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 under
2-26 state law.
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 Subsections (c) and (d) of this section, each applicant
6-18 for a license to act as an insurance agent in this state must
6-19 submit to a personal written examination that is prescribed by the
6-20 department 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 basic principles of insurance contracts;
7-18 (2) the basic laws of this state regulating the
7-19 business of 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 an unexpired
7-25 license issued by the department;
7-26 (2) an applicant whose Texas insurance license expired
8-1 less than one year before the date of the application, if the
8-2 previous license was not denied, revoked, or suspended by the
8-3 commissioner;
8-4 (3) a partnership, corporation, or bank;
8-5 (4) an applicant for a life, accident, and health
8-6 license who has attained the designation of chartered life
8-7 underwriter (CLU);
8-8 (5) an applicant for a life and health insurance
8-9 counselor license who has attained the designation of chartered
8-10 life underwriter (CLU), chartered financial consultant (ChFC), or
8-11 certified financial planner (CFP);
8-12 (6) an applicant for a property and casualty license
8-13 who has attained the designation of chartered property and casualty
8-14 underwriter (CPCU);
8-15 (7) an applicant for a specialty license issued by the
8-16 department;
8-17 (8) a nonresident individual who is exempt from the
8-18 examination requirement under Article 21.11 of this code; or
8-19 (9) an applicant for a general life, accident, and
8-20 health license who was authorized to solicit insurance on behalf of
8-21 a fraternal benefit society on September 1, 1999, if the applicant:
8-22 (A) had actually solicited insurance on behalf
8-23 of the fraternal benefit society for at least 24 months preceding
8-24 September 1, 1999;
8-25 (B) does not solicit insurance for any other
8-26 insurer or a different fraternal benefit society on or after
9-1 September 1, 1999;
9-2 (C) does not solicit or procure an insurance
9-3 contract on or after September 1, 1999, except from a person who is
9-4 eligible for membership in the fraternal benefit society; and
9-5 (D) does not solicit or procure an
9-6 interest-sensitive life insurance contract that exceeds $35,000 of
9-7 coverage on an individual life on or after September 1, 1999,
9-8 unless the applicant has obtained the designation of "Fraternal
9-9 Insurance Counselor" at the time the contract is solicited or
9-10 procured.
9-11 (e) A license to which the exemption authorized under
9-12 Subsection (d)(9) of this section applies must be held by the
9-13 applicant in an individual capacity and is not transferable.
9-14 (f) Each examination administered under this article shall
9-15 be offered in English and Spanish.
9-16 Sec. 3. CONTINUING EDUCATION REQUIREMENTS. (a) The
9-17 department has exclusive jurisdiction for all matters relating to
9-18 the continuing education of insurance agents who are licensed under
9-19 this code.
9-20 (b) Except as provided by Subsection (d) of this section,
9-21 each individual who holds a license issued by the department shall
9-22 complete continuing education. All required continuing education
9-23 hours must be completed before the expiration date of the
9-24 individual's license. An individual who holds a life, accident,
9-25 and health license, a life and health insurance counselor license,
9-26 or a property and casualty license shall complete 15 hours of
10-1 continuing education annually. The agent may not be required to
10-2 complete more than 15 continuing education hours annually as a
10-3 result of holding more than one license for which continuing
10-4 education is required. An individual who holds a limited life,
10-5 accident, and health license or a limited property and casualty
10-6 license shall complete five hours of continuing education annually.
10-7 Each individual who holds a license issued by the department shall
10-8 complete four hours of continuing education in ethics during each
10-9 license renewal period. At least 50 percent of all required
10-10 continuing education hours must be completed in a classroom setting
10-11 or a classroom equivalent setting approved by the department. The
10-12 department may grant reciprocity to license holders who complete
10-13 continuing education requirements in other professions or in
10-14 association with professional designations in an insurance-related
10-15 field.
10-16 (c) On a timely written request of an agent, the department
10-17 may extend the time for the agent to comply with the continuing
10-18 education requirements of this section or may exempt the agent from
10-19 some or all of the requirements for a licensing period if the
10-20 department finds that the agent is unable to comply with the
10-21 requirements because of illness, medical disability, or another
10-22 extenuating circumstance beyond the control of the agent. The
10-23 commissioner by rule shall prescribe the criteria for an exemption
10-24 or extension under this subsection.
10-25 (d) An individual who has continuously held a license issued
10-26 under this code to operate as an insurance agent for 20 years is
11-1 exempt from the continuing education requirements of this section.
11-2 The commissioner by rule may provide for other reasonable
11-3 exemptions.
11-4 (e) The department shall certify continuing education
11-5 programs for agents. Only a program that satisfies the criteria
11-6 established by rule by the commissioner may receive certification.
11-7 The certification criteria shall be designed to ensure that
11-8 continuing education programs enhance the knowledge, understanding,
11-9 and professional competence of the license holder. A nonrefundable
11-10 certification fee, in an amount set by the commissioner as
11-11 necessary for administering the program, must accompany each
11-12 application for certification of a continuing education program.
11-13 The fee shall be established by rule and based on a graduated scale
11-14 according to the number of hours required to complete the program.
11-15 (f) Each continuing education course provider shall register
11-16 with the department as a course provider. The department shall
11-17 assess a registration fee for each application for registration as
11-18 a provider, set by the commissioner in an amount necessary for the
11-19 proper administration of this section. The commissioner may adopt
11-20 rules establishing the requirements for continuing education course
11-21 providers. The department may negotiate agreements with
11-22 independent contractors under which the independent contractor
11-23 certifies and registers continuing education courses and providers.
11-24 The department may require those independent contractors to
11-25 correspond directly with providers with regard to the
11-26 administration of continuing education courses, and the contractors
12-1 may collect fees from the providers for administration of the
12-2 courses. The department retains the authority to establish the
12-3 scope and type of continuing education requirements for each type
12-4 of license.
12-5 (g) The commissioner may appoint an advisory council to
12-6 furnish the commissioner with information and assistance in the
12-7 conduct of the continuing education program for agents licensed
12-8 under this subchapter. If an advisory council is appointed, it
12-9 must be composed of nine members, four of whom must be public
12-10 members. The public members are entitled to reimbursement for
12-11 their reasonable travel expenses in attending meetings of the
12-12 advisory council, subject to any applicable limit in the General
12-13 Appropriations Act. A public member may not:
12-14 (1) be an officer, director, or employee of an
12-15 insurance company, insurance agency, agent, broker, adjuster, or
12-16 any other business entity regulated by the department;
12-17 (2) be a person required to register with the Texas
12-18 Ethics Commission under Chapter 305, Government Code; or
12-19 (3) be related to a person described by Subdivision
12-20 (1) or (2) of this subsection within the second degree by affinity
12-21 or consanguinity, as determined under Chapter 573, Government Code.
12-22 SECTION 1.03. Section 2, Article 21.01-2, Insurance Code, is
12-23 redesignated as Section 1A, Article 21.01-2, Insurance Code, and
12-24 amended to read as follows:
12-25 Sec. 1A [2]. EXPIRATION AND RENEWAL OF LICENSES.
12-26 (a) Except as provided by a staggered renewal system adopted under
13-1 Subsection (h) of this section, each agent license issued by the
13-2 department expires on the fifth anniversary of the date of
13-3 issuance unless suspended or revoked by the commissioner. A person
13-4 may renew a [an unexpired] license that has not expired or has not
13-5 been suspended or revoked by filing a properly completed renewal
13-6 application with the department in the form prescribed by the
13-7 department and paying to the department before the expiration date
13-8 of the license the required renewal fee. A renewal fee paid under
13-9 this section is nonrefundable.
13-10 (b) On the filing of a completed renewal application not
13-11 later than the expiration date of the license accompanied by the
13-12 renewal fee set by the commissioner, the original license continues
13-13 in force until:
13-14 (1) the department issues the renewal license; or
13-15 (2) the commissioner issues an order revoking the
13-16 license.
13-17 (c) If a person's license has been expired for 90 days or
13-18 less, the person may renew the license by filing a renewal
13-19 application with the department in the form prescribed by the
13-20 department and paying to the department the required renewal fee
13-21 and an additional [a] fee that is equal to one-half of the renewal
13-22 [license] fee[, if any,] for the license.
13-23 (d) If a person's license has been expired for more than 90
13-24 days but less than one year, the person may not renew the license,
13-25 but is entitled to a new license without taking the applicable
13-26 examination if the person submits to the department a new
14-1 application, the license fee, and an additional fee equal to
14-2 one-half of the license fee.
14-3 (e) [(c)] If a person's license has been expired for one
14-4 year or more [longer than 90 days], the person may not renew the
14-5 license. The person may obtain a new license by submitting to
14-6 reexamination, if examination is required for original issuance of
14-7 the license, and complying with the requirements and procedures for
14-8 obtaining an original license.
14-9 (f) The [However, the] department may renew without
14-10 reexamination an expired license of a person who was licensed in
14-11 this state, moved to another state, and is currently licensed and
14-12 has been in continual practice in the other state for the period
14-13 [two years] preceding application. The person must pay to the
14-14 department a fee that is equal to the license fee.
14-15 (g) [(d)] At least 30 days before the expiration of a
14-16 person's license, the department shall send written notice of the
14-17 impending license expiration to the person at the person's last
14-18 known mailing address according to the records of the department.
14-19 (h) [(e)] The commissioner by rule may adopt a system under
14-20 which licenses expire on various dates during a licensing period.
14-21 For the licensing period in which the license expiration is
14-22 changed, license fees shall be prorated [on a monthly basis] so
14-23 that each license holder shall pay only that portion of the license
14-24 fee that is allocable to the period [number of months] during which
14-25 the license is valid. On renewal of the license on the new
14-26 expiration date, the total license renewal fee is payable. The
15-1 commissioner shall adopt a system under which a person who holds
15-2 more than one license may renew all the licenses held in a single
15-3 process.
15-4 (i) [(f)] This section is not applicable to a license issued
15-5 under Article 21.07-6 or 21.07-7 of this code.
15-6 SECTION 1.04. Article 21.01-2, Insurance Code, is amended by
15-7 adding Section 2A to read as follows:
15-8 Sec. 2A. PROHIBITED ACTIVITIES. (a) A person licensed
15-9 under this code who receives a commission or other consideration
15-10 for services as an insurance agent may not receive an additional
15-11 fee for those services provided to the same client except for a fee
15-12 described by Article 21.35A or 21.35B of this code.
15-13 (b) An insurer or licensed insurance agent engaged in the
15-14 business of insurance in this state may not pay, directly or
15-15 indirectly, and may not accept, any commission or other valuable
15-16 consideration to or from any person for services performed by that
15-17 person as an insurance agent in this state unless the person holds
15-18 a license to act as an insurance agent as required by the laws of
15-19 this state. This subsection does not prevent the payment or
15-20 receipt of renewal or other deferred commissions to or by any
15-21 person solely because the person has ceased to hold a license to
15-22 act as an insurance agent.
15-23 (c) An insurance agent licensed under this code may not pay,
15-24 allow, or give, or offer to pay, allow, or give, directly or
15-25 indirectly, to any person who is not a licensed insurance agent,
15-26 any rebate of premiums payable, commission, paid employment, or
16-1 contract for service, or any other valuable consideration or
16-2 inducement, that is not specified in the policy or contract of
16-3 insurance for or on account of the solicitation or negotiation of
16-4 contracts of insurance.
16-5 (d) In addition to any other penalty imposed under this
16-6 code, a person who is determined by the department to have
16-7 committed conduct described by this subsection is barred from
16-8 receiving a license as an insurance agent before the fifth
16-9 anniversary of the date of the determination. This subsection
16-10 applies to a person who:
16-11 (1) acts as an insurance agent without holding a
16-12 license under this code;
16-13 (2) solicits a contract of insurance or acts as an
16-14 insurance agent without having been appointed or designated by an
16-15 authorized insurance company, association, or organization to do so
16-16 as provided by this code;
16-17 (3) solicits any contract of insurance or acts as an
16-18 agent for a person, including an insurance company, association, or
16-19 organization, not authorized to engage in the business of insurance
16-20 in this state without holding a license issued under Article 1.14-2
16-21 of this code; or
16-22 (4) as an officer or representative of an insurance
16-23 company, knowingly contracts with or appoints as an agent a person
16-24 who does not hold a valid and outstanding license.
16-25 (e) A person who has had an insurance license revoked in
16-26 this state or any other state may not solicit or otherwise transact
17-1 business under Chapter 10 of this code unless it is determined by
17-2 the department to be in the public interest, for good cause shown,
17-3 to allow the person to act in that capacity.
17-4 (f) A person who has had an insurance license revoked in
17-5 this state or any other state may not act as an officer, director,
17-6 member, manager, or partner, or as a shareholder with a controlling
17-7 interest, of an entity licensed under this subchapter unless it is
17-8 determined by the department to be in the public interest, for good
17-9 cause shown, to allow the person to act in that capacity.
17-10 (g) A property and casualty agent may not knowingly grant,
17-11 write, or permit a greater amount of insurance against loss by fire
17-12 than the reasonable value of the subject of the insurance.
17-13 (h) This section does not apply to a person who is licensed
17-14 under, or holds a certificate of authority issued under, Chapter 9
17-15 of this code.
17-16 SECTION 1.05. Section 5, Article 21.01-2, Insurance Code, is
17-17 redesignated as Section 3A, Article 21.01-2, Insurance Code, and
17-18 amended to read as follows:
17-19 Sec. 3A [5]. DENIAL OR REFUSAL OF LICENSE APPLICATION;
17-20 SUSPENSION OR REVOCATION OF LICENSES; DISCIPLINE OF LICENSE
17-21 HOLDERS. (a) In addition to any other remedy available under
17-22 Section 7, Article 1.10, of this code, the [The] department may
17-23 [shall] refuse to issue an original license, revoke, suspend, or
17-24 refuse to renew a license, place on probation a person whose
17-25 license has been suspended, assess an administrative penalty, or
17-26 reprimand a license holder for a violation of this code, another
18-1 insurance law of this state, or a rule of the commissioner [or the
18-2 board]. If a license suspension is probated, the commissioner may
18-3 require the person to:
18-4 (1) report regularly to the department on matters that
18-5 are the basis of the probation;
18-6 (2) limit the person's practice to the areas
18-7 prescribed by the department; or
18-8 (3) continue or review professional education until
18-9 the person attains a degree of skill satisfactory to the
18-10 commissioner in those areas that are the basis of the probation.
18-11 (b) If the department proposes to refuse to issue an
18-12 original license, or to suspend, revoke, or refuse to renew a
18-13 license, the person affected is entitled to a hearing conducted by
18-14 the State Office of Administrative Hearings in accordance with
18-15 Article 1.33B of this code. Notice of the hearing shall be
18-16 provided to the person and to any insurance carrier appearing on
18-17 the application as desiring that the license be issued.
18-18 (c) The department may discipline a license holder or deny a
18-19 license application under this article if the department determines
18-20 that the applicant or license holder, individually or through any
18-21 officer, director, or shareholder:
18-22 (1) has wilfully violated any provision of the
18-23 insurance laws of this state;
18-24 (2) has intentionally made a material misstatement in
18-25 the license application;
18-26 (3) has obtained, or attempted to obtain, a license by
19-1 fraud or misrepresentation;
19-2 (4) has misappropriated, converted to the applicant's
19-3 or holder's own use, or illegally withheld money belonging to:
19-4 (A) an insurer;
19-5 (B) a health maintenance organization; or
19-6 (C) an insured, enrollee, or beneficiary;
19-7 (5) has engaged in fraudulent or dishonest acts or
19-8 practices;
19-9 (6) has materially misrepresented the terms and
19-10 conditions of an insurance policy or contract, including a contract
19-11 relating to membership in a health maintenance organization;
19-12 (7) has made or issued, or caused to be made or
19-13 issued, any statement misrepresenting or making incomplete
19-14 comparisons regarding the terms or conditions of an insurance or
19-15 annuity contract legally issued by an insurer or a membership
19-16 issued by a health maintenance organization to induce the owner of
19-17 the contract or membership to forfeit or surrender the contract or
19-18 membership or allow it to lapse for the purpose of replacing the
19-19 contract or membership with another;
19-20 (8) is convicted of a felony;
19-21 (9) has offered or given a rebate of an insurance
19-22 premium or commission to an insured or enrollee;
19-23 (10) is not actively engaged in the soliciting or
19-24 writing of insurance for the public generally as required by
19-25 Section 2(c), Article 21.07, of this code; or
19-26 (11) has obtained or attempted to obtain a license,
20-1 not for the purpose of holding the license holder or applicant out
20-2 to the general public as an agent, but primarily for the purpose of
20-3 soliciting, negotiating, or procuring insurance or annuity
20-4 contracts or memberships covering:
20-5 (A) the applicant or license holder;
20-6 (B) a member of the applicant's or license
20-7 holder's family; or
20-8 (C) a business associate of the applicant or
20-9 license holder.
20-10 (d) An individual whose license application is denied or
20-11 whose license has been revoked under this article may not apply for
20-12 any license as an insurance agent before the fifth anniversary of:
20-13 (1) the effective date of the denial or revocation; or
20-14 (2) if the applicant or license holder seeks judicial
20-15 review of the department's action, the date of the final court
20-16 order or decree affirming that action.
20-17 (e) The commissioner may deny a timely application filed
20-18 under Subsection (d) of this section if the applicant does not show
20-19 good cause why the denial or revocation of the previous license
20-20 application or license should not be considered a bar to the
20-21 issuance of a new license. This subsection does not apply to an
20-22 applicant whose license application was denied for failure to:
20-23 (1) pass a required written examination; or
20-24 (2) submit a properly completed license application.
