimination as to fees or otherwise in favor of the
113-8 residents of the other state.
113-9 (c) A person who resides in a town through which the state
113-10 line runs and whose residence is located in the town in the
113-11 adjoining state may be licensed as a resident agent if the person
113-12 maintains the person's business office in this state [in accordance
113-13 with Article 21.14 of this code, subject to the limitations of this
113-14 article].
113-15 (d) The [(b) An applicant for issuance of a license under
113-16 this section must meet the requirements for issuance of a license
113-17 under Article 21.14 of this code, except that the] department may
113-18 [shall] waive any [of those] license requirements for an applicant
113-19 with a valid license from another state or jurisdiction that has
113-20 license requirements substantially equivalent to those of this
113-21 state.
113-22 (e) The commissioner shall be the attorney for service of
113-23 process on whom all lawful process, notice, or demand may be served
113-24 in any legal proceeding against a nonresident agent licensed to
113-25 transact business in this state if:
113-26 (1) the nonresident agent fails to appoint or maintain
114-1 an attorney for service in this state;
114-2 (2) an attorney for service is appointed but cannot
114-3 with reasonable diligence be found; or
114-4 (3) the license of the nonresident agent is revoked.
114-5 SECTION 4.02. Subsections (a) and (b), Section 2, Article
114-6 21.11, Insurance Code, are amended to read as follows:
114-7 (a) Except as otherwise specifically provided by this code
114-8 [section], a license issued under this article to an individual who
114-9 is not a resident of this state grants the same rights and
114-10 privileges afforded to a resident license holder [under a license
114-11 issued under Article 21.14 of this code].
114-12 (b) A person who holds a license issued under this article
114-13 and who is in compliance with the continuing education requirements
114-14 of the person's state of residence is exempt from the continuing
114-15 education requirements imposed under Article 21.01-1 of this code
114-16 [may not:]
114-17 [(1) maintain an office in this state;]
114-18 [(2) solicit insurance business in this state by any
114-19 method, including an oral, written, or electronic communication; or]
114-20 [(3) employ solicitors or others to directly or
114-21 indirectly solicit insurance in this state].
114-22 SECTION 4.03. Section 3, Article 21.11, Insurance Code, is
114-23 amended to read as follows:
114-24 Sec. 3. LIMITATIONS. (a) This article does not permit:
114-25 (1) any person or firm licensed solely as a broker in
114-26 the person's or firm's state of residence to be granted a license
115-1 under this article; or
115-2 (2) a holder of a license issued under this article to
115-3 act as a surplus lines agent under Article 1.14-2 of this code or
115-4 to perform any of the acts permitted under Article 1.14-2 of this
115-5 code, except as provided under Section 10, Article 21.54, of this
115-6 code[; or]
115-7 [(3) any person or firm who holds a license issued
115-8 under this article to engage in any form of direct solicitation of
115-9 insurance within this state].
115-10 (b) This subchapter [The commissioner shall revoke a
115-11 nonresident agent's license issued under this article if the
115-12 commissioner finds that the license was obtained or is being used
115-13 for the purpose of transacting insurance through a local recording
115-14 agent in a manner that permits the individual licensed under this
115-15 article, by subterfuge, to transact insurance as a local recording
115-16 agent.]
115-17 [(c) In the circumstances described by Subsection (b) of
115-18 this section, the commissioner shall also revoke the license of the
115-19 affected local recording agent.]
115-20 [(d) A license revoked under Subsection (b) or (c) of this
115-21 section is not subject to reissuance before the fifth anniversary
115-22 of the date the revocation is effective.]
115-23 [(e) The commissioner shall order that any insurance
115-24 transacted under an arrangement described by Subsection (b) of this
115-25 section be cancelled.]
115-26 [(f) Article 21.01-2 of this code] applies to licensing of a
116-1 nonresident agent under this article.
116-2 SECTION 4.04. Sections 4 and 5, Article 21.11, Insurance
116-3 Code, are amended to read as follows:
116-4 Sec. 4. HOME OFFICE EMPLOYEE. This article does not affect
116-5 the authority established under Section 7 [20], Article 21.14, of
116-6 this code of an actual full-time home office salaried employee of
116-7 an insurance carrier licensed to do business in this state.
116-8 Sec. 5. RULES. The commissioner may adopt rules as
116-9 necessary to implement this article and to meet the minimum
116-10 requirements of federal law and regulations.