20-25 (f) Instead of or in addition to taking disciplinary action
20-26 under this section, the department may order that a license holder
21-1 who is currently afflicted with a disability be placed on
21-2 disability probation under the terms and conditions specified under
21-3 Article 21.15-6 of this code and department rules.
21-4 (g) Subsections (c)-(f) of this section do not apply to a
21-5 person who is licensed under, or holds a certificate of authority
21-6 issued under, Chapter 9 of this code. [The commissioner shall
21-7 prescribe procedures by which all decisions to deny, suspend, or
21-8 revoke a license, or to refuse to renew a license, are made by or
21-9 are appealable to the commissioner.]
21-10 SECTION 1.06. Article 21.01-2, Insurance Code, is amended by
21-11 adding Sections 4A, 5A, and 6A to read as follows:
21-12 Sec. 4A. JUDICIAL REVIEW. A license applicant or license
21-13 holder may appeal as provided by Article 1.04 of this code if:
21-14 (1) the commissioner:
21-15 (A) refuses an application for a license as
21-16 provided by this article; or
21-17 (B) suspends, revokes, or refuses to renew a
21-18 license at a hearing as provided by this article; or
21-19 (2) the applicant or license holder is dissatisfied
21-20 with another action of the commissioner.
21-21 Sec. 5A. AUTOMATIC FINES. (a) To expedite the department's
21-22 processing of certain violations of this code, the commissioner may
21-23 establish by rule monetary fines for certain violations.
21-24 Violations for which the fines may be assessed include a failure
21-25 to:
21-26 (1) obtain the total number of continuing education
22-1 hours before the renewal date of the license;
22-2 (2) timely report a change of address to the
22-3 department; or
22-4 (3) notify the department of an administrative action
22-5 taken against the agent by another state's insurance regulator.
22-6 (b) This section may not be construed to limit the
22-7 department's authority to take any other disciplinary action
22-8 against a license holder as provided under another provision of
22-9 this code.
22-10 (c) If a person disputes the assessment of a fine under this
22-11 section, the matter is a contested case subject to Chapter 2001,
22-12 Government Code.
22-13 Sec. 6A. ENFORCEMENT OF SUBCHAPTER. The attorney general, a
22-14 district or county attorney, or the department acting through the
22-15 commissioner may institute an injunction proceeding or any other
22-16 proceeding to enforce this subchapter and to enjoin any person,
22-17 firm, corporation, or bank from engaging or attempting to engage in
22-18 the business of insurance in violation of this code or any other
22-19 insurance law of this state. The provisions of this section are
22-20 cumulative of the other penalties or remedies provided by this
22-21 article.
22-22 SECTION 1.07. Article 21.04, Insurance Code, is amended to
22-23 read as follows:
22-24 Art. 21.04. LICENSE HOLDER [SOLICITOR] DEEMED COMPANY'S
22-25 AGENT. Any person who solicits an application for life, accident,
22-26 or health insurance, or property or casualty insurance, shall, in
23-1 any controversy between the insured or the insured's beneficiary
23-2 and the company issuing any policy upon such application or between
23-3 the insured or the insured's dependents and that company, be
23-4 regarded as the agent of the company, and not the agent of the
23-5 insured, but such agent shall not have the power to waive, change
23-6 or alter any of the terms or conditions of the application or
23-7 policy.
23-8 SECTION 1.08. Article 21.06, Insurance Code, is amended to
23-9 read as follows:
23-10 Art. 21.06. AUTHORITY TO APPOINT [CERTIFICATES FOR] AGENTS.
23-11 Each [such] foreign or domestic insurance company shall, by
23-12 resolution of its board of directors, designate an [some] officer
23-13 or agent who is empowered to appoint or employ its agents [or
23-14 solicitors] in this State, and such officer or agent shall promptly
23-15 notify the department [Board] in writing of the name, title, and
23-16 address of each person so appointed or employed. The authority of
23-17 that designee to act on behalf of the insurance company continues
23-18 in force [Upon receipt of this notice, the Board shall issue to him
23-19 a certificate which shall include a copy of the certificate of
23-20 authority authorizing the company requesting it to do business in
23-21 this State, and the name and title of the person to whom the
23-22 certificate is issued. Such certificate], unless sooner revoked by
23-23 the commissioner [Board] for cause or cancelled at the request of
23-24 the insurance company [employing the holder thereof, shall continue
23-25 in force until the first day of March next after its issuance, and
23-26 must be renewed annually].
24-1 SECTION 1.09. Section 1, Article 21.07, Insurance Code, is
24-2 amended to read as follows:
24-3 Sec. 1. APPLICABILITY OF ARTICLE [ACT]. (a) No person[,
24-4 corporation, or bank] shall act as an agent of any insurance
24-5 company, health maintenance organization, or [(i) local mutual aid
24-6 association, (ii) local mutual burial association, (iii) statewide
24-7 mutual assessment corporation, (iv) stipulated premium company,
24-8 (v) county mutual insurance company, (vi) casualty company writing
24-9 accident and health insurance, or (vii) any] other type of
24-10 insurance carrier licensed to do business in the State of Texas and
24-11 which insurance carrier's agents are required to be licensed under
24-12 the provisions of this subchapter [Article, on the date that this
24-13 Act shall become effective,] unless that person [individual or
24-14 entity] shall have first procured a license from the department as
24-15 [in this Article is] provided by this subchapter, and no such
24-16 insurance carrier shall appoint any person[, corporation, or bank]
24-17 to act as its agent unless such person[, corporation, or bank]
24-18 shall have obtained a license under the provisions of this
24-19 subchapter [Article], and no such person[, corporation, or bank]
24-20 who obtains a license shall engage in business as an agent until
24-21 that person [individual or entity] shall have been appointed to act
24-22 as an agent by some duly authorized insurance carrier designated by
24-23 the provisions of this code [Article] and authorized to do business
24-24 in the State of Texas. [Any person, corporation, or bank desiring
24-25 to act as an agent of any insurance carrier licensed to do business
24-26 in the State of Texas and writing health and accident insurance may
25-1 obtain a separate license as an agent to write health and accident
25-2 insurance provided such person, corporation, or bank complies with
25-3 the provisions of this Article and has been appointed to act as an
25-4 agent by some duly authorized insurance carrier authorized to do
25-5 health and accident insurance business in the State of Texas.]
25-6 (b) The provisions of this subchapter do not apply to:
25-7 (1) an actual full-time home office salaried employee
25-8 of an insurance carrier licensed to do business in this state,
25-9 other than an employee who solicits or receives an application for
25-10 the sale of insurance through an oral, written, or electronic
25-11 communication in accordance with Article 21.14 of this code;
25-12 (2) an actual attorney in fact or the actual traveling
25-13 salaried representative of a reciprocal exchange or interinsurance
25-14 exchange admitted to do business in this state as to business
25-15 transacted through the attorney in fact or salaried representative;
25-16 (3) the actual attorney in fact for a Lloyd's
25-17 association;
25-18 (4) the group motor vehicle insurance business or the
25-19 group motor vehicle department of companies engaged in that
25-20 business; or
25-21 (5) a salaried employee who is not involved in the
25-22 solicitation or negotiation of insurance in the office of a
25-23 licensed agent who devotes the employee's full time to clerical and
25-24 administrative services, including the incidental taking of
25-25 information from customers and receipt of premiums in the office of
25-26 a licensed agent, if the employee does not receive any commissions
26-1 and the employee's compensation is not varied by the volume of
26-2 premiums taken and received. [No insurer or licensed insurance
26-3 agent doing business in this State shall pay directly or indirectly
26-4 any commission, or other valuable consideration, to any person,
26-5 corporation, or bank for services as an insurance agent within this
26-6 State, unless such person, corporation, or bank shall hold a
26-7 currently valid license to act as an insurance agent as required by
26-8 the laws of this State; nor shall any person, corporation, or bank
26-9 other than a duly licensed insurance agent, accept any such
26-10 commission or other valuable consideration; provided, however, that
26-11 the provisions of this Section shall not prevent the payment or
26-12 receipt of renewal or other deferred commissions to or by any
26-13 person solely because such person, corporation, or bank has ceased
26-14 to hold a license to act as an insurance agent.]
26-15 [(c) A person who has had a license revoked under Section 10
26-16 of this Article may not solicit or otherwise transact business
26-17 under Chapter 10 of this code.]
26-18 SECTION 1.10. Section 1A, Article 21.07, Insurance Code, is
26-19 amended to read as follows:
26-20 Sec. 1A. DEFINITIONS. Unless the context clearly indicates
26-21 otherwise, in [In] this subchapter:
26-22 (1) "Agent" means a person who is an authorized agent
26-23 of an insurance company or health maintenance organization, any
26-24 person who is a sub-agent of an agent, and any other person who
26-25 performs the acts of an agent, whether through an oral, written, or
26-26 electronic communication or otherwise, in the solicitation of,
27-1 negotiation for, procurement of, or collection of premiums on an
27-2 insurance or annuity contract, or who represents or purports to
27-3 represent a health maintenance organization, including a health
27-4 maintenance organization offering only a single health care service
27-5 plan, in the solicitation of, negotiation for, procurement of, or
27-6 effectuation of membership in the health maintenance organization.
27-7 The term does not include:
27-8 (A) a regular salaried officer or employee of an
27-9 insurance company, health maintenance organization, or insurance
27-10 agent who:
27-11 (i) devotes substantially all of the
27-12 officer's or employee's time to activities other than the
27-13 solicitation of applications for insurance, annuity contracts, or
27-14 memberships;
27-15 (ii) does not receive a commission or
27-16 other compensation directly dependent on the business obtained; and
27-17 (iii) does not solicit or accept from the
27-18 public applications for insurance, annuity contracts, or
27-19 memberships;
27-20 (B) an employer or an employer's officers or
27-21 employees or the trustees of an employee benefit plan, to the
27-22 extent that those employers, officers, employees, or trustees are
27-23 engaged in the administration or operation of any program of
27-24 employee benefits involving the use of insurance or annuities
27-25 issued by an insurance company or memberships issued by a health
27-26 maintenance organization, if those employers, officers, employees,
28-1 or trustees are not compensated, directly or indirectly, by the
28-2 insurance company or health maintenance organization issuing the
28-3 insurance or annuity contracts or memberships;
28-4 (C) except as otherwise provided by this code, a
28-5 bank, a savings and loan association, or a credit union, or the
28-6 officers and employees of banks, savings and loan associations, or
28-7 credit unions, to the extent that those banks, savings and loan
28-8 associations, credit unions, or officers and employees collect and
28-9 remit premiums or charges by charging those premiums or charges
28-10 against accounts of depositors on the orders of those depositors;
28-11 or
28-12 (D) a person or the employee of a person who has
28-13 contracted to provide administrative, management, or health care
28-14 services to a health maintenance organization and who is
28-15 compensated for those services by the payment of an amount computed
28-16 as a percentage of the revenues, net income, or profit of the
28-17 health maintenance organization, if that method of compensation is
28-18 the sole basis for subjecting that person or the employee of the
28-19 person to this article.
28-20 (2) "Bank" means:
28-21 (A) a national banking association organized and
28-22 existing under the National Bank Acts (12 U.S.C. Section 21 et
28-23 seq.);
28-24 (B) a state bank organized and existing under
28-25 Subtitle A, Title 3, Finance Code;
28-26 (C) a state savings bank organized under or
29-1 subject to Subtitle C, Title 3, Finance Code;
29-2 (D) a bank branch;
29-3 (E) a bank operating subsidiary, as defined by
29-4 state or federal law;
29-5 (F) a savings and loan association organized and
29-6 existing under Subtitle B, Title 3, Finance Code; or
29-7 (G) a federal savings and loan association or
29-8 federal savings bank.
29-9 (3) "Control" means the power to direct or cause the
29-10 direction of the management and policies of a license holder,
29-11 whether directly or indirectly. For the purposes of this
29-12 subchapter, a person is considered to control:
29-13 (A) a corporate license holder if the person,
29-14 individually or acting with others, directly or indirectly, holds
29-15 with the power to vote, owns, or controls, or holds proxies
29-16 representing, at least 10 percent of the voting stock or voting
29-17 rights of the corporate license holder; or
29-18 (B) a partnership if the person through a right
29-19 to vote or through any other right or power exercises rights in the
29-20 management, direction, or conduct of the business of the
29-21 partnership.
29-22 (4) "Corporation" means a legal entity that is
29-23 organized under the business corporations laws or limited liability
29-24 company laws of this state, another state, or a territory of the
29-25 United States and that has as one of its purposes the authority to
29-26 act as an insurance agent. The licensing and regulation of a
30-1 limited liability company is subject to all provisions of this
30-2 subchapter that apply to a corporation licensed under this
30-3 subchapter.
30-4 (5) "Individual" means a natural person. The term
30-5 includes a resident or a nonresident of this state.
30-6 (6) "Insurance company," "insurance carrier," or
30-7 "insurer" means an insurance company regulated by the department.
30-8 The term includes:
30-9 (A) any domestic or foreign, stock and mutual,
30-10 life, health, or accident insurance company;
30-11 (B) any domestic or foreign, stock and mutual,
30-12 fire and casualty insurance company;
30-13 (C) a Mexican casualty company;
30-14 (D) a domestic or foreign Lloyd's plan insurer;
30-15 (E) a domestic or foreign reciprocal or
30-16 interinsurance exchange;
30-17 (F) a domestic or foreign fraternal benefit
30-18 society;
30-19 (G) a stipulated premium insurance company;
30-20 (H) a nonprofit or for-profit legal service
30-21 corporation;
30-22 (I) a statewide mutual assessment company;
30-23 (J) a local mutual aid association;
30-24 (K) a local mutual burial association;
30-25 (L) an exempt association under Article 14.17 of
30-26 this code;
31-1 (M) a nonprofit hospital, medical, or dental
31-2 service corporation, including a company subject to Chapter 20 of
31-3 this code;
31-4 (N) a health maintenance organization;
31-5 (O) a county mutual insurance company; or
31-6 (P) a farm mutual insurance company.
31-7 (7) "Partnership" means an association of two or more
31-8 persons organized under the partnership laws or limited liability
31-9 partnership laws of this state, another state, or a territory of
31-10 the United States. The term includes a general partnership,
31-11 limited partnership, limited liability partnership, and limited
31-12 liability limited partnership.
31-13 (8) "Person" means an individual, partnership,
31-14 corporation, or bank.
31-15 (9) "Sub-agent" means any person, other than a
31-16 regular salaried officer or employee of an insurance company,
31-17 insurance carrier, or health maintenance organization, or of an
31-18 agent, engaging in activities described under Subdivision (1) of
31-19 this section who acts for or on behalf of an agent, whether through
31-20 an oral, written, or electronic communication or otherwise, in the
31-21 solicitation of, negotiation for, or procurement of an insurance or
31-22 annuity contract or health maintenance organization membership, or
31-23 the collection of premiums or charges on an insurance or annuity
31-24 contract or health maintenance organization membership, whether or
31-25 not the sub-agent is designated by the agent as a sub-agent or by
31-26 any other title. A sub-agent is an agent, for all purposes of this
32-1 subchapter, and wherever the term "agent" is used in this chapter,
32-2 it includes sub-agents whether or not a sub-agent is specifically
32-3 mentioned. A sub-agent must hold at least one of the licenses
32-4 issued to the agent for whom the sub-agent acts, but is not
32-5 required to hold each of those licenses. However, the sub-agent
32-6 must be properly licensed to write each type of insurance that the
32-7 sub-agent is employed to write [Article, "person" means an
32-8 individual or a general partnership composed of two or more
32-9 individuals or a limited liability partnership registered with the
32-10 Secretary of State under Section 3.08, Texas Revised Partnership
32-11 Act (Article 6132b-3.08, Vernon's Texas Civil Statutes). The term
32-12 "partnership" or "agency partnership" as used in this Article means
32-13 a general partnership or a registered limited liability
32-14 partnership].
32-15 SECTION 1.11. Section 2, Article 21.07, Insurance Code, is
32-16 amended to read as follows:
32-17 Sec. 2. APPLICATION FOR LICENSE; TO WHOM LICENSE MAY BE
32-18 ISSUED. (a) Any person[, corporation, or bank] that desires to
32-19 become an agent for an [a local mutual aid association, a local
32-20 mutual burial association, a statewide mutual assessment
32-21 corporation, a stipulated premium company, a county mutual]
32-22 insurance company or health maintenance organization[, a casualty
32-23 company writing accident and health insurance, or any other type of
32-24 insurance carrier licensed to do business in the State of Texas],
32-25 the agents of which are required to be licensed under this
32-26 subchapter [Article], shall submit to the department an application
33-1 for a license in the form required by the department.
33-2 (b) Each applicant for a license to act as an insurance
33-3 agent in this state shall file with the commissioner a completed
33-4 application on forms developed by the department. The commissioner
33-5 shall establish by rule the requirements for a properly completed
33-6 application.
33-7 (c) The commissioner may not grant a license as an insurance
33-8 agent to write any form of insurance unless the department finds
33-9 that:
33-10 (1) the applicant is or intends to be actively engaged
33-11 in the soliciting or writing of insurance for the public generally
33-12 and is to be actively engaged in the business of insurance; and
33-13 (2) the application is not made to evade the laws
33-14 against rebating and discrimination, either for the applicant or
33-15 for some other person.
33-16 (d) This section does not prohibit an applicant insuring
33-17 property that the applicant owns or in which the applicant has an
33-18 interest, but it is the intent of this section to prohibit coercion
33-19 of insurance and to preserve to each individual the right to choose
33-20 that individual's own agent or insurance company, and to prohibit
33-21 the licensing of a person to engage in the insurance business
33-22 principally to handle business that the applicant controls only
33-23 through ownership, mortgage or sale, family relationship, or
33-24 employment. An applicant for an original license must have a bona
33-25 fide intention to engage in business in which, in any calendar
33-26 year, at least 25 percent of the total volume of premiums is
34-1 derived from persons other than the applicant and from property
34-2 other than that on which the applicant controls the placing of
34-3 insurance through ownership, mortgage, sale, family relationship,
34-4 or employment.