116-11 ARTICLE 5. CONFORMING AMENDMENTS
116-12 SECTION 5.01. Section 1, Article 3.71, Insurance Code, is
116-13 amended to read as follows:
116-14 Sec. 1. Notwithstanding any contrary or inconsistent
116-15 provision of any law, two or more insurance companies authorized to
116-16 separately do such an insurance business in this state, including
116-17 stock companies, reciprocals, or inter-insurance exchanges, Lloyds'
116-18 associations, fraternal benefit societies and mutual companies of
116-19 all kinds, including state-wide mutual assessment corporations and
116-20 local mutual aid associations, and stipulated premium companies,
116-21 may join together to offer, sell and administer hospital, surgical
116-22 and medical expense insurance plans under a group policy covering
116-23 residents of this state who are sixty-five (65) years of age and
116-24 older and their spouses on which policy each insurance carrier
116-25 shall be severally liable, and such companies may agree with
116-26 respect to premium rates, policy provisions, sales, administrative,
117-1 technical and accounting procedures and other matters within the
117-2 scope of this Article. Such companies may issue such insurance
117-3 policies in their own names or in the name of an unincorporated
117-4 association, trust, or other organization formed for the sole
117-5 purposes of this Article and evidenced by a contract in writing
117-6 executed by the participating insurance companies, and any
117-7 unincorporated associations, trusts, or other organizations
117-8 heretofore formed for the sole purpose of this Article and
117-9 evidenced by a contract in writing executed by the participating
117-10 insurance companies is hereby ratified, confirmed and approved and
117-11 validated from the date of its formation. Any such policy may be
117-12 executed on behalf of the insurance companies by a duly authorized
117-13 person and need not be countersigned on behalf of any such company
117-14 by a resident agent. Any person who is licensed as a general life,
117-15 accident, and health [insurance] agent or as a general property and
117-16 casualty [local recording] agent [or as a solicitor] under Article
117-17 [the provisions of Articles 21.07,] 21.07-1[,] or [Article] 21.14
117-18 of this code [the Insurance Code of the State of Texas,] may act as
117-19 such agent in connection with policies of insurance or certificates
117-20 of insurance issued by any unincorporated association, trust or
117-21 other organization formed for the sole purposes of this Article
117-22 without the necessity of notifying the department [State Board of
117-23 Insurance] that such person is appointed to so act.
117-24 SECTION 5.02. Section 7, Article 3.75, Insurance Code, is
117-25 amended to read as follows:
117-26 Sec. 7. VARIABLE CONTRACT AGENTS LICENSE.
118-1 (a) Notwithstanding any other law of this state, no person shall
118-2 sell or offer for sale within this state a variable contract or do
118-3 or perform any act or thing in the sale, negotiation, making, or
118-4 consummating of any variable contract other than for himself,
118-5 unless such person shall have a valid and current license issued
118-6 under Article 21.07-1 of this code [certificate from the State
118-7 Board of Insurance] authorizing such person to act within this
118-8 state as a general life, accident, and health [variable] agent.
118-9 [No such certificate shall be issued unless and until said board is
118-10 satisfied, after examination, that such person is by training,
118-11 knowledge, ability, and character qualified to act as such agent.
118-12 Any such certificate may be withdrawn and cancelled by said board,
118-13 after notice and hearing, if it shall find that the holder thereof
118-14 does not then have the qualifications required for issue of such
118-15 certificate.]
118-16 (b) The licensing and regulation of a person acting as a
118-17 variable agent is subject to the same provisions applicable to the
118-18 licensing and regulation of other agents under Subchapter A,
118-19 Chapter 21, of this code. [The Commissioner of Insurance shall
118-20 collect in advance from variable agent applicants a nonrefundable
118-21 license fee in an amount not to exceed $50. Unless the State Board
118-22 of Insurance accepts a qualifying examination administered by a
118-23 testing service, as provided under Article 21.01-1, Insurance Code,
118-24 as amended, the Commissioner of Insurance shall collect in advance
118-25 from variable agent applicants an examination fee in an amount not
118-26 to exceed $20. The State Board of Insurance shall determine the
119-1 amount of the fees. A new examination fee shall be paid for each
119-2 and every examination. The examination fee shall not be returned
119-3 under any circumstance other than for failure to appear and take
119-4 the examination after the applicant has given at least 24 hours
119-5 notice of an emergency situation to the Commissioner of Insurance
119-6 and received the Commissioner's approval. All fees collected
119-7 pursuant to this section shall be deposited in the State Treasury
119-8 to the credit of the State Board of Insurance operating fund to be
119-9 used to administer the provisions of this section and Article
119-10 21.07-1, Insurance Code, as amended.]
119-11 [(c) Each license issued to a variable contract agent shall
119-12 expire two years following the date of issue, unless prior thereto
119-13 it is suspended or revoked by the Commissioner of Insurance.]
119-14 [(d) The Commissioner of Insurance shall suspend the license
119-15 of a variable agent during any period in which the agent does not
119-16 have an outstanding valid appointment. The Commissioner of
119-17 Insurance shall lift the suspension on receipt by the State Board
119-18 of Insurance of acceptable notice of a valid appointment.]
119-19 [(e) A license applicant or licensee whose license
119-20 application or license has been denied, refused, or revoked under
119-21 this section may not apply for any license as an insurance agent
119-22 before the first anniversary of the effective date of the denial,
119-23 refusal, or revocation, or, if the applicant or licensee seeks
119-24 judicial review of the denial, refusal, or revocation, before the
119-25 first anniversary of the date of the final court order or decree
119-26 affirming that action. The Commissioner of Insurance may deny an
120-1 application timely filed if the applicant does not show good cause
120-2 why the denial, refusal, or revocation of the previous license
120-3 application or license should not be considered a bar to the
120-4 issuance of a new license.]
120-5 [(f) Licenses which have not expired or which have not been
120-6 suspended or revoked may be renewed by filing with the State Board
120-7 of Insurance a completed renewal application and paying the
120-8 nonrefundable renewal fee set by the board in an amount not to
120-9 exceed $50 on or before the expiration date of the license in
120-10 accordance with Article 21.01-2 of this code.]
120-11 [(g) Any agent licensed under this article may represent and
120-12 act as an agent for more than one insurance carrier any time while
120-13 the license is in force, if the agent so desires. Any such agent
120-14 and the insurance carrier involved must give notice to the State
120-15 Board of Insurance of any additional appointment or appointments
120-16 authorizing the agent to act as agent for an additional insurance
120-17 carrier or carriers. Such notice shall be accompanied by a
120-18 certificate from each insurance carrier to be named in each
120-19 additional appointment that said insurance carrier desires to
120-20 appoint the applicant as its agent. This notice shall also contain
120-21 such other information as the State Board of Insurance may require.
120-22 The agent or company shall be required to pay a nonrefundable fee
120-23 in an amount not to exceed $16 as determined by the State Board of
120-24 Insurance for each additional appointment applied for, which fee
120-25 shall accompany the notice. If approval of the additional
120-26 appointment is not received from the board before the eighth day
121-1 after the date on which the completed application and fee were
121-2 received by the board, the agent and the insurance carrier, in the
121-3 absence of notice of disapproval, may assume that the board
121-4 approves the application, and the agent may act for the insurance
121-5 carrier. All fees collected pursuant to this section shall be
121-6 deposited in the State Treasury to the credit of the State Board of
121-7 Insurance operating fund to be used to administer the provisions of
121-8 this article and Article 21.07-1, Insurance Code, as amended.]
121-9 [(h) Duplicate License; Fee. The Commissioner of Insurance
121-10 shall collect in advance from agents requesting duplicate licenses
121-11 a fee not to exceed $20. The State Board of Insurance shall
121-12 determine the amount of the fee.]
121-13 SECTION 5.03. Subsection (c), Article 5.13-1, Insurance
121-14 Code, is amended to read as follows:
121-15 (c) The right of such insurers to issue prepaid legal
121-16 services contracts on individual, group, or franchise bases is
121-17 hereby recognized, and qualified agents of such insurers who are
121-18 licensed under Article 21.07-1 or [Articles 21.07 and] 21.14 of
121-19 this code [the Insurance Code, as amended, and Chapter 213, Acts of
121-20 the 54th Legislature, 1955, as amended (Article 21.07-1, Vernon's
121-21 Texas Insurance Code),] shall be authorized to write such coverages
121-22 under such rules [and regulations] as the commissioner [State Board
121-23 of Insurance] may prescribe.
121-24 SECTION 5.04. Chapter 10, Insurance Code, is amended by
121-25 adding Article 10.37-3 to read as follows:
121-26 Art. 10.37-3. AGENT'S LICENSE REQUIRED. (a) A person may
122-1 not solicit or procure insurance contracts on behalf of a fraternal
122-2 benefit society unless the person holds a license issued by the
122-3 department under this code or is specifically exempted from the
122-4 license requirement as provided by Section 2, Article 21.07-1, of
122-5 this code.