34-5 (e) The department may not deny a license application solely
34-6 on the ground that the applicant will act only part-time as an
34-7 agent.
34-8 (f) The [application must bear a signed endorsement by an
34-9 officer or properly authorized representative of the insurance
34-10 carrier that the individual applicant or each member of the
34-11 partnership or each officer, director, and shareholder of the
34-12 corporation or the responsible officer and employee of the bank is
34-13 qualified to hold that individual or the partnership, the
34-14 corporation, or the bank out in good faith to the general public as
34-15 an insurance agent, and that the insurance carrier desires that the
34-16 applicant act as an insurance agent to represent it in this State.]
34-17 [(c) The] department shall issue a license to an individual
34-18 to engage [or to a general partnership engaging] in the business of
34-19 insurance if the department finds that the individual:
34-20 (1) is at least 18 years of age;
34-21 (2) has passed the applicable licensing examination
34-22 required under Article 21.01-1 of this code within the past 12
34-23 months;
34-24 (3) has not committed an act for which a license may
34-25 be denied under Article 21.01-2 of this code; and
34-26 (4) has submitted the application, appropriate fees,
35-1 and any other information required by the department.
35-2 (g) An individual engaging in the business of insurance as a
35-3 sole proprietorship under the authority of a license issued under
35-4 this subchapter may incorporate, but the corporation does not have
35-5 greater license authority than that granted to the license holder
35-6 in the holder's individual capacity.
35-7 (h) Each individual license holder shall notify the
35-8 department on a monthly basis of:
35-9 (1) a change of the license holder's mailing address;
35-10 (2) a conviction of the license holder of a felony; or
35-11 (3) an administrative action taken against the license
35-12 holder by the insurance regulator of another state [partner in the
35-13 partnership must be licensed individually as an agent under this
35-14 Article].
35-15 (i) [(d)] The department shall issue a license to a
35-16 corporation or partnership if the department finds that:
35-17 (1) [That] the corporation or partnership is:
35-18 (A) organized under the laws of this state or
35-19 any other state or territory of the United States;
35-20 (B) admitted to conduct business in this state
35-21 by the secretary of state, if so required; and
35-22 (C) authorized by its articles of incorporation
35-23 or its partnership agreement to act as an insurance agent [a Texas
35-24 corporation organized or existing under the Texas Business
35-25 Corporation Act or the Texas Professional Corporation Act (Article
35-26 1528e, Vernon's Texas Civil Statutes) having its principal place of
36-1 business in the State of Texas and having as one of its purposes
36-2 the authority to act as an agent covered by this Article];
36-3 (2) the corporation or partnership meets the
36-4 definition of that entity adopted under Section 1A of this article;
36-5 [That every officer, director, and shareholder of the corporation
36-6 is individually licensed under the provisions of this Article, or
36-7 that every officer and director of the corporation is individually
36-8 licensed under this Article, that the corporation is a wholly owned
36-9 subsidiary of a parent corporation that is licensed under this
36-10 Article, and that every shareholder of the parent corporation is
36-11 individually licensed under this Article; and]
36-12 (3) at least one officer of the corporation or one
36-13 active partner of the partnership and all other persons performing
36-14 any acts of an agent on behalf of the corporation or partnership in
36-15 this state are individually licensed by the department separately
36-16 from the corporation or partnership;
36-17 (4) the [That such] corporation or partnership will
36-18 have the ability to pay any sums up to $25,000 which it might
36-19 become legally obligated to pay on account of any claim made
36-20 against it by any customer and caused by any negligent act, error,
36-21 or omission of the corporation or partnership or any person for
36-22 whose acts the corporation or partnership is legally liable in the
36-23 conduct of its business under this code [Article]. The term
36-24 "customer" means any person, firm, or corporation to whom such
36-25 corporation or partnership sells or attempts to sell a policy of
36-26 insurance, or from whom such corporation or partnership accepts an
37-1 application for insurance. Such ability shall be maintained
37-2 [proven] in one of the following ways:
37-3 (A) an errors and omissions policy insuring such
37-4 corporation or partnership against errors and omissions in at least
37-5 the sum of $250,000 [$100,000] with [no more than] a [$10,000]
37-6 deductible of not more than 10 percent of the face amount of the
37-7 policy [feature] issued by an insurance company licensed to do
37-8 business in this state [the State of Texas] or, if a policy cannot
37-9 be obtained from a company licensed to do business in this state
37-10 [Texas], through a properly obtained surplus lines policy [issued
37-11 by a company not licensed to do business in Texas on filing an
37-12 affidavit with the department stating the inability to obtain
37-13 coverage and receiving the commissioner's approval]; or
37-14 (B) a bond executed by such corporation or
37-15 partnership as principal and a surety company authorized to do
37-16 business in this state [State], as surety, in the principal sum of
37-17 $25,000, payable to the department for the use and benefit of
37-18 customers of such corporation or partnership, conditioned that such
37-19 corporation or partnership shall pay any final judgment recovered
37-20 against it by any customer[; or]
37-21 [(C) a deposit of cash or securities of the
37-22 class authorized by Articles 2.08 and 2.10, Insurance Code, as
37-23 amended, having a fair market value of $25,000 with the
37-24 comptroller. The comptroller is directed to accept and receive
37-25 such deposit and hold it exclusively for the protection of any
37-26 customer of such corporation recovering a final judgment against
38-1 such corporation. Such deposit may be withdrawn only upon filing
38-2 with the department evidence satisfactory to it that the
38-3 corporation has withdrawn from business and has no unsecured
38-4 liabilities outstanding, or that such corporation has provided for
38-5 the protection of its customers by furnishing an errors and
38-6 omissions policy or a bond as provided. Securities so deposited
38-7 may be exchanged from time to time for other qualified securities].
38-8 A binding commitment to issue such a policy or bond[, or the tender
38-9 of such securities,] shall be sufficient in connection with any
38-10 application for license;
38-11 (5) the corporation or partnership intends to be
38-12 actively engaged in the business of insurance as required under
38-13 Subsection (c) of this section;
38-14 (6) each location from which the corporation or
38-15 partnership will conduct its Texas business under authority of an
38-16 insurance license is separately registered with the department;
38-17 (7) the corporation or partnership has submitted the
38-18 application, appropriate fees, and any other information required
38-19 by the department; and
38-20 (8) an officer, director, member, manager, partner, or
38-21 any other person who has the right or ability to control the
38-22 license holder has not:
38-23 (A) had a license suspended or revoked or been
38-24 the subject of any other disciplinary action by the insurance
38-25 regulator of this or any other state; or
38-26 (B) committed an act for which a license may be
39-1 denied under Article 21.01-2 of this code.
39-2 (j) Nothing contained in this section [herein] shall be
39-3 construed to permit any unlicensed employee or agent of any
39-4 corporation or partnership to perform any act of an agent under
39-5 this subchapter [Article] without obtaining a license.
39-6 (k) [If at any time, any corporation holding an agent's
39-7 license does not maintain the qualifications necessary to obtain a
39-8 license, the license of such corporation to act as an agent shall
39-9 be cancelled or denied in accordance with the provisions of
39-10 Sections 10 and 11 of this Article; provided, however, that should
39-11 any person who is not a licensed agent under this Article acquire
39-12 shares in such a corporation by devise or descent, that person
39-13 shall have a period of 90 days from date of acquisition within
39-14 which to obtain a license or to dispose of the shares to a person
39-15 licensed under this Article.]
39-16 [Should such an unlicensed person acquire shares in a
39-17 corporation and not dispose of them within a period of 90 days to a
39-18 licensed agent, then they must be purchased by the corporation for
39-19 their book value, that is, the value of said shares of stock as
39-20 reflected by the regular books and records of said corporation, as
39-21 of the date of the acquisition of said shares by said unlicensed
39-22 person. Should the corporation fail or refuse to so purchase such
39-23 shares, its license shall be cancelled.]
39-24 [Any such corporation shall have the power to redeem the
39-25 shares of any shareholder, or the shares of a deceased shareholder,
39-26 upon such terms as may be agreed upon by the board of directors and
40-1 such shareholder or such shareholder's personal representative, or
40-2 at a price and upon such terms as may be provided in the articles
40-3 of incorporation, the bylaws, or an existing contract entered into
40-4 between the shareholders of the corporation.]
40-5 Each corporation or partnership licensed as an agent under
40-6 this subchapter [Article] shall file, under oath, on a form
40-7 developed by the department, biographical information for each [a
40-8 list of the names and addresses of all] of its executive officers
40-9 and[,] directors or unlicensed partners who administer the entity's
40-10 operations in this state, and shareholders who are in control of
40-11 the corporation, or any other partners who have the right or
40-12 ability to control the partnership. If any corporation or
40-13 partnership is owned, in whole or in part, by another entity, a
40-14 biographical form is required for each individual who is in control
40-15 of the parent entity[, and shareholders with its application for
40-16 renewal license].
40-17 (l) Each corporation or partnership shall notify the
40-18 department on a monthly basis of:
40-19 (1) the addition or removal of licensed agents
40-20 employed by the corporation or partnership to perform any act of an
40-21 agent in this state;
40-22 (2) a felony conviction of a licensed agent of the
40-23 entity or any individual associated with the corporation or
40-24 partnership who is required to file biographical information with
40-25 the department;
40-26 (3) an event that would require notification under
41-1 Article 1.30 of this code; and
41-2 (4) the addition or removal of an officer, director,
41-3 partner, member, or manager.
41-4 (m) The department shall issue a license to a bank in the
41-5 manner provided for the licensing of a corporation under this
41-6 section.
41-7 (n) A person may not acquire in any manner any ownership
41-8 interest in an entity licensed as an agent under this subchapter if
41-9 the person is, or after the acquisition would be, directly or
41-10 indirectly, in control of the license holder, or otherwise acquire
41-11 control of or exercise any control over the license holder, unless
41-12 the person has filed the following information with the department
41-13 under oath:
41-14 (1) a biographical form for each person by whom or on
41-15 whose behalf the acquisition of control is to be effected;
41-16 (2) a statement certifying that no person who is
41-17 acquiring an ownership interest in or control of the license holder
41-18 has been the subject of a disciplinary action taken by any state
41-19 insurance regulator;
41-20 (3) a statement certifying that, immediately on the
41-21 change of control, the license holder will be able to satisfy the
41-22 requirements for the issuance of the license to solicit the line or
41-23 lines of insurance for which it is licensed; and
41-24 (4) any additional information that the commissioner
41-25 may by rule prescribe as necessary or appropriate to the protection
41-26 of the insurance consumers of this state or as in the public
42-1 interest.
42-2 (o) If a person required to file a statement under
42-3 Subsection (n) of this section is a partnership, limited
42-4 partnership, syndicate, or other group, the commissioner may
42-5 require that the information required by Subdivisions (1)-(4) of
42-6 that subsection for an individual be provided regarding each
42-7 partner of the partnership or limited partnership, each member of
42-8 the syndicate or group, and each person who controls the partner or
42-9 member. If the partner, member, or person is a corporation or the
42-10 person required to file the statement under Subsection (n) of this
42-11 section is a corporation, the commissioner may require that the
42-12 information required by Subdivisions (1)-(4) of that subsection be
42-13 provided regarding:
42-14 (1) the corporation;
42-15 (2) each individual who is an executive officer or
42-16 director of the corporation; and
42-17 (3) each person who is directly or indirectly the
42-18 beneficial owner of more than 10 percent of the outstanding voting
42-19 securities of the corporation.
42-20 (p) The department may disapprove an acquisition of control
42-21 if, after notice and opportunity for hearing, the commissioner
42-22 determines that:
42-23 (1) immediately on the change of control the license
42-24 holder would not be able to satisfy the requirements for the
42-25 issuance of the license to solicit the line or lines of insurance
42-26 for which it is presently licensed;
43-1 (2) the competence, trustworthiness, experience, and
43-2 integrity of the persons who would control the operation of the
43-3 license holder are such that it would not be in the interest of the
43-4 insurance consumers of this state to permit the acquisition of
43-5 control; or
43-6 (3) the acquisition of control would violate this code
43-7 or another law of this state, another state, or the United States.
43-8 (q) Notwithstanding Subsection (o) of this section, a change
43-9 in control is considered approved if the department has not
43-10 proposed to deny the requested change before the 91st day after the
43-11 date of receipt by the department of all information required by
43-12 this section.
43-13 (r) The commissioner shall be the corporation's or
43-14 partnership's attorney for service of process on whom all lawful
43-15 process, notice, or demand may be served in any legal proceeding
43-16 against the corporation or partnership if:
43-17 (1) the corporation or partnership licensed to
43-18 transact business in this state fails to appoint or maintain an
43-19 attorney for service in this state;
43-20 (2) an attorney for service cannot with reasonable
43-21 diligence be found; or
43-22 (3) the license of a corporation or partnership is
43-23 revoked.
43-24 (s) If a license holder does not maintain the qualifications
43-25 necessary to obtain the license, the department shall revoke or
43-26 suspend the license or deny the renewal of the license in
44-1 accordance with Article 21.01-2 of this code.
44-2 (t) A person licensed under this subchapter shall maintain
44-3 all insurance records, including all records relating to customer
44-4 complaints, separate from the records of any other business in
44-5 which the person may be engaged.
44-6 [Each corporation shall notify the department upon any change
44-7 in its officers, directors, or shareholders not later than the 30th
44-8 day after the date on which the change becomes effective.]
44-9 [Except as provided by Subdivision (2) of this subsection, a
44-10 corporation may not own any interest in another corporation
44-11 licensed under this Article, and each owner of an interest in a
44-12 corporation licensed under this Article shall be a natural person
44-13 who holds a valid license issued under this Article.]
44-14 [(e) The department shall issue a license to a bank if the
44-15 department finds that:]
44-16 [(1) the bank satisfies the definition of Section 1C
44-17 of this Article;]
44-18 [(2) at least one officer of the bank and each
44-19 individual who will be performing any acts as an agent for the bank
44-20 are individually licensed under this Article; and]
44-21 [(3) the bank will have the ability to pay any sums up
44-22 to $25,000 that it might become legally obligated to pay on account
44-23 of any claim made against it by a customer and caused by a
44-24 negligent act, error, or omission of the bank or any person for
44-25 whose acts the bank is legally liable in the conduct of its
44-26 business under this Article. The term "customer" means any person,
45-1 firm, or corporation to whom the bank sells or attempts to sell a
45-2 policy of insurance or from whom the bank accepts an application
45-3 for insurance. That ability shall be proven through:]
45-4 [(A) an errors and omissions policy insuring the
45-5 bank against errors and omissions in at least the sum of $100,000
45-6 with not more than a $10,000 deductible feature, issued by an
45-7 insurance company licensed to do business in this state or, if a
45-8 policy cannot be obtained from a company licensed to do business in
45-9 this state, a policy issued by a company not licensed to do
45-10 business in this state on filing an affidavit with the department
45-11 stating the inability to obtain coverage and receiving the
45-12 department's approval;]
45-13 [(B) a bond executed by the bank as principal
45-14 and a surety company authorized to do business in this state, as
45-15 surety, in the principal sum of $25,000, payable to the department
45-16 for the use and benefit of customers of the bank, conditioned that
45-17 the bank shall pay any final judgment recovered against it by a
45-18 customer; or]
45-19 [(C) a deposit with the comptroller of cash or
45-20 securities of the class authorized by Articles 2.08 and 2.10 of
45-21 this code, with a fair market value of $25,000. The comptroller
45-22 shall accept and receive the deposit and hold it exclusively for
45-23 the protection of a customer of the bank who recovers a final
45-24 judgment against the bank. The deposit may be withdrawn only on
45-25 filing with the department satisfactory evidence that the bank has
45-26 withdrawn from the business of insurance and has no unsecured
46-1 liabilities outstanding or that the bank has provided for the
46-2 protection of its customers by furnishing an errors and omissions
46-3 policy or a bond as provided by this subdivision. Securities so
46-4 deposited may be exchanged from time to time for other qualified
46-5 securities.]
46-6 [A binding commitment to issue such a policy or bond, or the
46-7 tender of applicable securities, is sufficient in connection with
46-8 an application for license.]
46-9 [Nothing in this subsection permits an unlicensed employee or
46-10 agent of a bank to perform any act of an agent under this Article
46-11 without obtaining a license.]
46-12 [A bank licensed as an agent under this Article may have
46-13 additional offices from which the business of insurance is
46-14 conducted only in a place with a population of 5,000 or less and
46-15 must comply with the department's regulations regarding additional
46-16 offices.]
46-17 [A bank licensed as an agent under this Article must maintain
46-18 the insurance records of the bank, including all files relating to
46-19 customer complaints, separate from records relating to the banking
46-20 transactions of the bank.]
46-21 [If at any time, a bank that holds an agent's license does
46-22 not maintain the qualifications necessary to obtain a license, the
46-23 license of that bank to act as an agent shall be canceled or denied
46-24 in accordance with Sections 10 and 11 of this Article.]
46-25 [Each bank licensed as an agent under this Article shall file
46-26 under oath with its application for license renewal a list of the
47-1 name and address of each individual who will be acting as an agent
47-2 on behalf of the bank and of each officer and director of the bank,
47-3 as defined by Article 21.02 of this code, and other biographical
47-4 information as required by the department.]
47-5 [Each bank shall notify the department of any change in its
47-6 officers and directors, and any change in other persons who will be
47-7 acting as agents, as defined by Article 21.02 of this code, and
47-8 submit biographical information on those officers, directors, and
47-9 persons as required by the department not later than the 30th day
47-10 after the date on which the change takes effect.]