122-6 (b) The licensing and regulation of agents for fraternal
122-7 benefit societies under this chapter is subject to the requirements
122-8 adopted under Subchapter A, Chapter 21, of this code and other
122-9 existing or subsequent applicable laws governing the licensing of
122-10 those agents. A provision of such a law is applicable to a license
122-11 applicant and license holder under this chapter.
122-12 SECTION 5.05. Article 16.24A, Insurance Code, is amended to
122-13 read as follows:
122-14 Art. 16.24A. LICENSING OF AGENTS [FOR CROP INSURANCE].
122-15 (a) No person or firm shall solicit, write, sign, execute or
122-16 deliver insurance policies, bind insurance risks, collect premiums,
122-17 or otherwise act in the capacity of an insurance agent [a local
122-18 recording agent] in the solicitation or sale of [crop] insurance
122-19 for a farm mutual insurance company unless the person or firm holds
122-20 a license issued [is licensed] under Subchapter A, Chapter 21,
122-21 [Article 21.14] of this code.
122-22 (b) A farm mutual insurance company may not appoint and act
122-23 through an agent [who qualifies for a license as an agricultural
122-24 insurance agent] under Article 21.14-2 of this code.
122-25 SECTION 5.06. Section 9, Article 17.25, Insurance Code, is
122-26 amended to read as follows:
123-1 Sec. 9. AGENTS' LICENSE. Agents [or solicitors] for such
123-2 companies shall be licensed and appointed as provided by Subchapter
123-3 A, Chapter 21, [in Article 21.07 or 21.14] of this Code.
123-4 SECTION 5.07. Sections 4, 19, and 21, Managing General
123-5 Agents' Licensing Act (Article 21.07-3, Vernon's Texas Insurance
123-6 Code), are amended to read as follows:
123-7 Sec. 4. REDEMPTION OF SHARES [APPLICATION FOR LICENSE; TO
123-8 WHOM LICENSE MAY BE ISSUED]. [(a) Each applicant for license
123-9 shall be a resident of Texas and file a written sworn application
123-10 on forms furnished by the Commissioner. The applicant shall
123-11 include in the application the names and addresses of the
123-12 applicant's officers, directors, shareholders, or partners, if
123-13 applicable, and affiliates.]
123-14 [(b) The Commissioner shall issue a license to an individual
123-15 applicant upon successful completion of the examination and
123-16 compliance with the other requirements of this Act.]
123-17 [(c) The Commissioner shall issue a license to a general
123-18 partnership, or to a limited liability partnership registered with
123-19 the Secretary of State under Section 3.08, Texas Revised
123-20 Partnership Act (Article 6132b-3.08, Vernon's Texas Civil
123-21 Statutes), engaging in the business of insurance if each of the
123-22 partners is licensed as an agent under this Act. The term
123-23 "partnership" or "agency partnership" as used in this Act means a
123-24 general partnership or a registered limited liability partnership.]
123-25 [(d) The Commissioner shall issue a license to a corporation
123-26 on finding:]
124-1 [(1) that the corporation is a Texas corporation
124-2 having its principal place of business in the State of Texas and
124-3 having as one of its purposes the authority to act as a managing
124-4 general agent; and]
124-5 [(2) that every officer, director, and shareholder of
124-6 the corporation is individually licensed as a managing general
124-7 agent under the provisions of this Insurance Code; provided,
124-8 however, that in the event ownership of the shares of such
124-9 corporation is acquired through devise or descent by an unlicensed
124-10 shareholder, the corporation shall still be entitled to a license
124-11 if such unlicensed shareholder qualifies as a licensed managing
124-12 general agent or disposes of the shares to a licensed managing
124-13 general agent within 90 days after the date of such stock
124-14 acquisition. If an unlicensed person acquires shares in such a
124-15 corporation and does not qualify to be licensed as a managing
124-16 general agent and the person does not dispose of the shares within
124-17 the 90-day period to a licensed managing general agent, the shares
124-18 must be purchased by the corporation for the value of the shares of
124-19 stock as reflected by the regular books and records of the
124-20 corporation on the date of the acquisition of the shares by the
124-21 unlicensed person. If the corporation fails or refuses to purchase
124-22 the shares, the corporation's license shall be cancelled.]