47-11 SECTION 1.12. Article 21.07, Insurance Code, is amended by
47-12 adding Section 3A to read as follows:
47-13 Sec. 3A. TEMPORARY LICENSE. (a) The department may issue a
47-14 temporary agent's license to an applicant for a license under
47-15 Section 2 of this article who is being considered for appointment
47-16 as an agent by another license holder, an insurer, or a health
47-17 maintenance organization. An applicant for a temporary license is
47-18 not required to pass a written examination. A temporary license is
47-19 valid for the 90 days after the date of issuance. The department
47-20 shall issue a temporary license immediately on receipt by the
47-21 department of a properly completed application executed by the
47-22 person in the form required by Section 2 of this article,
47-23 accompanied by the nonrefundable filing fee set by the department
47-24 and a certificate signed by an officer or properly authorized
47-25 representative of the agent, insurer, or health maintenance
47-26 organization stating that:
48-1 (1) the applicant is being considered for appointment
48-2 by the agent, insurer, or health maintenance organization as its
48-3 full-time agent;
48-4 (2) the agent, insurer, or health maintenance
48-5 organization desires that the applicant be issued a temporary
48-6 license; and
48-7 (3) the applicant will complete, under the agent's,
48-8 insurer's, or health maintenance organization's supervision, at
48-9 least 40 hours of training as prescribed by Subsection (h) of this
48-10 section not later than the 14th day after the date on which the
48-11 application, certificate, and nonrefundable fee are delivered or
48-12 mailed to the department.
48-13 (b) If the temporary license is not received from the
48-14 department before the eighth day after the date on which the
48-15 application, certificate, and nonrefundable fee are delivered or
48-16 mailed to the department and the agent, insurer, or health
48-17 maintenance organization has not been notified that the application
48-18 is denied, the agent, insurer, or health maintenance organization
48-19 may assume that the temporary license will be issued in due course
48-20 and the applicant may proceed to act as an agent.
48-21 (c) A temporary license may not be renewed or issued more
48-22 than once in a consecutive six-month period to the same applicant.
48-23 (d) A temporary license may not be granted to a person who
48-24 does not intend to apply for a license to sell insurance or
48-25 memberships to the public generally.
48-26 (e) A temporary license may not be used to obtain
49-1 commissions from sales made to persons who have family, employment,
49-2 or business relationships with the temporary license holder. An
49-3 agent, insurer, or health maintenance organization may not
49-4 knowingly pay, directly or indirectly, to the holder of a temporary
49-5 license under this section, and a temporary license holder may not
49-6 receive or accept, a commission on the sale of a contract of
49-7 insurance or membership covering:
49-8 (1) the temporary license holder;
49-9 (2) a person related to the temporary license holder
49-10 by consanguinity or affinity;
49-11 (3) a person who is or has been during the past six
49-12 months the temporary license holder's employer, either as an
49-13 individual or as a member of a partnership, association, firm, or
49-14 corporation; or
49-15 (4) a person who is or who has been during the past
49-16 six months the employee of the temporary license holder.
49-17 (f) A person who has been issued a temporary license under
49-18 this section and is acting under the authority of the temporary
49-19 license may not engage in any insurance solicitation, sale, or
49-20 other agency transaction that results in or is intended to result
49-21 in the replacement of any existing individual life insurance policy
49-22 form or annuity contract that is in force, or receive, directly or
49-23 indirectly, any commission or other compensation that may or does
49-24 result from such a solicitation, sale, or other agency transaction.
49-25 A person who holds a permanent license may not circumvent or
49-26 attempt to circumvent the intent of this subsection by acting for
50-1 or with a person holding a temporary license. As used in this
50-2 subsection, "replacement" means a transaction in which a new life
50-3 insurance or annuity contract is to be purchased, and it is known
50-4 or should be known to the temporary agent that by reason of the
50-5 solicitation, sale, or other transaction the existing life
50-6 insurance or annuity contract has been or is to be:
50-7 (1) lapsed, forfeited, surrendered, or otherwise
50-8 terminated;
50-9 (2) converted to reduced paid-up insurance, continued
50-10 as extended term insurance, or otherwise reduced in value by the
50-11 use of nonforfeiture benefits or other policy values;
50-12 (3) amended so as to effect either a reduction in
50-13 benefits or in the term for which coverage would otherwise remain
50-14 in force or for which benefits would be paid;
50-15 (4) reissued with any reduction in cash value; or
50-16 (5) pledged as collateral or subjected to borrowing,
50-17 whether in a single loan or under a schedule of borrowing over a
50-18 period of time, for amounts in the aggregate exceeding 25 percent
50-19 of the loan value set forth in the policy.
50-20 (g) The department may cancel, suspend, or revoke the
50-21 temporary appointment powers of an agent, insurer, or health
50-22 maintenance organization if, after notice and opportunity for
50-23 hearing, the commissioner finds that that agent, insurer, or health
50-24 maintenance organization has abused the temporary appointment
50-25 powers. An appeal from the department's decision is subject to
50-26 Article 1.04 of this code. In considering whether abuse has
51-1 occurred, the department may consider:
51-2 (1) the number of temporary appointments made;
51-3 (2) the percentage of appointees sitting for
51-4 examination as agents under this article, as provided by Subsection
51-5 (j) of this section; and
51-6 (3) the number of appointees who pass the examination.
51-7 (h) The agent, insurer, or health maintenance organization
51-8 shall administer at least 40 hours of training to each applicant
51-9 for a temporary license not later than the 14th day after the date
51-10 on which the application, certificate, and nonrefundable fee are
51-11 delivered or mailed to the department. At least 10 hours must be
51-12 taught in a classroom setting, including an accredited college,
51-13 university, junior college, or community college, a business
51-14 school, or a private institute or classes sponsored by the agent,
51-15 insurer, or health maintenance organization and especially
51-16 established for this purpose. The training program must be
51-17 designed to provide an applicant with basic knowledge of:
51-18 (1) the broad principles of insurance, including the
51-19 licensing and regulatory laws of this state;
51-20 (2) the broad principles of health maintenance
51-21 organizations, including membership requirements and related
51-22 licensing and regulatory laws of this state; and
51-23 (3) the ethical obligations and duties of an agent.
51-24 (i) If the commissioner finds under Subsection (g) of this
51-25 section that an abuse of temporary appointment powers has occurred,
51-26 the commissioner may require the affected agent, insurer, or health
52-1 maintenance organization to file with the department a description
52-2 of the agent's, insurer's, or health maintenance organization's
52-3 training program and may require the agent, insurer, or health
52-4 maintenance organization to obtain the approval of the department
52-5 before continuing to use the training program.
52-6 (j) Each agent, insurer, or health maintenance organization
52-7 shall ensure that, during any two consecutive calendar quarters, at
52-8 least 70 percent of the agent's, insurer's, or health maintenance
52-9 organization's applicants for temporary licenses sit for the
52-10 required licensing examination. At least 50 percent of the
52-11 applicants taking the examination must pass during that period.
52-12 (k) An agent, insurer, or health maintenance organization
52-13 may not make more than 250 appointments of temporary license
52-14 holders during a calendar year.
52-15 SECTION 1.13. Section 6, Article 21.07, Insurance Code, is
52-16 amended to read as follows:
52-17 Sec. 6. FILING OF [AGENT MAY BE LICENSED TO REPRESENT]
52-18 ADDITIONAL APPOINTMENTS [INSURERS]. (a) Except as specifically
52-19 prohibited by another provision of this code, an [Any] agent
52-20 licensed under this subchapter [Article] may represent and act as
52-21 an agent for more than one insurance carrier at any time while the
52-22 agent's license is in force, if the agent so desires. Any such
52-23 agent and the insurance carrier involved shall file with the
52-24 department [must give notice to the State Board of Insurance of]
52-25 any additional appointment [or appointments] authorizing the agent
52-26 to act as agent for an additional insurance carrier or carriers not
53-1 later than the 30th day after the effective date of the
53-2 appointment. The filing [Such notice] must include:
53-3 (1) [be accompanied by] a certificate from the [each]
53-4 insurance carrier to be named in the [each] additional appointment
53-5 that states[, and must state] that the [said] insurance company
53-6 desires to appoint the applicant as its agent;
53-7 (2) [. This notice shall also contain such] other
53-8 information as the commissioner [State Board of Insurance] may
53-9 require; and
53-10 (3) [. The agent shall be required to pay] a
53-11 nonrefundable fee in an amount [not to exceed $16 as] determined by
53-12 the commissioner [State Board of Insurance] for each additional
53-13 appointment for which the insurance carrier applies [applied for,
53-14 which fee shall accompany the notice. If approval of the
53-15 additional appointment is not received from the State Board of
53-16 Insurance before the eighth day after the date on which the
53-17 completed application and fee were received by the Board, the agent
53-18 and the insurance carrier, in the absence of notice of disapproval,
53-19 may assume that the Board approves the application, and the agent
53-20 may act for the insurance carrier].
53-21 (b) An appointment made under this Article to authorize an
53-22 agent to act as an agent for an insurance carrier continues in
53-23 effect without the necessity of renewal until it is terminated or
53-24 [and] withdrawn by the insurance carrier or agent. If the agent is
53-25 terminated for cause, the insurance carrier shall follow the
53-26 procedures established under Section 6B of [as provided by this
54-1 section or is otherwise terminated in accordance with] this
54-2 Article. Each renewal license issued to the agent authorizes the
54-3 agent to represent and act for the insurance carriers for which the
54-4 agent holds an appointment until the appointment is terminated or
54-5 withdrawn, and that agent is considered to be the agent of the
54-6 appointing insurance carriers for the purposes of this code
54-7 [Article].
54-8 (c) An agent appointed under this section may act on behalf
54-9 of the appointing carrier before the department receives the filing
54-10 made under this section.
54-11 (d) A person acting as a sub-agent is not required to be
54-12 separately appointed by each insurance carrier that has appointed
54-13 the licensed person who has designated the sub-agent in writing to
54-14 the department. Termination of the sub-agent by the licensed
54-15 person shall be reported promptly to the department and terminates
54-16 the sub-agent's authority to act for the licensed person and that
54-17 person's insurance carriers.
54-18 SECTION 1.14. Article 21.07, Insurance Code, is amended by
54-19 adding Sections 6B, 6C, 6D, and 6E to read as follows:
54-20 Sec. 6B. INSURANCE CARRIER TO NOTIFY DEPARTMENT OF
54-21 TERMINATION OF CONTRACT; COMMUNICATION PRIVILEGED. (a) Each
54-22 insurance carrier shall, on termination of the appointment of an
54-23 agent for cause, immediately file with the department a statement
54-24 of the facts relating to the termination of the appointment and
54-25 the date and cause of the termination. On receipt of the statement
54-26 the department shall record the termination of the appointment of
55-1 that agent to represent the insurance carrier in this state.
55-2 (b) A document, record, statement, or other information
55-3 required to be made or disclosed to the department under this
55-4 section is a privileged and confidential communication and is not
55-5 admissible in evidence in any court action or proceeding except
55-6 under a subpoena issued by a court of record.
55-7 (c) An insurance carrier, an employee or agent of the
55-8 carrier, or any other person, acting without malice, is not liable
55-9 for providing the information required to be disclosed under this
55-10 section.
55-11 Sec. 6C. FEES; USE OF FUNDS. (a) The department shall
55-12 collect from each agent of an insurance carrier writing insurance
55-13 in this state under this code a nonrefundable license fee and a
55-14 nonrefundable appointment fee for each appointment by an insurance
55-15 carrier. These fees, together with examination fees, license fees,
55-16 and license renewal fees, shall be deposited to the credit of the
55-17 Texas Department of Insurance operating fund.
55-18 (b) The department may use any portion of the fees collected
55-19 to enforce this subchapter, may employ persons as it considers
55-20 necessary to investigate and make reports regarding alleged
55-21 violations of this code and misconduct on the part of agents, and
55-22 may pay the salaries and expenses of those persons and office
55-23 employees and other expenses necessary to enforce this subchapter
55-24 from the fees collected. A person employed by the department under
55-25 this section may administer the oath and examine under oath any
55-26 person considered necessary in gathering information and evidence
56-1 and may have that information and evidence reduced to writing if
56-2 considered necessary, and all such expenses shall be paid from the
56-3 fees.
56-4 (c) The department shall set the fees in amounts reasonable
56-5 and necessary to implement this subchapter.
56-6 Sec. 6D. DUPLICATE LICENSE FEE. The department shall
56-7 collect in advance from an agent requesting a duplicate license a
56-8 fee in an amount set by the department. The fee collected under
56-9 this section shall be deposited to the credit of the Texas
56-10 Department of Insurance operating fund.
56-11 Sec. 6E. REQUIREMENT TO APPOINT SUB-AGENT. If a general
56-12 life, accident, and health agent or general property and casualty
56-13 agent who has been appointed by an insurance carrier that has a
56-14 permit to do business in this state desires to appoint a sub-agent
56-15 in the operation of an insurance business, the general agent shall
56-16 submit to the department in writing, in the form prescribed by the
56-17 department, notice of the sub-agent's appointment. The notice must
56-18 be accompanied by a nonrefundable fee in an amount determined by
56-19 the commissioner.
56-20 ARTICLE 2. LIFE, ACCIDENT, AND HEALTH LICENSES
56-21 SECTION 2.01. Subchapter A, Chapter 21, Insurance Code, is
56-22 amended by adding Article 21.07-1 to read as follows:
56-23 Art. 21.07-1. TEXAS LIFE, ACCIDENT, AND HEALTH AGENTS
56-24 LICENSE ACT
56-25 Sec. 1. SHORT TITLE; APPLICATION. (a) This article may be
56-26 cited as the Texas Life, Accident, and Health Agents License Act.
57-1 (b) Each agent of an insurance company authorized to provide
57-2 life, accident, and health insurance coverage in this state is
57-3 subject to this article. This article applies to each person who:
57-4 (1) performs the acts of an agent, as defined by
57-5 Article 21.02 of this code, whether through oral, written, or
57-6 electronic communications or otherwise, by the solicitation of,
57-7 negotiation for, procurement of, or collection of premiums on an
57-8 insurance or annuity contract offered by any type of insurance
57-9 carrier authorized to sell life, accident, and health insurance
57-10 products in this state; or
57-11 (2) represents or purports to represent a health
57-12 maintenance organization in the solicitation, negotiation,
57-13 procurement, or effectuation of membership in the health
57-14 maintenance organization.
57-15 Sec. 2. GENERAL LIFE, ACCIDENT, AND HEALTH LICENSE; LICENSE
57-16 REQUIRED. (a) A general life, accident, and health license is
57-17 required for each person who acts as:
57-18 (1) an agent writing life, accident, and health
57-19 insurance for a life insurance company;
57-20 (2) an agent writing only accident and health
57-21 insurance;
57-22 (3) an agent representing a health maintenance
57-23 organization;
57-24 (4) an agent writing fixed or variable annuity
57-25 contracts or variable life contracts;
57-26 (5) an industrial life insurance agent for an
58-1 industrial company that writes only weekly premium life insurance
58-2 on a debit basis under Article 3.52 of this code;
58-3 (6) an agent writing:
58-4 (A) only life insurance in excess of $15,000 on
58-5 any one life for a stipulated premium insurance company;
58-6 (B) only accident and health insurance for a
58-7 stipulated premium insurance company; or
58-8 (C) both types of insurance described by
58-9 Paragraphs (A) and (B) of this subdivision;
58-10 (7) an agent writing life, accident, and health
58-11 insurance for any type of authorized life insurance company,
58-12 including a legal reserve life insurance company, domiciled in this
58-13 state, representing the insurer in a foreign country or territory
58-14 and either on a United States military installation or with United
58-15 States military personnel; or
58-16 (8) an agent writing any other type of insurance as
58-17 required by the commissioner for the protection of the insurance
58-18 consumers of this state.
58-19 (b) For the purposes of this subsection, a "combination
58-20 company" is an insurer that writes weekly premium life insurance or
58-21 monthly ordinary life insurance on a debit basis. A general life,
58-22 accident, and health license is required for each person who acts
58-23 as a combination life insurance agent for a combination company. A
58-24 combination company and a combination life insurance agent may also
58-25 write ordinary contracts of life insurance.
58-26 (c) Except as otherwise provided by this subsection, a
59-1 general life, accident, and health license is required for an agent
59-2 writing life, accident, and health insurance for a fraternal
59-3 benefit society under Chapter 10 of this code. A license is not
59-4 required for an agent, regularly salaried officer, employee,
59-5 representative, or member of a fraternal benefit society who
59-6 devotes less than 50 percent of the person's time to the
59-7 solicitation or procurement of insurance contracts for the society.
59-8 A person who, in the preceding calendar year, has solicited or
59-9 procured the following amounts on any of the following contracts of
59-10 insurance on behalf of a fraternal benefit society is presumed to
59-11 have devoted 50 percent or more of the person's time to the
59-12 solicitation or procurement of insurance contracts:
59-13 (1) life insurance contracts that generate, in the
59-14 aggregate, more than $20,000 of direct premium for all lives
59-15 insured for the preceding calendar year, if no interest-sensitive
59-16 life insurance certificate is solicited or procured with a face
59-17 amount of insurance that exceeds $35,000 unless the person has
59-18 obtained the designation of "Fraternal Insurance Counselor";
59-19 (2) an insurance contract, other than a life insurance
59-20 contract, that the fraternal benefit society may write that insures
59-21 the individual lives of more than 25 persons; or
59-22 (3) a variable life insurance or variable annuity
59-23 contract.
59-24 Sec. 3. AUTHORITY TO WRITE ADDITIONAL PRODUCT LINES. A
59-25 person who holds a general life, accident, and health license
59-26 issued under the requirements of this subchapter may, without
60-1 obtaining an additional license, write additional types of
60-2 insurance contracts as provided under:
60-3 (1) Sections 4, 5, and 6 of this article; or
60-4 (2) a specialty license program established under
60-5 state law.
60-6 Sec. 4. LIMITED LIFE, ACCIDENT, AND HEALTH LICENSE. (a) In
60-7 this section, "job protection insurance" has the meaning assigned
60-8 by Article 25.01 of this code.
60-9 (b) This section applies to:
60-10 (1) an agent for an insurance company that writes only
60-11 job protection insurance;
60-12 (2) an agent writing policies or riders to policies
60-13 that provide only:
60-14 (A) lump-sum cash benefits in the event of
60-15 accidental death, death by accidental means, or dismemberment; or
60-16 (B) ambulance expense benefits in the event of
60-17 accident or sickness;
60-18 (3) an agent writing prepaid legal services contracts
60-19 under Article 5.13-1 or Chapter 23 of this code;
60-20 (4) an agent writing credit insurance except as
60-21 otherwise provided under a specialty license program established
60-22 under state law; and
60-23 (5) an agent writing any other type of insurance
60-24 required by the commissioner to be licensed for the protection of
60-25 the insurance consumers of this state.
60-26 (c) A person to whom this section applies must hold a
61-1 limited life, health, and accident license under this section. The
61-2 commissioner may adopt rules as necessary to implement this
61-3 section.
61-4 (d) A person who holds a limited life, accident, and health
61-5 license issued under this section may write only the types of
61-6 insurance products described by this section.
61-7 (e) An applicant for a limited life, accident, and health
61-8 license is eligible for a temporary license under Section 3A,
61-9 Article 21.07, of this code.
61-10 Sec. 5. FUNERAL PREARRANGEMENT LIFE INSURANCE AGENT.
61-11 (a) In this section, "funeral prearrangement life insurance agent"
61-12 means a life insurance agent who, subject to the limitations of
61-13 this section, writes only life insurance policies and fixed annuity
61-14 contracts to secure the delivery of funeral services and
61-15 merchandise under prepaid funeral contracts regulated by the Texas
61-16 Department of Banking under Chapter 154, Finance Code.
61-17 (b) The commissioner shall issue a license to act as a
61-18 funeral prearrangement life insurance agent to an individual after
61-19 receiving certification from an insurance company authorized to
61-20 write life insurance and annuities in this state that the applicant
61-21 has completed a course of study and instruction on life insurance
61-22 and fixed annuities for applicants offered by the insurance company
61-23 and passed without aid a written examination administered by the
61-24 insurance company. The course of study and instruction must be at
61-25 least a five-hour course and must include instruction on:
61-26 (1) the policies to be sold; and
62-1 (2) the laws relating to funeral prearrangement.
62-2 (c) The commissioner shall authorize an insurance company to
62-3 administer a funeral prearrangement life insurance agent
62-4 examination as provided by Subsection (b) of this section after
62-5 approval by the commissioner of a complete outline and explanation
62-6 of the course of study and instruction and the nature and manner of
62-7 conducting the examination for applicants. The commissioner shall
62-8 prescribe a uniform examination for applicants that fairly
62-9 addresses the information contained in the approved course of study
62-10 and instruction.
62-11 (d) The commissioner may investigate as necessary the manner
62-12 of instruction and the examination administered by an insurance
62-13 company under this section. The commissioner may withdraw from an
62-14 insurance company the authority under this section to offer
62-15 instruction and administer an examination.
62-16 (e) A funeral prearrangement life insurance agent licensed
62-17 under this section may not:
62-18 (1) write any coverage or combination of coverages
62-19 with an initial guaranteed death benefit that exceeds $15,000 on
62-20 any life; or
62-21 (2) act as an agent for more than one insurance
62-22 company.
62-23 (f) A license issued under this section to act as an agent
62-24 for an insurance company is canceled when the license holder ceases
62-25 to act as an agent for an insurance company. Not later than the
62-26 15th day after the date on which the license holder ceases to act
63-1 as an agent for an insurance company, the insurance company or
63-2 agent shall send written notification to the department.
63-3 (g) Except as specifically provided by this section, the
63-4 provisions of this subchapter that apply to a limited license apply
63-5 to a license issued under this section.
63-6 Sec. 6. LIFE INSURANCE NOT EXCEEDING $15,000. (a) The
63-7 commissioner shall issue a license to act as an agent to an
63-8 individual who writes only life insurance not to exceed $15,000 on
63-9 any one life after receiving certification from a stipulated
63-10 premium insurance company, a statewide mutual assessment company, a
63-11 local mutual aid association, or a local mutual burial association,
63-12 that the applicant has completed a course of study and instruction
63-13 on life insurance and fixed annuities for applicants offered by the
63-14 insurer and passed without aid a written examination administered
63-15 by the insurer. The course of study and instruction must be at
63-16 least a five-hour course and must include instruction on:
63-17 (1) the policies to be sold; and
63-18 (2) the laws relating to the regulation of insurance
63-19 in this state.
63-20 (b) The commissioner shall authorize an insurer described by
63-21 Subsection (a) of this section to administer an agent examination
63-22 as provided by Subsection (a) of this section after approval by the
63-23 commissioner of a complete outline and explanation of the course of
63-24 study and instruction and the nature and manner of conducting the
63-25 examination for applicants. The commissioner shall prescribe a
63-26 uniform examination for applicants that fairly addresses the
64-1 information contained in the approved course of study and
64-2 instruction.
64-3 (c) The commissioner may investigate as necessary the manner
64-4 of instruction and the examination administered by an insurer under
64-5 this section. The commissioner may withdraw from an insurer the
64-6 authority under this section to offer instruction and administer an
64-7 examination.
64-8 (d) An insurance agent licensed under this section may not
64-9 write any coverage or combination of coverages with an initial
64-10 guaranteed death benefit that exceeds $15,000 on any life.
64-11 (e) A license is not required under this section for an
64-12 agent who, in the preceding calendar year, wrote policies that
64-13 generated, in the aggregate, less than $20,000 indirect premium.
64-14 (f) Except as specifically provided by this section, the
64-15 provisions of this subchapter that apply to a limited license apply
64-16 to a license issued under this section.
64-17 ARTICLE 3. PROPERTY AND CASUALTY LICENSES
64-18 SECTION 3.01. Article 21.14, Insurance Code, is amended to
64-19 read as follows:
64-20 Art. 21.14. TEXAS PROPERTY AND CASUALTY AGENTS LICENSE ACT
64-21 Sec. 1. SHORT TITLE; APPLICATION. (a) This article may be
64-22 cited as the Texas Property and Casualty Agents License Act.
64-23 (b) Each agent of an insurance company authorized to provide
64-24 property and casualty insurance coverage in this state is subject
64-25 to this article. This article applies to each person who performs
64-26 the acts of an agent, as defined by Article 21.02 of this code,
65-1 whether through oral, written, or electronic communications or
65-2 otherwise, by the solicitation of, negotiation for, procurement of,
65-3 or collection of premiums on an insurance contract offered by any
65-4 type of insurance carrier authorized to sell property and casualty
65-5 insurance products in this state, including:
65-6 (1) a fidelity or surety company;
65-7 (2) an interinsurance exchange;
65-8 (3) a mutual company, including a farm mutual or a
65-9 county mutual;
65-10 (4) a reciprocal exchange; or
65-11 (5) a Lloyd's plan.
65-12 Sec. 2. GENERAL PROPERTY AND CASUALTY LICENSE; LICENSE
65-13 REQUIRED. A general property and casualty license is required for
65-14 each person who acts as:
65-15 (1) an agent writing property and casualty insurance
65-16 for an insurance carrier authorized to provide property and
65-17 casualty insurance coverage in this state;
65-18 (2) a sub-agent of a person licensed as an agent under
65-19 this article who solicits and binds insurance risks on behalf of
65-20 that agent; or
65-21 (3) an agent writing any other type of insurance as
65-22 required by the commissioner for the protection of the insurance
65-23 consumers of this state.
65-24 Sec. 3. AUTHORITY TO WRITE ADDITIONAL PRODUCT LINES. A
65-25 person who holds a general property and casualty license issued
65-26 under this subchapter may write additional types of insurance
66-1 contracts as provided under:
66-2 (1) Sections 6 and 9 of this article; or
66-3 (2) a specialty license program established under
66-4 state law.
66-5 Sec. 4. AUTHORITY TO WRITE ACCIDENT AND HEALTH INSURANCE. A
66-6 person who holds a general property and casualty license issued
66-7 under this subchapter may write health and accident insurance for a
66-8 property and casualty insurer authorized to sell those insurance
66-9 products in this state without holding a license issued under
66-10 Article 21.07-1 of this code.
66-11 Sec. 5. EMERGENCY LICENSE WITHOUT EXAMINATION. In the event
66-12 of the death or disability of a property and casualty agent or if a
66-13 property and casualty agent is found to be insolvent and unable to
66-14 pay for premiums as they become due to an insurer, the department
66-15 may issue to an applicant for a property and casualty license an
66-16 emergency property and casualty license without examination if it
66-17 is established to the satisfaction of the department that the
66-18 emergency license is necessary for the preservation of the agency
66-19 assets of a deceased, disabled, or insolvent property and casualty
66-20 agent. An emergency license is valid for 90 days in any 12
66-21 consecutive months and may be renewed by the department for an
66-22 additional 90 days during the 12-month period if the other
66-23 requirements of this subchapter are met.
66-24 Sec. 6. LIMITED PROPERTY AND CASUALTY LICENSE.
66-25 (a) Notwithstanding any other law, a limited property and casualty
66-26 license is required for each person who desires to act as an agent
67-1 writing:
67-2 (1) insurance only on growing crops under Article
67-3 21.14-2 of this code;
67-4 (2) any form of insurance authorized under Chapter 16
67-5 of this code for a farm mutual insurance company, except that a
67-6 license is not required under this subsection for a person who
67-7 wrote policies that generated, in the aggregate, less than $50,000
67-8 in direct premium for the preceding calendar year;
67-9 (3) exclusively all forms of insurance authorized to
67-10 be solicited and written in this state that cover the ownership,
67-11 operation, maintenance, or use of a motor vehicle that is designed
67-12 for use on the public highways, including a trailer or semitrailer,
67-13 and the motor vehicle's accessories or equipment;
67-14 (4) exclusively all forms of insurance authorized to
67-15 be solicited and written in this state that relate to the
67-16 ownership, occupancy, maintenance, or use of a manufactured home
67-17 that is classified as personal property under Section 2.001,
67-18 Property Code;
67-19 (5) prepaid legal services contracts under Article
67-20 5.13-1 or Chapter 23 of this code;
67-21 (6) only industrial fire insurance policies covering
67-22 dwellings, household goods, and wearing apparel on a weekly,
67-23 monthly, or quarterly basis on a continuous premium payment plan
67-24 written for an insurance company whose business is devoted
67-25 exclusively to that business as described by Article 17.02 of this
67-26 code, except that a license is not required under this subsection
68-1 for a person who wrote industrial fire insurance policies that
68-2 generated, in the aggregate, less than $20,000 in direct premium
68-3 for the preceding calendar year;
68-4 (7) an agent writing credit insurance, except as
68-5 otherwise provided by a specialty license program established under
68-6 state law.
68-7 (8) any other type of insurance as required by the
68-8 commissioner for the protection of the insurance consumers of this
68-9 state.
68-10 (b) Subsection (a)(1) of this section applies to a
68-11 production credit association or bank for a cooperative, as
68-12 provided under the farm credit system under 12 U.S.C. 2001 et seq.,
68-13 as amended.
68-14 (c) A person who holds a limited property and casualty
68-15 license issued under this subchapter may write only the types of
68-16 insurance products designated on the license by the department.
68-17 Sec. 7. FULL-TIME HOME OFFICE EMPLOYEES: MANDATORY
68-18 REGISTRATION, CONTINUING EDUCATION REQUIREMENTS, AND NOTIFICATION
68-19 TO CONSUMERS; DISCIPLINARY ACTIONS. (a) Each actual full-time
68-20 home office salaried employee of an insurance carrier licensed to
68-21 do business in this state who solicits or receives an application
68-22 for the sale of insurance through an oral, written, or electronic
68-23 communication shall register with the commissioner.
68-24 (b) An insurance carrier licensed to do business in this
68-25 state whose general plan of operation includes the use of employees
68-26 described by Subsection (a) of this section shall certify to the
69-1 commissioner that each of those employees receives at least 15
69-2 hours of continuing education annually. Each continuing education
69-3 course provided by the insurance carrier shall be submitted to the
69-4 department for approval as provided by Section 3, Article 21.01-1,
69-5 of this code. A person registered under this section shall comply
69-6 with the continuing education requirements adopted under Section 3,
69-7 Article 21.01-1, of this code, as if the person were a licensed
69-8 agent. The continuing education must be designed to give the
69-9 employee:
69-10 (1) reasonable familiarity with:
69-11 (A) the broad principles of insurance;
69-12 (B) insurance licensing and regulatory laws; and
69-13 (C) the terms and conditions of the insurance
69-14 that the registrant transacts; and
69-15 (2) a fair and general understanding of the duties of
69-16 an insurer to an insured, including training in ethical
69-17 considerations.
69-18 (c) The registration of an actual full-time home office
69-19 salaried employee shall be suspended and the employer insurance
69-20 carrier may be disciplined for any act for which an agent may be
69-21 disciplined under Article 21.01-2 of this code.
69-22 (d) Each registrant under this section shall disclose the
69-23 fact of the registration when making an oral, written, or
69-24 electronic communication to solicit or receive an application for
69-25 the sale of insurance.
69-26 (e) Each person who registers under this section shall
70-1 submit a nonrefundable registration fee in an amount determined by
70-2 the department.
70-3 Sec. 8. INSURANCE SERVICE REPRESENTATIVE LICENSE. (a) An
70-4 insurance service representative license is required for each
70-5 person who is employed on a salaried basis to perform assigned
70-6 duties only within the office of a property and casualty agent.
70-7 Those duties may include the issuance of insurance binders only
70-8 with the express approval of the property and casualty agent who
70-9 supervises the insurance service representative.
70-10 (b) The provisions of this subchapter that apply to a
70-11 general license apply to a license issued under this section,
70-12 except that proof of financial responsibility is not required of a
70-13 person licensed only as an insurance service representative.
70-14 Sec. 9. COUNTY MUTUAL AGENT LICENSE. (a) The commission
70-15 shall issue a license to act as an agent for a county mutual
70-16 insurance company under Chapter 17 of this code to an individual
70-17 after receiving certification from the insurance company that the
70-18 applicant has completed a course of study and instruction on motor
70-19 vehicle insurance and insurance covering dwellings for applicants
70-20 offered by the insurance company and passed without aid a written
70-21 examination administered by the insurance company. The course of
70-22 study and instruction must be at least a five-hour course and must
70-23 include instruction on:
70-24 (1) the policies to be sold; and
70-25 (2) the laws relating to the regulation of insurance
70-26 in this state.
71-1 (b) The commissioner shall authorize a county mutual
71-2 insurance company to administer an agent examination as provided by
71-3 Subsection (a) of this section after approval by the commissioner
71-4 of a complete outline and explanation of the course of study and
71-5 instruction and the nature and manner of conducting the examination
71-6 for applicants. The commissioner shall prescribe a uniform
71-7 examination for applicants that fairly addresses the information
71-8 contained in the approved course of study and instruction.
71-9 (c) The commissioner may investigate as necessary the manner
71-10 of instruction and the examination administered by an insurance
71-11 company under this section. The commissioner may withdraw from an
71-12 insurance company the authority under this section to offer
71-13 instruction and administer an examination.
71-14 (d) Except as specifically provided by this section, the
71-15 provisions of this subchapter that apply to a limited license apply
71-16 to a license issued under this section. [LICENSING OF LOCAL
71-17 RECORDING AGENTS AND SOLICITORS; LIFE, HEALTH AND ACCIDENT
71-18 INSURANCE EXCEPTED; OTHER EXCEPTIONS]
71-19 [Sec. 1. CLASSES OF AGENTS. Insurance agents, as that term
71-20 is defined in the laws of this State, shall for the purpose of this
71-21 article be divided into two classes: Local Recording Agents and
71-22 Solicitors.]
71-23 [Sec. 2. DEFINITIONS; CERTAIN ORDERS, SOCIETIES OR
71-24 ASSOCIATIONS NOT AFFECTED. (a) In this article:]
71-25 [(1) "Local Recording Agent" means a person or firm
71-26 engaged in soliciting and writing insurance, being authorized by an
72-1 insurance company or insurance carrier, including fidelity and
72-2 surety companies, to solicit business and to write, sign, execute,
72-3 and deliver policies of insurance, and to bind companies on
72-4 insurance risks, and who maintain an office and a record of such
72-5 business and the transactions which are involved, who collect
72-6 premiums on such business and otherwise perform the customary
72-7 duties of a local recording agent representing an insurance carrier
72-8 in its relation with the public; or a person or firm engaged in
72-9 soliciting and writing insurance, being authorized by an insurance
72-10 company or insurance carrier, including fidelity and surety
72-11 companies, to solicit business, and to forward applications for
72-12 insurance to the home office of the insurance companies and
72-13 insurance carriers, where the insurance company's and insurance
72-14 carrier's general plan of operation in this State provides for the
72-15 appointment and compensation of agents for insurance and for the
72-16 execution of policies of insurance by the home office of the
72-17 insurance company or insurance carrier, or by a supervisory office
72-18 of such insurance company or insurance carrier, and who maintain an
72-19 office and a record of such business and the transactions which are
72-20 involved, and who collect premiums on such business and otherwise
72-21 qualify and perform the customary duties of a local recording agent
72-22 representing an insurance carrier in its relation with the public.]