124-23 [(e)] A corporation may redeem the shares of any shareholder
124-24 or the shares of a deceased shareholder, on terms agreed on by the
124-25 board of directors and the shareholder or the shareholder's
124-26 personal representative or at a price and on terms provided in the
125-1 articles of incorporation, the bylaws, or an existing contract
125-2 entered into between the shareholders of the corporation.
125-3 [(f) Nothing contained herein shall be construed to permit
125-4 any unlicensed shareholder or any employee or agent of any
125-5 corporation licensed as a managing general agent to perform any act
125-6 of a managing general agent without obtaining a managing general
125-7 agent's license.]
125-8 [(g) If at any time, any person holding a managing general
125-9 agent's license does not maintain the qualifications necessary to
125-10 obtain a license, the license of such person to act as a managing
125-11 general agent shall be cancelled or denied in accordance with the
125-12 other provisions of this Act.]
125-13 [(h) Nothing in this section shall prevent any shareholder
125-14 from selling or otherwise transferring stock in any corporation to
125-15 a company or managing general agent licensed to do business in
125-16 Texas, nor prevent any such company or managing general agent from
125-17 owning all or any portion of the stock of such corporation.]
125-18 [(i) Each corporation licensed as a managing general agent
125-19 shall notify the Commissioner of any change in its officers,
125-20 directors, or shareholders not later than the 30th day after the
125-21 date on which the change takes effect.]
125-22 [(j) In this Act the term "corporation" shall mean a
125-23 corporation organized under the Texas Business Corporation Act or a
125-24 Texas domiciled limited liability company organized or existing
125-25 under the Texas Limited Liability Company Act (Article 1528n,
125-26 Vernon's Texas Civil Statutes) having its principal place of
126-1 business in this state and having as one of its purposes the
126-2 authority to act as a managing general insurance agent. Each
126-3 officer, manager, and member of a limited liability company must be
126-4 licensed under this Act. The licensing and regulation of a limited
126-5 liability company shall be subject to the same provisions and
126-6 requirements of this Act that are applicable to corporations
126-7 licensed under this Act.]
126-8 Sec. 19. ADMINISTRATION AND REGULATION OF MANAGING GENERAL
126-9 AGENTS; VIOLATIONS OF ACT. (a) The licensing and regulation of a
126-10 person acting as a managing general agent is subject to the laws
126-11 and requirements applicable to the licensing and regulation of
126-12 other agents under Subchapter A, Chapter 21, Insurance Code.
126-13 (b) Any person, firm, or corporation who violates any of the
126-14 provisions of this Act or any rule, regulation, or order adopted
126-15 under this Act or Subchapter A, Chapter 21, Insurance Code, shall
126-16 be subject to:
126-17 (1) Sections 2A, 3A, 4A, 5A, and 6A, Article 21.01-2,
126-18 Insurance Code; and
126-19 (2) [sanctions under] Section 7, Article 1.10,
126-20 Insurance Code.
126-21 Sec. 21. ADMINISTRATION OF ACT. The administration of this
126-22 Act shall be vested in the commissioner, [State Board of Insurance]
126-23 who may establish, and from time to time amend, reasonable rules
126-24 [and regulations] for the administration of this Act.
126-25 SECTION 5.08. Article 22.14, Insurance Code, is amended to
126-26 read as follows:
127-1 Art. 22.14. LICENSING OF AGENTS. All agents of stipulated
127-2 premium companies shall be licensed in accordance with the
127-3 provisions of Subchapter A [Art. 21.07] of Chapter 21 of this Code.
127-4 SECTION 5.09. Chapter 23, Insurance Code, is amended by
127-5 adding Article 23.23A to read as follows:
127-6 Art. 23.23A. REGULATION OF AGENTS. The licensing and
127-7 regulation of an agent authorized to solicit prepaid legal services
127-8 contracts for corporations complying with this chapter is subject
127-9 to Subchapter A, Chapter 21, of this code.
127-10 ARTICLE 6. SURPLUS LINES
127-11 SECTION 6.01. Subdivision (1), Subsection (a), Section 2,
127-12 Article 1.14-2, Insurance Code, is amended to read as follows:
127-13 (1) "Surplus lines agent" means:
127-14 (A) [(i) is] an agent authorized under Article
127-15 21.14 who is granted a surplus lines license in accordance with
127-16 this Article; or
127-17 (B) [, (ii) is] a managing general agent who is
127-18 [(authorized to be licensed and] licensed under the Managing
127-19 General Agents' Licensing Act[, Acts, 1967, 60th Legislature,
127-20 Chapter 727, codified by Vernon as] (Article 21.07-3, Vernon's
127-21 Texas Insurance Code) who is granted a surplus lines license in
127-22 accordance with this Article and who complies with the provisions
127-23 of this Article, except it is not necessary that the managing
127-24 general agent be licensed as a general property and casualty
127-25 [recording] agent[, or (iii) is a nonresident insurance agent
127-26 authorized under Article 21.11 and who is granted a surplus lines
128-1 license for the limited purpose of acting on behalf of a purchasing
128-2 group operating in this state in the placement of liability
128-3 insurance for risks located in this state].