72-23 [(2) "Solicitor" means a person who is a bona fide
72-24 solicitor and engaged in the business of soliciting and binding
72-25 insurance risks on behalf of a local recording agent, and who
72-26 offices with such local recording agent, and who does not sign and
73-1 execute policies of insurance, and who does not maintain company
73-2 records of such transactions. This shall not be construed to make
73-3 a solicitor of a local recording agent, who places business of a
73-4 class which the rules of the company or carrier require to be
73-5 placed on application or to be written in a supervisory office. A
73-6 solicitor may bind insurance risks only with the express prior
73-7 approval of the local recording agent for whom the solicitor works.]
73-8 [(3) "Board" means the State Board of Insurance.]
73-9 [(4) "Company" or "Carrier" means any insurance
73-10 company, corporation, inter-insurance exchange, mutual, reciprocal,
73-11 association, Lloyds or other insurance carrier licensed to transact
73-12 business in the State of Texas other than as excepted herein.]
73-13 [(5) "Insurance service representative" means a
73-14 solicitor employed on a salaried basis who performs assigned duties
73-15 only within the office of a local recording agent, which may
73-16 include binding insurance risks, but only with the express prior
73-17 approval of the local recording agent for whom the representative
73-18 works.]
73-19 [(b) Nothing contained in this article shall be so construed
73-20 as to affect or apply to orders, societies, or associations which
73-21 admit to membership only persons engaged in one or more crafts or
73-22 hazardous occupations in the same or similar lines of business, and
73-23 the ladies' societies, or ladies' auxiliary to such orders,
73-24 societies or associations, or any secretary of a Labor Union or
73-25 organization, or any secretary or agent of any fraternal benefit
73-26 society, which does not operate at a profit, except that a person
74-1 who has had a license revoked under Section 16 of this article may
74-2 not solicit or otherwise transact business under Chapter 10 of this
74-3 code.]
74-4 [Sec. 3. APPLICATION FOR LICENSE; TO WHOM LICENSE MAY BE
74-5 ISSUED. (a) When any person, partnership, registered limited
74-6 liability partnership, limited liability company, corporation, or
74-7 bank shall desire to engage in business as a local recording agent
74-8 for an insurance company, or insurance carrier, that person or
74-9 entity shall make application for a license to the Texas Department
74-10 of Insurance, in such form as the Department may require. Such
74-11 application shall bear a signed endorsement by a general, state or
74-12 special agent of a qualified insurance company, or insurance
74-13 carrier that applicant or each member of the partnership or each
74-14 stockholder of the corporation or each member of the limited
74-15 liability company is a resident of this state.]
74-16 [(b) The Department shall issue a license to an individual
74-17 or a general partnership or a limited liability partnership
74-18 registered with the Secretary of State under Section 3.08, Texas
74-19 Revised Partnership Act (Article 6132b-3.08, Vernon's Texas Civil
74-20 Statutes), engaging in the business of insurance. The Department
74-21 may not issue a license to a partnership if an inactive partner who
74-22 is not subject to Section 3a of this article has an interest in the
74-23 partnership principally to have written and be compensated therefor
74-24 for insurance on property controlled through ownership, mortgage or
74-25 sale, family relationship, or employment; and provided further,
74-26 that all licensed agents must be residents of Texas. Provided,
75-1 that a person who resides in a town through which the state line
75-2 runs and whose residence is in the town in the adjoining state may
75-3 be licensed, if the person's business office is being maintained in
75-4 this state. All persons acting as agent or solicitor for health
75-5 and accident insurance within the provisions hereof, and who
75-6 represent only fire and casualty companies, and not life insurance
75-7 companies, shall be required to procure only one license, and such
75-8 license as is required under the provisions of this article.]
75-9 [(c) The Department shall issue a license to a corporation
75-10 if the Department finds:]
75-11 [(1) That the corporation is a Texas corporation
75-12 organized or existing under the Texas Business Corporation Act or
75-13 the Texas Professional Corporation Act having its principal place
75-14 of business in the State of Texas and having as one of its purposes
75-15 the authority to act as a local recording agent; and]
75-16 [(2) That every officer, director and shareholder of
75-17 the corporation is individually licensed as a local recording agent
75-18 under the provisions of this Insurance Code, except as may be
75-19 otherwise permitted by this Section or Section 3a of this article,
75-20 or that every officer and director of the corporation is
75-21 individually licensed as a local recording agent under this
75-22 Insurance Code, that the corporation is a wholly owned subsidiary
75-23 of a parent corporation that is licensed as a local recording agent
75-24 under this Insurance Code, and that every shareholder of the parent
75-25 corporation is individually licensed as a local recording agent
75-26 under this Insurance Code, and except as specifically provided by
76-1 this article, that no shareholder of the corporation is a corporate
76-2 entity; and]
76-3 [(3) That such corporation will have the ability to
76-4 pay any sums up to $25,000 which it might become legally obligated
76-5 to pay on account of any claim made against it by any customer and
76-6 caused by any negligent act, error or omission of the corporation
76-7 or any person for whose acts the corporation is legally liable in
76-8 the conduct of its business as a local recording agent. The term
76-9 "customer" as used herein shall mean any person, firm or
76-10 corporation to whom such corporation sells or attempts to sell a
76-11 policy of insurance, or from whom such corporation accepts an
76-12 application for insurance. Such ability shall be proven in one of
76-13 the following ways:]
76-14 [(A) An errors and omissions policy insuring
76-15 such corporation against errors and omissions, in at least the sum
76-16 of $100,000 with no more than a $10,000 deductible feature or the
76-17 sum of at least $300,000 with no more than a $25,000 deductible
76-18 feature, issued by an insurance company licensed to do business in
76-19 the State of Texas or, if a policy cannot be obtained from a
76-20 company licensed to do business in Texas, a policy issued by a
76-21 company not licensed to do business in Texas, on filing an
76-22 affidavit with the Texas Department of Insurance stating the
76-23 inability to obtain coverage and receiving the Department's
76-24 approval; or]
76-25 [(B) A bond executed by such corporation as
76-26 principal and a surety company authorized to do business in this
77-1 state, as surety, in the principal sum of $25,000, payable to the
77-2 Texas Department of Insurance for the use and benefit of customers
77-3 of such corporation, conditioned that such corporation shall pay
77-4 any final judgment recovered against it by any customer; or]
77-5 [(C) A deposit of cash or securities of the
77-6 class authorized by Articles 2.08 and 2.10 of this Code, having a
77-7 fair market value of $25,000 with the comptroller. The comptroller
77-8 is hereby authorized and directed to accept and receive such
77-9 deposit and hold it exclusively for the protection of any customer
77-10 of such corporation recovering a final judgment against such
77-11 corporation. Such deposit may be withdrawn only upon filing with
77-12 the Department evidence satisfactory to it that the corporation has
77-13 withdrawn from business, and has no unsecured liabilities
77-14 outstanding, or that such corporation has provided for the
77-15 protection of its customers by furnishing an errors and omissions
77-16 policy or a bond as hereinbefore provided. Securities so deposited
77-17 may be exchanged from time to time for other qualified securities.]
77-18 [A binding commitment to issue such a policy or bond, or the
77-19 tender of such securities, shall be sufficient in connection with
77-20 any application for license.]
77-21 [Nothing contained herein shall be construed to permit any
77-22 unlicensed employee or agent of any corporation to perform any act
77-23 of a local recording agent without obtaining a local recording
77-24 agent's license. The Department shall not require a corporation to
77-25 take the examination provided in Section 6 of this Article 21.14.]
77-26 [If at any time, any corporation holding a local recording
78-1 agent's license does not maintain the qualifications necessary to
78-2 obtain a license, the license of such corporation to act as a local
78-3 recording agent shall be cancelled or denied in accordance with the
78-4 provisions of Sections 16, 17 and 18 of this Article 21.14;
78-5 provided, however, that should any person who is not a licensed
78-6 local recording agent acquire shares in such a corporation by
78-7 devise or descent, they shall have a period of 90 days from date of
78-8 acquisition within which to obtain a license as a local recording
78-9 agent or to dispose of the shares to a licensed local recording
78-10 agent except as may be permitted by Section 3a of this article.]
78-11 [Should such an unlicensed person, except as may be permitted
78-12 by Section 3a of this article, acquire shares in such a corporation
78-13 and not dispose of them within said period of 90 days to a licensed
78-14 local recording agent, then they must be purchased by the
78-15 corporation for their book value, that is, the value of said shares
78-16 of stock as reflected by the regular books and records of said
78-17 corporation, as of the date of the acquisition of said shares by
78-18 said unlicensed person. Should the corporation fail or refuse to
78-19 so purchase such shares, its license shall be cancelled.]
78-20 [Any such corporation shall have the power to redeem the
78-21 shares of any shareholder, or the shares of a deceased shareholder,
78-22 upon such terms as may be agreed upon by the Board of Directors and
78-23 such shareholder or his personal representative, or at such price
78-24 and upon such terms as may be provided in the Articles of
78-25 Incorporation, the Bylaws, or an existing contract entered into
78-26 between the shareholders of the corporation.]
79-1 [Each corporation licensed as a local recording agent shall
79-2 file, under oath, a list of the names and addresses of all of its
79-3 officers, directors and shareholders with its application for
79-4 renewal license.]
79-5 [Each corporation licensed as a local recording agent shall
79-6 notify the Texas Department of Insurance upon any change in its
79-7 officers, directors or shareholders not later than the 30th day
79-8 after the date on which the change became effective.]
79-9 [The term "firm" as it applies to local recording agents in
79-10 Sections 2, 12 and 16 of this Article 21.14 shall be construed to
79-11 include corporations.]
79-12 [(d) The department shall issue a license to a bank if the
79-13 department finds that:]
79-14 [(1) the bank is a national banking association
79-15 organized and existing under the National Bank Acts (12 U.S.C.
79-16 Section 21 et seq.), a state bank organized and existing under the
79-17 Texas Banking Act (Article 342-1.001 et seq., Vernon's Texas Civil
79-18 Statutes), a state savings bank organized and existing under the
79-19 Texas Savings Bank Act (Article 489e, Vernon's Texas Civil
79-20 Statutes), or a bank operating subsidiary, as defined by state or
79-21 federal law, that is located and doing business in this state in a
79-22 place with a population of 5,000 or less;]
79-23 [(2) at least one officer of the bank and each
79-24 individual who will be performing any acts of an agent for the bank
79-25 are individually licensed under this Article; and]
79-26 [(3) the bank will have the ability to pay any sums up
80-1 to $25,000 that it might become legally obligated to pay on account
80-2 of any claim made against it by a customer and caused by a
80-3 negligent act, error, or omission of the bank or any person for
80-4 whose acts the bank is legally liable in the conduct of its
80-5 business as a local recording agent. The term "customer" means any
80-6 person, firm, or corporation to whom the bank sells or attempts to
80-7 sell a policy of insurance or from whom the bank accepts an
80-8 application for insurance. That ability shall be proven through:]
80-9 [(A) an errors and omissions policy insuring the
80-10 bank against errors and omissions, in at least the sum of $100,000
80-11 with not more than a $10,000 deductible feature, or the sum of at
80-12 least $300,000 with not more than a $25,000 deductible feature,
80-13 issued by an insurance company licensed to do business in this
80-14 state or, if a policy cannot be obtained from a company licensed to
80-15 do business in this state, a policy issued by a company not
80-16 licensed to do business in this state, on filing an affidavit with
80-17 the department stating the inability to obtain coverage and
80-18 receiving the department's approval;]
80-19 [(B) a bond executed by the bank as principal
80-20 and a surety company authorized to do business in this state, as
80-21 surety, in the principal sum of $25,000, payable to the department
80-22 for the use and benefit of customers of the bank, conditioned that
80-23 the bank shall pay any final judgment recovered against it by a
80-24 customer; or]
80-25 [(C) a deposit with the comptroller of cash or
80-26 securities of the class authorized by Articles 2.08 and 2.10 of
81-1 this code, with a fair market value of $25,000. The comptroller
81-2 shall accept and receive the deposit and hold it exclusively for
81-3 the protection of a customer of the bank who recovers a final
81-4 judgment against the bank. The deposit may be withdrawn only on
81-5 filing with the department satisfactory evidence that the bank has
81-6 withdrawn from the business of insurance and has no unsecured
81-7 liabilities outstanding or that the bank has provided for the
81-8 protection of its customers by furnishing an errors and omissions
81-9 policy or a bond as provided by this subsection. Securities so
81-10 deposited may be exchanged from time to time for other qualified
81-11 securities.]
81-12 [A binding commitment to issue such a policy or bond, or the
81-13 tender of applicable securities, is sufficient in connection with
81-14 an application for license.]
81-15 [Nothing in this subsection shall be construed to permit an
81-16 unlicensed employee or agent of a bank to perform any act of a
81-17 local recording agent without obtaining a local recording agent's
81-18 license. The department may not require a bank to take the
81-19 examination provided by Section 6 of this Article.]
81-20 [A bank licensed as an agent under this Article may have
81-21 additional offices from which the business of insurance is
81-22 conducted only in a place with a population of 5,000 or less and
81-23 must comply with the department's regulations regarding additional
81-24 offices.]
81-25 [A bank licensed as an agent under this article must maintain
81-26 its insurance records, including all files relating to and
82-1 reflecting customer complaints, separate from records relating to
82-2 banking transactions of the bank.]
82-3 [If a bank that holds a local recording agent's license does
82-4 not maintain the qualifications necessary to obtain a license, the
82-5 license of that bank to act as a local recording agent shall be
82-6 canceled or denied in accordance with Sections 16 and 18 of this
82-7 article.]
82-8 [Each bank licensed as a local recording agent shall file
82-9 under oath with its application for license renewal a list of the
82-10 name and address of each individual who will be acting as an agent
82-11 on behalf of the bank and of each officer and director of the bank,
82-12 as defined by Article 21.02 of this code, and other biographical
82-13 information as required by the department.]
82-14 [Each bank licensed as a local recording agent shall notify
82-15 the department of any change in its officers and directors and any
82-16 change in other persons who will be performing any acts of an
82-17 agent, as defined by Article 21.02 of this code, and submit
82-18 biographical information on those officers, directors, and persons
82-19 as required by the department not later than the 30th day after the
82-20 date on which the change takes effect.]
82-21 [The term "firm," as that term applies to local recording
82-22 agents in Sections 2, 12, and 16 of this article, includes
82-23 corporations and banks.]
82-24 [(e) The term "partnership" or "agency partnership" as used
82-25 in this Article means a general partnership or a registered limited
82-26 liability partnership domiciled in Texas.]
83-1 [(f) In this Article, the term "corporation" or
83-2 "corporations" shall mean a corporation organized under the Texas
83-3 Business Corporation Act, The Texas Professional Corporation Act
83-4 (Article 1528e, Vernon's Texas Civil Statutes), or a Texas
83-5 domiciled limited liability company organized or existing under the
83-6 Texas Limited Liability Company Act (Article 1528n, Vernon's Texas
83-7 Civil Statutes) having its principal place of business in this
83-8 state and having as one of its purposes the authority to act as an
83-9 insurance agent. Each officer, manager, and member of a limited
83-10 liability company must be licensed under this Article. The
83-11 licensing and regulation of a limited liability company shall be
83-12 subject to the same provisions and requirements of this Article
83-13 that are applicable to corporations licensed under this Article.]
83-14 [(g) In this article, the term "bank" means a national
83-15 banking association organized and existing under the National Bank
83-16 Acts (12 U.S.C. Section 21 et seq.), a state bank organized and
83-17 existing under the Texas Banking Act (Article 342-1.001 et seq.,
83-18 Vernon's Texas Civil Statutes), a state savings bank organized and
83-19 existing under the Texas Savings Bank Act (Article 489e, Vernon's
83-20 Texas Civil Statutes), a bank branch, or a bank operating
83-21 subsidiary, as defined by state or federal law, that is located and
83-22 doing business in this state in a place with a population of 5,000
83-23 or less. A bank operating subsidiary, as defined by state or
83-24 federal law, located and doing business in a place in this state
83-25 with a population of 5,000 or less may own a licensed corporate
83-26 agent that is also located and doing business in a place with a
84-1 population of 5,000 or less, and is subject to Section 3a(5) of
84-2 this Article.]
84-3 [Sec. 3a. PERSONS OTHER THAN LICENSED LOCAL RECORDING AGENTS
84-4 WHO MAY SHARE IN PROFITS OF LOCAL RECORDING AGENT. (1) Upon the
84-5 death of a duly licensed local recording agent who is a member of
84-6 an agency partnership, the surviving spouse and children, if any,
84-7 of such deceased partner, or a trust for such surviving spouse and
84-8 children, may share in the profits of such agency partnership
84-9 during the lifetime of such surviving spouse or such children, as
84-10 the case may be, if and as provided by a written partnership
84-11 agreement, or in the absence of any written agreement, if and as
84-12 agreed by the surviving partner or partners and the surviving
84-13 spouse, the trustee, and the legal representative of the surviving
84-14 child or children. Such surviving spouse and any such surviving
84-15 children or trusts shall not be required to qualify as local
84-16 recording agents to participate in such profits, but shall not do
84-17 or perform any act of a local recording agent on behalf of such
84-18 partnership without having qualified as a local recording agent;
84-19 provided, however, that a duly licensed local recording agent who
84-20 is a member of an agency partnership may, with the approval of the
84-21 other members of the partnership, transfer an interest in the
84-22 agency partnership to his children or a trust for same, and may
84-23 operate such interest for their use and benefit; and such children
84-24 or trusts may share in the profits of such agency partnership.