128-4 SECTION 6.02. Subdivision (2), Subsection (a), Section 2,
128-5 Article 1.14-2, Insurance Code, is amended to read as follows:
128-6 (2) A [Each "]surplus lines agent,["] as a condition
128-7 of being licensed as a surplus lines agent and as a condition of
128-8 continuing to be licensed as a surplus lines agent, shall offer the
128-9 proof of financial responsibility [solvency and demonstrate
128-10 capacity in respect of responsibility to insureds under policies of
128-11 surplus lines insurance, or in the alternative show proof of
128-12 adequate bond and surety] in respect of [his] transactions with
128-13 insureds under policies of surplus lines insurance [and] as
128-14 required by [the] reasonable rules [and regulations] of the
128-15 department [State Board of Insurance shall provide].
128-16 SECTION 6.03. Subdivision (3), Subsection (a), Section 2,
128-17 Article 1.14-2, Insurance Code, is amended to read as follows:
128-18 (3) Any surplus lines license granted to an agency
128-19 authorized under the Managing General Agents' Licensing Act
128-20 (Article 21.07-3, Vernon's Texas Insurance Code), but[, Acts, 1967,
128-21 60th Legislature, Chapter 727, that is] not [also] licensed under
128-22 Article 21.14 of this code, [the Insurance Code] shall be limited
128-23 to the acceptance of business originating through a regularly
128-24 licensed general property and casualty [recording] agent and does
128-25 [shall] not authorize the [such] surplus lines agency to transact
128-26 business directly with the applicant for insurance.
129-1 SECTION 6.04. Subsection (b), Section 4, Article 1.14-2,
129-2 Insurance Code, is amended to read as follows:
129-3 (b) The department [Texas Department of Insurance] may issue
129-4 a surplus lines license to an applicant if the applicant submits a
129-5 properly completed license application and an application fee as
129-6 determined by the department and the department determines that the
129-7 applicant [an agent as defined by Subdivision (1) of Subsection (a)
129-8 of Section 2 of this article after the agent has]:
129-9 (1) is an individual who:
129-10 (A) is a resident of this state;
129-11 (B) is currently licensed as a general property
129-12 and casualty agent under Article 21.14 of this code or as a
129-13 managing general agent under the Managing General Agents' Licensing
129-14 Act (Article 21.07-3, Vernon's Texas Insurance Code);
129-15 (C) has passed the surplus lines license
129-16 examination administered under Article 21.01-1 of this code and
129-17 department rules; and
129-18 (D) provides proof of financial responsibility
129-19 as required under Section 2 of this article [remitted the
129-20 application fee set by the Texas Department of Insurance in an
129-21 amount not to exceed $50];
129-22 (2) is a corporation or partnership that:
129-23 (A) has at least one officer or director or at
129-24 least one active partner who:
129-25 (i) is a resident of this state; and
129-26 (ii) has passed the surplus lines license
130-1 examination required under this article;
130-2 (B) is currently licensed as a general property
130-3 and casualty agent under Article 21.14 of this code or as a
130-4 managing general agent under the Managing General Agents' Licensing
130-5 Act (Article 21.07-3, Vernon's Texas Insurance Code); and
130-6 (C) provides proof of financial responsibility
130-7 as required under Section 2 of this article [submitted a completed
130-8 license application on a form approved by the Texas Department of
130-9 Insurance]; or [and]
130-10 (3) is a nonresident insurance agent authorized under
130-11 Article 21.11 of this code who holds a general property and
130-12 casualty license from the department and whose authority as a
130-13 surplus lines agent is limited to acting on behalf of a purchasing
130-14 group operating in this state in the placement of liability
130-15 insurance for risks located in this state [passed a qualifying
130-16 examination approved by the Texas Department of Insurance. If the
130-17 agent is a general partnership or a registered limited liability
130-18 partnership, this examination must be met by each natural person
130-19 acting as a partner in that partnership. If the agent is a
130-20 corporation, this examination requirement must be met by each
130-21 natural person acting as an officer, director, or shareholder of
130-22 that corporation. If the agent is a limited liability company,
130-23 this examination requirement must be met by each natural person
130-24 acting as an officer, manager, and member of that limited liability
130-25 company].