84-25 Such child or children or trusts shall not be required to qualify
84-26 as a local recording agent to participate in such profits, but
85-1 shall not do or perform any act of a local recording agent on
85-2 behalf of such partnership without having qualified as a local
85-3 recording agent.]
85-4 [(2) Upon the death of a duly licensed local recording
85-5 agent, who is a sole proprietorship, unless otherwise provided by
85-6 the last will of such deceased agent, the surviving spouse and
85-7 children, if any, of such deceased agent, or a trust for such
85-8 spouse or children, may share in the profits of the continuance of
85-9 the agency business of said deceased agent, provided such agency
85-10 business is continued by a duly licensed local recording agent.
85-11 Said surviving spouse, trusts or children, may participate in such
85-12 profits during the lifetime of such surviving spouse and said
85-13 children. Said surviving spouse, trusts or children shall not be
85-14 required to qualify as local recording agents in order to
85-15 participate in the profits of such agency, but shall not do or
85-16 perform any act of a local recording agent in connection with the
85-17 continuance of such agency business without first having been duly
85-18 licensed as a local recording agent; provided, however, that a duly
85-19 licensed local recording agent who is a sole proprietorship may
85-20 transfer an interest in his agency to his children, or a trust for
85-21 same, and may operate such interest for their use and benefit; and
85-22 such children may share in the profits of such local recording
85-23 agency during their lifetime, and during such time shall not be
85-24 required to qualify as a local recording agent in order to
85-25 participate in such profits, but shall not do or perform any act of
85-26 a local recording agent in connection with such agency business
86-1 without first having been duly licensed as a local recording agent.]
86-2 [(3) Upon the death of a shareholder in a corporate licensed
86-3 local recording agency, the surviving spouse and children, if any,
86-4 of such deceased shareholder, or a trust for such surviving spouse
86-5 and children, may share in the profits of such corporate agency
86-6 during the lifetime of such surviving spouse or children, as the
86-7 case may be, if and as provided by a contract entered into by and
86-8 between all of the shareholders and the corporation. Any such
86-9 surviving spouse, surviving children, or trusts shall not be
86-10 required to individually qualify as a local recording agent in
86-11 order to participate in such profits, but shall not do or perform
86-12 any act of a local recording agency on behalf of such corporation
86-13 without having qualified as a local recording agent; provided,
86-14 however, that a shareholder in a corporate licensed local recording
86-15 agent, may, if provided by a contract entered into by and between
86-16 all of the shareholders and the corporation, transfer an interest
86-17 in the agency to his children or a trust for same, and such
86-18 children or trusts may share in the profits of such agency to the
86-19 extent of such interest during their lifetime. Such children or
86-20 trusts shall not be required to qualify as a local recording agent
86-21 to participate in such profits, but shall not do or perform any act
86-22 of a local recording agent on behalf of such corporation without
86-23 having qualified as a local recording agent.]
86-24 [(4) Except as provided in Subsections (1), (2), and (3)
86-25 above, and as may be provided in Section 6a, Article 21.14 of the
86-26 Insurance Code, no person shall be entitled to perform any act of a
87-1 local recording agent nor in any way participate as a partner or
87-2 corporate shareholder in the profits of any local recording agent,
87-3 without first having qualified as a duly licensed local recording
87-4 agent and having successfully passed the examination required by
87-5 the Insurance Code; provided, however, that all persons, or trusts
87-6 for any person, that received licenses before March 1, 1963, as
87-7 silent, inactive, or non-active partners, or who are silent,
87-8 inactive, or non-active partners in an agency which was so
87-9 qualified before such date, shall continue to receive licenses, or
87-10 renewals thereof, as partners in such agency or in any successor
87-11 agency, providing: (a) that such persons are members of an agency
87-12 in which there is at least one partner who has qualified as a duly
87-13 licensed local recording agent; (b) that such non-active partner
87-14 or partners do not actively solicit insurance; and (c) that such
87-15 agency is not a limited partnership.]
87-16 [(5) Notwithstanding any provision of this article or this
87-17 code to the contrary, a bank located and doing business in a place
87-18 with a population of 5,000 or less that owns a licensed bank
87-19 operating subsidiary, as defined by state or federal law, that is
87-20 also located and doing business in a place with a population of
87-21 5,000 or less may receive profits from the licensed bank operating
87-22 subsidiary. To advertise under the bank name or participate in the
87-23 insurance operation other than by receiving profits from the
87-24 insurance business, the bank must hold an agent license. Nothing
87-25 in this section permits a bank or any affiliate to pay commissions
87-26 or other valuable consideration to any nonlicensed employees, and a
88-1 bank may not pay, credit, or otherwise reward particular
88-2 nonlicensed units or geographic locations of the bank or any of its
88-3 affiliates with a portion of the commission.]
88-4 [Sec. 4. ACTING WITHOUT LICENSE FORBIDDEN. (a) It shall be
88-5 unlawful for any person, firm, partnership, corporation or bank, or
88-6 any partner, officer, director, employee, or shareholder of a
88-7 corporation, or any officer, director, or employee of a bank to act
88-8 as a local recording agent or solicitor in procuring business for
88-9 any insurance company, corporation, interinsurance exchange,
88-10 mutual, reciprocal, association, Lloyds or other insurance carrier,
88-11 until that person or entity shall have in force the license
88-12 provided for herein.]
88-13 [(b) No insurer doing business in this state shall pay
88-14 directly or indirectly any commission, or other valuable
88-15 consideration, to any person, firm, partnership, corporation, or
88-16 bank for services as a local recording agent within this state,
88-17 unless such person, firm, partnership, corporation, or bank shall
88-18 hold a currently valid license and appointment to act as a local
88-19 recording agent as required by the laws of this state; nor shall
88-20 any person, firm, partnership, corporation, or bank other than a
88-21 duly licensed and appointed local recording agent accept any such
88-22 commission or other valuable consideration; provided, however, that
88-23 nothing contained in this subsection shall prohibit an assigned
88-24 risk pool or assigned risk plan, duly authorized to operate by the
88-25 laws of this state, from paying commissions, or other valuable
88-26 consideration, to a duly licensed person, firm, partnership,
89-1 corporation, or bank for services as a local recording agent.]
89-2 [(c) No licensed local recording agent, managing general
89-3 agent, or surplus lines agent doing business in this state shall
89-4 pay directly or indirectly any commission, or other valuable
89-5 consideration, to any person, firm, partnership, corporation, or
89-6 bank for services as a local recording agent within this state,
89-7 unless such person, firm, partnership, corporation, or bank shall
89-8 hold a currently valid license to act as a local recording agent as
89-9 required by the laws of this state; nor shall any person, firm,
89-10 partnership, corporation, or bank other than a duly licensed local
89-11 recording agent accept any such commission or other valuable
89-12 consideration.]
89-13 [(d) No local recording agent doing business in this state
89-14 shall pay directly or indirectly any commission, or other valuable
89-15 consideration, to any person for services as a solicitor within
89-16 this state, unless such person shall hold a currently valid license
89-17 and appointment to act as a solicitor for such local recording
89-18 agent as required by the laws of this state; nor shall any person
89-19 other than a duly licensed and appointed solicitor accept any such
89-20 commission or other valuable consideration.]
89-21 [Sec. 5. ACTIVE AGENTS OR SOLICITORS ONLY TO BE LICENSED.
89-22 No license shall be granted to any person, firm, partnership,
89-23 corporation, or bank as a local recording agent or to a person as a
89-24 solicitor, for the purpose of writing any form of insurance, unless
89-25 it is found by the department that such person, firm, partnership,
89-26 corporation, or bank is or intends to be, actively engaged in the
90-1 soliciting or writing of insurance for the public generally; that
90-2 each person or individual of a firm is a resident of Texas and is
90-3 to be actively engaged in good faith in the business of insurance,
90-4 and that the application is not being made in order to evade the
90-5 laws against rebating and discrimination either for the applicant
90-6 or for some other person, firm, partnership, corporation, or bank.
90-7 Nothing herein contained shall prohibit an applicant insuring
90-8 property which the applicant owns or in which the applicant has an
90-9 interest; but it is the intent of this Section to prohibit coercion
90-10 of insurance and to preserve to each citizen the right to choose
90-11 that individual's own agent or insurance carrier, and to prohibit
90-12 the licensing of an individual, firm, partnership, corporation, or
90-13 bank to engage in the insurance business principally to handle
90-14 business which the applicant controls only through ownership,
90-15 mortgage or sale, family relationship or employment, which shall be
90-16 taken to mean that an applicant who is making an original
90-17 application for license shall show the department that the
90-18 applicant has a bona fide intention to engage in business in which,
90-19 in any calendar year, at least twenty-five per cent (25%) of the
90-20 total volume of premiums shall be derived from persons or
90-21 organizations other than applicant and from property other than
90-22 that on which the applicant shall control the placing of insurance
90-23 through ownership, mortgage, sale, family relationship or
90-24 employment. Nothing herein contained shall be construed to
90-25 authorize a partnership, corporation, or bank to receive a license
90-26 as a solicitor.]
91-1 [Sec. 5a. REQUIREMENTS AS TO KNOWLEDGE OR INSTRUCTION FOR
91-2 LOCAL RECORDING AGENT'S LICENSE. (a) Every applicant for local
91-3 recording agent's license from and after October 1, 1971, shall
91-4 upon the successful passage of the examination for local recording
91-5 agent's license as promulgated by the State Board of Insurance
91-6 pursuant to the provisions of this Article 21.14 be issued a
91-7 temporary local recording agent's license. The holder of a
91-8 temporary local recording agent's license shall have the same
91-9 authority and be subject to the same provisions of the law as local
91-10 recording agents until such temporary license shall expire. Each
91-11 such temporary license so issued shall expire upon the happening of
91-12 any one of the following, whichever shall first occur, to wit:]
91-13 [(i) The issuance of a local recording agent's license
91-14 to such person;]
91-15 [(ii) One year from date of issuance of the temporary
91-16 local recording agent's license.]
91-17 [Each such person receiving a temporary license as set out
91-18 above shall within one (1) year from the issue date of such
91-19 temporary license complete to the satisfaction of the State Board
91-20 of Insurance one of the following courses of study:]
91-21 [(i) Classroom courses in insurance satisfactory to
91-22 the State Board of Insurance at a school, college, junior college
91-23 or extension thereof; or]
91-24 [(ii) An insurance company or agents' association
91-25 school approved by the State Board of Insurance; or]
91-26 [(iii) A correspondence course in insurance approved
92-1 by the State Board of Insurance.]
92-2 [Upon the successful completion of any one of the above
92-3 courses of study within the one year period, the temporary agent
92-4 shall then be entitled to receive from the State Board of Insurance
92-5 his local recording agent's license.]
92-6 [(b) Provided, however, none of the provisions of this
92-7 section shall apply to the following:]
92-8 [(1) To any person holding a license as a local
92-9 recording agent upon the effective date of this Act.]
92-10 [(2) To any person applying for an emergency local
92-11 recording agent's license under the provisions of Section 6a of
92-12 Article 21.14 of the Insurance Code of Texas.]
92-13 [(3) To any person who holds the designation Chartered
92-14 Property and Casualty Underwriter (C.P.C.U.) from the American
92-15 Institute for C.P.C.U., the designation Certified Insurance
92-16 Counselor (C.I.C.) from the national Society of Certified Insurance
92-17 Counselors, or the designation Accredited Adviser in Insurance
92-18 (A.A.I.) from the Insurance Institute of America.]
92-19 [(4) To any person who has a bachelor's degree from a
92-20 four-year accredited college or university with a major in
92-21 insurance.]
92-22 [(5) To any person who within two (2) years
92-23 immediately preceding the filing of an application was a licensed
92-24 agent in good standing in the state from which the person moved to
92-25 Texas, provided such state makes similar provision for those agents
92-26 who may move from Texas to such state.]
93-1 [(6) To any person desiring to apply for a license to
93-2 solicit and write exclusively all forms of insurance authorized to
93-3 be solicited and written in Texas covering the ownership,
93-4 operation, maintenance or use of any motor vehicle, its accessories
93-5 and equipment, designed for use upon the public highways, including
93-6 trailers and semitrailers. Such person shall continue to apply for
93-7 and qualify to be licensed under the other provisions of Article
93-8 21.14 of the Insurance Code of Texas. Provided, such applicant
93-9 shall be required to take and pass, to the satisfaction of the
93-10 Texas Department of Insurance, an examination, promulgated by said
93-11 department, covering only those forms of insurance referred to in
93-12 this paragraph. Provided, when such a person so applies and
93-13 qualifies, the person shall be issued a license which shall contain
93-14 on the face of said license the following language: "Motor vehicle
93-15 insurance only." An agent holding such a limited license hereby
93-16 created shall solicit only those forms of insurance hereinabove
93-17 provided, but shall be subject to all other laws relating to local
93-18 recording agents.]
93-19 [(c) There is hereby created an Agents' Education Advisory
93-20 Board whose duties shall be to advise with and make recommendations
93-21 to the State Board of Insurance concerning the curriculum, course
93-22 content and schools to be approved under Subsection (a) above. The
93-23 members of said Advisory Board shall be appointed by the chairman
93-24 of the State Board of Insurance and shall serve for one year, from
93-25 September 1 to August 31, or until their successors are appointed.
93-26 Said Advisory Board shall be composed of the following persons:
94-1 Two (2) members, each of whom shall be a resident of Texas and have
94-2 a minimum of ten (10) years' experience as an executive of a fire
94-3 and casualty company doing business in Texas and whose company
94-4 operates an agents' school; two (2) members, each of whom shall be
94-5 a licensed local recording agent in Texas with a minimum of ten
94-6 (10) years' experience as an agent; and one (1) member who shall be
94-7 a teacher of insurance at a four-year accredited college or
94-8 university in Texas. Said Advisory Board shall meet at the offices
94-9 of the State Board of Insurance upon call of the chairman of the
94-10 State Board of Insurance and the members of said Advisory Board
94-11 shall be paid out of the Recording Agents License Fund for their
94-12 actual and necessary expenses incurred in connection with their
94-13 attendance at said meetings.]
94-14 [Sec. 5b. CONTINUING EDUCATION. (a) The State Board of
94-15 Insurance shall adopt a procedure for certifying and shall certify
94-16 continuing education programs for agents. Participation in the
94-17 programs is mandatory for all agents licensed under this article.
94-18 The State Board of Insurance shall exempt agents who have been
94-19 licensed for 20 years or more on or after September 1, 1992, and
94-20 shall have the rulemaking authority to provide for other reasonable
94-21 exemptions. No agent shall be required to complete more than 15
94-22 hours of continuing education per year. An agent licensed under
94-23 both Articles 21.07-1 and 21.14 of this code and any subsequent
94-24 amendments may elect to satisfy the continuing education
94-25 requirements of either article and shall not be required to
94-26 complete a total of more than 15 hours of continuing education per
95-1 year.]
95-2 [(b) On written request of the agent, the State Board of
95-3 Insurance may extend the time for the agent to comply with the
95-4 continuing education requirements of this section or may exempt the
95-5 agent from some or all of the requirements for a licensing period
95-6 if the board finds that the agent is unable to comply with the
95-7 requirements because of illness, medical disability, or another
95-8 extenuating circumstance beyond the control of the agent. The
95-9 criteria for such exemptions and extensions shall be established by
95-10 rule.]
95-11 [Sec. 5c. ADVISORY COUNCIL. (a) An advisory council of
95-12 nine members shall be appointed by the State Board of Insurance to
95-13 furnish the Board with information and assistance in the conduct of
95-14 the continuing education program for agents licensed under Articles
95-15 21.07-1 and 21.14.]
95-16 [(b) Four of the members of the advisory council must be
95-17 representatives of the general public. A public representative may
95-18 not be:]
95-19 [(1) an officer, director, or employee of an insurance
95-20 company, insurance agency, agent, broker, solicitor, adjuster, or
95-21 any other business entity regulated by the State Board of
95-22 Insurance;]
95-23 [(2) a person required to register with the secretary
95-24 of state under Chapter 305, Government Code; or]
95-25 [(3) related to a person described by Subdivision (1)
95-26 or (2) of this subsection within the second degree of affinity or
96-1 consanguinity.]
96-2 [Sec. 5d. JURISDICTION FOR CONTINUING EDUCATION.
96-3 Notwithstanding the rules or regulations of any other state agency,
96-4 the board has sole jurisdiction for all matters relating to the
96-5 continuing education of insurance agents who are licensed under
96-6 this Article.]
96-7 [Sec. 6. EXAMINATION REQUIRED; EXCEPTIONS. (a) If
96-8 applicant for a local recording agent's license has not prior to
96-9 date of such application, been licensed as a local recording agent,
96-10 or if the applicant for a solicitor's license has not been licensed
96-11 as a local recording agent or as a solicitor prior to date of such
96-12 application, the Board shall require such applicant to submit to a
96-13 written examination covering all kinds of insurance or contracts,
96-14 which license if granted, will permit the applicant to solicit.]
96-15 [(b) Any applicant for local recording agent's license who
96-16 has prior to the date of such application been licensed as a local
96-17 recording agent, shall be entitled to a local recording agent's
96-18 license without examination, provided the other requirements of
96-19 this article are met. Any applicant for solicitor's license who
96-20 has been licensed as a local recording agent or as a solicitor
96-21 prior to date of such application, shall be entitled to a
96-22 solicitor's license without an examination, provided the other
96-23 requirements of this article are met.]
96-24 [(c) The Board by rule shall apply different examination
96-25 standards to a solicitor employed as an insurance service
96-26 representative than those applied to other solicitors.]