130-26 SECTION 6.05. Subsection (c), Section 4, Article 1.14-2,
131-1 Insurance Code, is amended to read as follows:
131-2 (c) In addition to the requirements of this article, the
131-3 administration and regulation of a surplus lines agent's license
131-4 is governed by Subchapter A, Chapter 21, of this code, except that
131-5 Article 21.07 of this code does not apply to a license issued under
131-6 this article. [Unless the State Board of Insurance adopts a system
131-7 for staggered renewal of licenses, as provided by Article 21.01-2
131-8 of this code, each license issued under this section is for a
131-9 two-year term that expires on December 31; however, the term of the
131-10 initial licensing period shall expire on December 31 of the year
131-11 following the year in which the license is issued. A license may
131-12 be renewed for periods of two years.]
131-13 SECTION 6.06. Subsection (d), Section 4, Article 1.14-2,
131-14 Insurance Code, is amended to read as follows:
131-15 (d) If a license holder does not maintain the qualifications
131-16 necessary to obtain the license, the department may revoke or
131-17 suspend the license or deny the renewal of that license in
131-18 accordance with Article 21.01-2 of this code. [By filing a
131-19 completed written application in the form prescribed by the State
131-20 Board of Insurance and paying the nonrefundable renewal fee set by
131-21 the board in an amount not to exceed $50, an unexpired license may
131-22 be renewed on or before the expiration date of the license.]
131-23 ARTICLE 7. REPEALER
131-24 SECTION 7.01. The following laws are repealed:
131-25 (1) Subsections (f), (g), and (h), Section 4, Article
131-26 1.14-2, Insurance Code;
132-1 (2) Section 15, Article 17.25, Insurance Code;
132-2 (3) Sections 15 and 15A, Texas Health Maintenance
132-3 Organization Act (Sections 20A.15 and 20A.15A, Vernon's Texas
132-4 Insurance Code);
132-5 (4) Sections 1, 3, 4, and 6, Article 21.01-2,
132-6 Insurance Code;
132-7 (5) Article 21.02-1, Insurance Code;
132-8 (6) Article 21.05, Insurance Code;
132-9 (7) the following sections of Article 21.07, Insurance
132-10 Code:
132-11 (A) Sections 1B and 1C;
132-12 (B) Section 3, as amended by Chapters 596 and
132-13 972, Acts of the 75th Legislature, Regular Session, 1997;
132-14 (C) Sections 3B, 4, 4A, 5, 7, 8, 9, 10, 10A, 11,
132-15 12, 13, 14, 15, 15A, 16, 17, 18, 19, and 20;
132-16 (D) Section 21, as added by Chapter 820, Acts of
132-17 the 75th Legislature, Regular Session, 1997; and
132-18 (E) Section 21, as added by Chapter 1196, Acts
132-19 of the 75th Legislature, Regular Session, 1997;
132-20 (8) Article 21.07A, Insurance Code;
132-21 (9) Chapter 213, Acts of the 54th Legislature, Regular
132-22 Session, 1955 (Article 21.07-1, Vernon's Texas Insurance Code);
132-23 (10) the following sections of the Managing General
132-24 Agents' Licensing Act (Article 21.07-3, Vernon's Texas Insurance
132-25 Code):
132-26 (A) Sections 4A, 4B, and 4C;
133-1 (B) Subsection (h), Section 5;
133-2 (C) Sections 6 and 6A;
133-3 (D) Sections 8, 9, and 10;
133-4 (E) Sections 12, 13, 14, and 15;
133-5 (F) Section 17; and
133-6 (G) Section 20;
133-7 (11) Section 14, Article 21.14-1, Insurance Code;
133-8 (12) Article 21.15, Insurance Code;
133-9 (13) Article 21.15-2, Insurance Code;
133-10 (14) Article 21.15-3, Insurance Code;
133-11 (15) Article 21.15-4, Insurance Code;
133-12 (16) Article 21.15-7, Insurance Code;
133-13 (17) Section 10, Article 21.58A, Insurance Code; and
133-14 (18) Article 23.23, Insurance Code.
133-15 ARTICLE 8. GRANDFATHER CLAUSE; TRANSITION
133-16 SECTION 8.01. On the effective date of this Act, a person
133-17 who holds a license issued by the Texas Department of Insurance
133-18 that is in good standing is:
133-19 (1) considered licensed under the applicable licensing
133-20 law as amended by this Act;
133-21 (2) entitled to act as an agent under the new license
133-22 type, subject to this article; and
133-23 (3) subject to the provisions of the Insurance Code as
133-24 amended by this Act.
133-25 SECTION 8.02. (a) A person who, immediately before the
133-26 effective date of this Act, holds an agent license issued by the
134-1 Texas Department of Insurance and who obtained that license by
134-2 passing a written examination, whether administered by the
134-3 insurance carrier, company, or state testing contractor, is
134-4 entitled to the appropriate license as provided by Subchapter A,
134-5 Chapter 21, Insurance Code, as amended by this Act, without further
134-6 examination.
134-7 (b) A person who, immediately before the effective date of
134-8 this Act, holds an agent license issued by the Texas Department of
134-9 Insurance before January 1, 1999, and who obtained that license
134-10 without taking a written examination or who actually solicited
134-11 insurance on behalf of a stipulated premium company, farm mutual
134-12 company, or county mutual insurance company before January 1, 1999,
134-13 is entitled to the appropriate license as provided by Subchapter A,
134-14 Chapter 21, Insurance Code, as amended by this Act, but must pass
134-15 the appropriate license examination not later than the second
134-16 anniversary of the date of issuance, to retain the license. The
134-17 license of a person who does not pass the license examination as
134-18 required by this subsection expires on the second anniversary of
134-19 the date of issuance and may not be renewed.
134-20 (c) A person who, immediately before the effective date of
134-21 this Act, holds an agent license issued by the Texas Department of
134-22 Insurance on or after January 1, 1999, and who obtained that
134-23 license without taking a written examination or who actually
134-24 solicited insurance on behalf of a stipulated premium company, farm
134-25 mutual company, or county mutual insurance company on or after
134-26 January 1, 1999, but before the effective date of this Act, is
135-1 entitled to the appropriate license as provided by Subchapter A,
135-2 Chapter 21, Insurance Code, as amended by this Act, but must pass
135-3 the appropriate license examination not later than May 31, 2000, to
135-4 retain the license. The license of a person who does not pass the
135-5 license examination as required by this subsection expires on May
135-6 31, 2000.
135-7 (d) A person who has actually solicited insurance on behalf
135-8 of a stipulated premium company, farm mutual company, or county
135-9 mutual insurance company for at least 24 months preceding the
135-10 effective date of this Act is entitled to the appropriate license
135-11 as provided by Subchapter A, Chapter 21, Insurance Code, as amended
135-12 by this Act, without further examination.
135-13 SECTION 8.03. (a) The Texas Department of Insurance may
135-14 issue a life, accident, and health license to a person who
135-15 solicited insurance on behalf of a fraternal benefit society
135-16 immediately before the effective date of this Act on submission to
135-17 the department by the person of the following:
135-18 (1) a certified statement from the fraternal benefit
135-19 society indicating the period of time the person has solicited
135-20 insurance on behalf of the fraternal benefit society;
135-21 (2) a completed license application form; and
135-22 (3) a nonrefundable application fee in an amount
135-23 determined by the department.
135-24 (b) To retain the license issued under Subsection (a) of
135-25 this section, a person who has solicited insurance on behalf of a
135-26 fraternal benefit society for less than two years as of the
136-1 effective date of this Act must pass the license examination
136-2 required under Subchapter A, Chapter 21, Insurance Code, not later
136-3 than the 180th day after the date of issuance of the license. The
136-4 license of a person who does not pass the license examination as
136-5 required by this subsection expires on the 180th day after the date
136-6 of issuance of the license and may not be renewed.
136-7 ARTICLE 9. EFFECTIVE DATE; TRANSITION; EMERGENCY
136-8 SECTION 9.01. (a) This Act takes effect September 1, 1999.
136-9 (b) Section 3, Article 21.01-1, Insurance Code, as amended
136-10 by this Act, applies to continuing education requirements for
136-11 insurance agents for a renewal of a license that occurs on or after
136-12 January 1, 2001.
136-13 SECTION 9.02. The importance of this legislation and the
136-14 crowded condition of the calendars in both houses create an
136-15 emergency and an imperative public necessity that the
136-16 constitutional rule requiring bills to be read on three several
136-17 days in each house be suspended, and this rule is hereby suspended.