97-1 [Sec. 6a. DEATH, DISABILITY OR INSOLVENCY; EMERGENCY LICENSE
97-2 WITHOUT EXAMINATION. In event of death or disability of a local
97-3 recording agent or in event a local recording agent is found to be
97-4 insolvent and unable to pay for premiums coming to his hands as
97-5 such local recording agent, the Board may issue to an applicant for
97-6 local recording agent's license an emergency local recording
97-7 agent's license for a period of ninety (90) days in any twelve (12)
97-8 consecutive months and at the Board's option, an additional period
97-9 up to ninety (90) days without an examination provided the other
97-10 requirements of this article are met and if it is established to
97-11 the satisfaction of the Board that such emergency license is
97-12 necessary for the preservation of the agency assets of a deceased
97-13 or disabled local recording agent or of an insolvent local
97-14 recording agent.]
97-15 [Sec. 7. CONDUCT OF EXAMINATIONS; NOTICE; MANUAL OF
97-16 QUESTIONS AND ANSWERS. Unless the State Board of Insurance accepts
97-17 a qualifying examination administered by a testing service, as
97-18 provided under Article 21.01-1, Insurance Code, as amended, all
97-19 examinations provided by this article shall be conducted by the
97-20 State Board of Insurance, and shall be held not less frequently
97-21 than one each sixty (60) days every year at times and places
97-22 prescribed by the State Board of Insurance, of which applicants
97-23 shall be notified by the State Board of Insurance in writing ten
97-24 (10) days prior to the date of such examinations, and shall be
97-25 conducted in writing in either the English or Spanish language.
97-26 Provided, further, that printed copies of a manual of questions and
98-1 answers thereto pertaining to the examination published under the
98-2 direction of the State Board of Insurance shall be made available
98-3 to all companies, general agents, and managers for the use of their
98-4 prospective agents, to all agents for the use of their prospective
98-5 solicitors in preparing for such examination. The questions to be
98-6 asked on such examination shall be based upon the questions and
98-7 answers contained in the manual.]
98-8 [Sec. 8. EXPIRATION OF LICENSE; RENEWAL. Except as may be
98-9 provided by a staggered renewal system adopted under Article
98-10 21.01-2 of this code, every license issued to a local recording
98-11 agent or a solicitor shall expire two years from the date of its
98-12 issue, unless a completed application to qualify for the renewal of
98-13 any such license shall be filed with the State Board of Insurance
98-14 and a nonrefundable fee paid on or before such date, in which event
98-15 the license sought to be renewed shall continue in full force and
98-16 effect until renewed or renewal is denied.]
98-17 [Sec. 9. FEES PAYABLE BEFORE EXAMINATION. Unless the State
98-18 Board of Insurance accepts a qualifying examination administered by
98-19 a testing service, as provided under Article 21.01-1, Insurance
98-20 Code, as amended, applicants required to be examined shall, at time
98-21 and place of examination, pay prior to being examined the following
98-22 fees: For a local recording agent's license a fee in an amount not
98-23 to exceed $50 as determined by the State Board of Insurance and for
98-24 a solicitor's license a fee in an amount not to exceed $20 as
98-25 determined by the State Board of Insurance. The fees paid under
98-26 this section shall not be returned for any reason other than
99-1 failure to appear and take the examination after the applicant has
99-2 given at least 24 hours' notice of an emergency situation to the
99-3 State Board of Insurance and received board approval. A new fee
99-4 shall be paid before each and every examination.]
99-5 [Sec. 10. RENEWAL FEES. (a) An applicant for the renewal
99-6 of a local recording agent's license shall pay, at the time the
99-7 renewal application is filed, a fee in an amount not to exceed $50
99-8 as determined by the State Board of Insurance. An applicant for
99-9 the renewal of a solicitor's license shall pay, at the time the
99-10 renewal application is filed, a fee in an amount not to exceed $20
99-11 as determined by the State Board of Insurance.]
99-12 [Sec. 11. ISSUANCE OF LICENSE. (a) Whenever the provisions
99-13 of this article have been complied with, the Board shall issue to
99-14 any applicant the license applied for where such applicant shall
99-15 have satisfactorily passed the examination prescribed by the State
99-16 Board of Insurance, and who shall possess the other qualifications
99-17 required by this article.]
99-18 [(b) The Commissioner of Insurance shall collect in advance
99-19 from agents requesting duplicate licenses a fee not to exceed $20.
99-20 The State Board of Insurance shall determine the amount of the fee.]
99-21 [Sec. 12. NOTICE TO COMMISSIONER OF INSURANCE OF APPOINTMENT
99-22 OF LOCAL RECORDING AGENT BY INSURANCE COMPANY. (a) After a person
99-23 or firm shall be granted a license as a local recording agent in
99-24 this state, that person or firm shall be authorized to act as such
99-25 local recording agent in this state, only after and during the time
99-26 such person or firm has been authorized so to do, by an insurance
100-1 company having a permit to do business in this state; and when so
100-2 authorized each company or carrier or its general or state or
100-3 special agent making the appointment shall immediately notify the
100-4 Commissioner of Insurance, on such form as the Commissioner may
100-5 require, of the appointment. If approval of an additional
100-6 appointment is not received from the Commissioner before the eighth
100-7 day after the date on which the completed application and fee were
100-8 received by the Commissioner, the agent and the insurance company
100-9 may assume that the Commissioner approves the application, and the
100-10 agent may act for the insurance company. The agent shall be
100-11 required to pay a nonrefundable fee of $16.00 for each appointment
100-12 applied for, which fee shall accompany the notice, and such person
100-13 or firm shall be presumed to be the agent for such company in this
100-14 state until such company or its general or state or special agent
100-15 shall have delivered written notice to the Commissioner of
100-16 Insurance that such appointment has been withdrawn.]
100-17 [(b) Every insurance carrier shall, upon termination for
100-18 cause of the appointment of any agent, immediately file with the
100-19 State Board of Insurance a statement of the facts relative to the
100-20 termination of the appointment and the date and cause thereof. The
100-21 Board shall thereupon record the termination of the appointment of
100-22 such agent to represent such insurance carrier in this state. The
100-23 agent terminated for cause shall receive from the insurance carrier
100-24 a copy of the notice sent to the State Board of Insurance.]
100-25 [(c) Any information, document, record or statement required
100-26 to be made or disclosed to the Board pursuant to this Article shall
101-1 be deemed confidential and privileged unless or until introduced as
101-2 evidence in an administrative hearing.]
101-3 [(d) No liability may be imposed on any insurance carrier,
101-4 its employees or agents, or any other person, acting without
101-5 malice, providing the information required to be disclosed pursuant
101-6 to this section.]
101-7 [Sec. 13. APPLICATION FOR SOLICITOR'S LICENSE. When any
101-8 local recording agent who has been appointed by an insurance
101-9 carrier having a permit to do business in this State shall desire
101-10 to appoint a solicitor in the operation of his business, he and a
101-11 company jointly shall make application for a license for such
101-12 solicitor to the Board of Insurance Commissioners, in such form as
101-13 the Board may require.]
101-14 [Sec. 14. NOTICE TO INSURANCE COMMISSIONERS OF SOLICITOR'S
101-15 APPOINTMENT; AUTHORITY TO SOLICIT. (a) No solicitor shall be
101-16 authorized to solicit insurance until after the State Board of
101-17 Insurance shall have been notified by a local recording agent of
101-18 his appointment, and no local recording agent shall accept business
101-19 tendered by a solicitor until such local recording agent has given
101-20 notice to the State Board of Insurance of such solicitor's
101-21 appointment as such, and until such solicitor has been licensed by
101-22 the State Board of Insurance. No solicitor shall have outstanding
101-23 at any time a notification of appointment from more than one local
101-24 recording agent, and a solicitor shall solicit insurance only in
101-25 the name of and for the account of the local recording agent by
101-26 whom he has been appointed.]
102-1 [(b) If approval of an appointment of a currently licensed
102-2 solicitor is not received from the Commissioner before the eighth
102-3 day after the date on which the completed application and
102-4 nonrefundable fee were received by the Commissioner, the solicitor
102-5 and local recording agent may assume that the Commissioner approves
102-6 the application, and the solicitor may act for the local recording
102-7 agent.]
102-8 [(c) A licensed solicitor's appointment may be terminated
102-9 either by the local recording agent who appointed the solicitor or
102-10 by the solicitor on the filing of notice with the Board of the
102-11 termination.]
102-12 [(d) Upon termination for cause of the appointment of any
102-13 solicitor, the local recording agent shall immediately file with
102-14 the State Board of Insurance a statement of the facts relative to
102-15 the termination of the appointment and the date and cause thereof.
102-16 The Board shall thereupon record the termination of the appointment
102-17 of such solicitor to represent such local recording agent. The
102-18 solicitor terminated for cause shall receive from the local
102-19 recording agent a copy of the notice sent to the State Board of
102-20 Insurance.]
102-21 [(e) Any information, document, record or statement required
102-22 to be made or disclosed to the Board pursuant to this Article shall
102-23 be deemed privileged and confidential unless or until introduced
102-24 into evidence in an administrative hearing.]
102-25 [(f) No liability may be imposed on any insurance carrier,
102-26 its employees or agents, or any other person, acting without
103-1 malice, providing the information required to be disclosed pursuant
103-2 to this section.]
103-3 [Sec. 15. FIRE INSURANCE IN EXCESS OF VALUE, WRITING OF
103-4 FORBIDDEN. It shall be unlawful for any local recording agent or
103-5 solicitor for an insurance company or insurance carrier knowingly
103-6 to grant, write or permit a greater amount of insurance against
103-7 loss by fire than the reasonable value of the subject of insurance.]
103-8 [Sec. 16. SUSPENSION OR REVOCATION OF LICENSE. (a) The
103-9 license of any local recording agent shall be suspended during a
103-10 period in which the agent does not have outstanding a valid
103-11 appointment to act as an agent for an insurance company. The Board
103-12 shall end the suspension on receipt of evidence satisfactory to the
103-13 board that the agent has a valid appointment. The Board shall
103-14 cancel the license of a solicitor if the solicitor does not have
103-15 outstanding a valid appointment to act as a solicitor for a local
103-16 recording agent, and shall suspend the license during a period that
103-17 the solicitor's local recording agent does not have outstanding a
103-18 valid appointment to act as an agent under this Article.]
103-19 [(b) The department may discipline any local recording agent
103-20 or solicitor or deny an application under Section 5, Article
103-21 21.01-2, of this code if it finds that the applicant, individually
103-22 or through any officer, director, or shareholder, for or holder of
103-23 such license:]
103-24 [(1) Has wilfully violated any provision of the
103-25 insurance laws of this state;]
103-26 [(2) Has intentionally made a material misstatement in
104-1 the application for such license;]
104-2 [(3) Has obtained, or attempted to obtain, such
104-3 license by fraud or misrepresentation;]
104-4 [(4) Has misappropriated or converted to the
104-5 applicant's or licensee's own use or illegally withheld money
104-6 belonging to an insurer or an insured or beneficiary;]
104-7 [(5) Has been guilty of fraudulent or dishonest acts;]
104-8 [(6) Has materially misrepresented the terms and
104-9 conditions of any insurance policies or contracts;]
104-10 [(7) Has made or issued, or caused to be made or
104-11 issued, any statement misrepresenting or making incomplete
104-12 comparisons regarding the terms or conditions of any insurance
104-13 contract legally issued by an insurance carrier for the purpose of
104-14 inducing or attempting to induce the owner of such contract to
104-15 forfeit or surrender such contract or allow it to expire for the
104-16 purpose of replacing such contract with another;]
104-17 [(8) Is convicted of a felony;]
104-18 [(9) Is guilty of rebating any insurance premium or
104-19 discriminating as between insureds;]
104-20 [(10) Is not engaged in the soliciting or writing of
104-21 insurance for the public generally as required by Section 5 of this
104-22 Article; or]
104-23 [(11) Is afflicted with a disability as that term is
104-24 defined by Subsection (a) of Article 21.15-6 of this code.]
104-25 [(c) The State Board of Insurance may order that a local
104-26 recording agent or solicitor who is afflicted with a disability be
105-1 placed on disability probation under the terms and conditions
105-2 specified under Article 21.15-6 of this code instead of taking
105-3 disciplinary action under Subsection (b) of this section.]
105-4 [(d) A license applicant or licensee whose license
105-5 application or license has been denied, refused, or revoked under
105-6 this section may not apply for any license as an insurance agent
105-7 before the first anniversary of the effective date of the denial,
105-8 refusal, or revocation, or, if the applicant or licensee seeks
105-9 judicial review of the denial, refusal, or revocation before the
105-10 first anniversary of the date of the final court order or decree
105-11 affirming that action. The Commissioner may deny an application
105-12 timely filed if the applicant does not show good cause why the
105-13 denial, refusal, or revocation of the previous license application
105-14 or license should not be considered a bar to the issuance of a new
105-15 license. This subsection does not apply to an applicant whose
105-16 license application was denied for failure to pass a required
105-17 written examination.]
105-18 [Sec. 18. APPEAL. If the Commissioner refuses an
105-19 application for license as provided by this article, or suspends,
105-20 revokes, or refuses to renew any license at a hearing as provided
105-21 by this article, and if the applicant or accused is dissatisfied
105-22 with the action of the Commissioner, the applicant or accused may
105-23 appeal from the action in accordance with Article 1.04 of this
105-24 Code.]
105-25 [Sec. 19. NOTICE TO LAST ADDRESS. Where notice to the
105-26 applicant or accused is provided for in any part of this article,
106-1 notice by registered mail to his last known address shall be
106-2 sufficient.]
106-3 [Sec. 20. LIFE, HEALTH AND ACCIDENT INSURANCE, INAPPLICABLE
106-4 TO; OTHER EXCEPTIONS. The provisions of this article do not apply
106-5 to the Life, Health and Accident Insurance business or the Life,
106-6 Health and Accident Department of the companies engaged therein,
106-7 nor shall it apply to any of the following, namely:]
106-8 [(a) Any actual full-time home office salaried
106-9 employee of any insurance carrier licensed to do business in Texas,
106-10 other than an employee who solicits or receives an application for
106-11 the sale of insurance through an oral, written, or electronic
106-12 communication in accordance with Section 20A of this article.]
106-13 [(b) Any actual attorney in fact and its actual
106-14 traveling salaried representative as to business transacted through
106-15 such attorney in fact or salaried representative of any reciprocal
106-16 exchange or interinsurance exchange admitted to do business in
106-17 Texas.]
106-18 [(c) Any adjuster of losses, and/or inspector of
106-19 risks, for an insurance carrier licensed to do business in Texas.]
106-20 [(d) Any General Agent or State Agent or Branch
106-21 Manager representing an admitted and licensed insurance company or
106-22 carrier, or insurance companies or carriers, in a supervisory
106-23 capacity.]
106-24 [(e) The actual attorney in fact for any Lloyds.]
106-25 [(f) All incorporated or unincorporated mutual
106-26 insurance companies, their agents and representatives, organized
107-1 and/or operating under and by authority of Chapters 16 and 17 of
107-2 this code.]
107-3 [(g) Nothing in this entire article shall ever be
107-4 construed to apply to any member, agent, employee, or
107-5 representative of any county or farm mutual insurance company as
107-6 exempted under Chapters 16 and 17 of this code.]
107-7 [(h) Nothing in this article shall apply to the group
107-8 motor vehicle insurance business or the group motor vehicle
107-9 department of the companies engaged in that business.]
107-10 [(i) Salaried employees not involved in solicitation
107-11 or negotiation of insurance in the office of a local recording
107-12 agent who devote their full time to clerical and administrative
107-13 services, including the incidental taking of information from
107-14 customers and receipt of premiums in the office of a local
107-15 recording agent, provided the employees do not receive any
107-16 commissions and their compensation is not varied by the volume of
107-17 premiums taken and received.]
107-18 [Sec. 20A. FULL-TIME HOME OFFICE SOLICITORS: MANDATORY
107-19 REGISTRATION, CONTINUING EDUCATION, AND NOTIFICATION TO CONSUMERS;
107-20 DISCIPLINARY ACTIONS. (a) Any actual full-time home office
107-21 salaried employee of any insurance carrier licensed to do business
107-22 in Texas who solicits or receives an application for the sale of
107-23 insurance through an oral, written, or electronic communication
107-24 shall register with the commissioner.]
107-25 [(b) Any insurance carrier licensed to do business in Texas
107-26 whose general plan of operation includes the use of employees
108-1 described in Subsection (a) of this section shall certify to the
108-2 commissioner that such employees receive continuing education of
108-3 not less than 15 hours per year designed to give such employees:]
108-4 [(1) reasonable familiarity with the broad principles
108-5 of insurance, with licensing and regulatory laws, and with
108-6 provisions, terms, and conditions of the insurance which the
108-7 registrant transacts; and]
108-8 [(2) a fair and general understanding of the
108-9 obligations and duties of an insurer to an insured, including
108-10 training in ethical considerations.]
108-11 [(c) The registration of any actual full-time home office
108-12 salaried employee shall be suspended and the employer insurance
108-13 carrier may be disciplined in accordance with the insurance laws of
108-14 this state, if the commissioner finds that the registrant:]
108-15 [(1) has wilfully violated any provision of this code,
108-16 the laws of this state, or a rule of the commissioner;]
108-17 [(2) has been guilty of fraudulent or dishonest acts;]
108-18 [(3) has materially misrepresented the terms and
108-19 conditions of any insurance policies or contracts;]
108-20 [(4) has made or issued, or caused to be made or
108-21 issued, any statement misrepresenting or making incomplete
108-22 comparisons regarding the terms or conditions of any insurance
108-23 contract legally issued by an insurance carrier for the purpose of
108-24 inducing or attempting to induce the owner of such contract to
108-25 forfeit or surrender such contract or allow it to expire for the
108-26 purpose of replacing such contract with another;]
109-1 [(5) is guilty of rebating any insurance premium or
109-2 discriminating as between insureds; or]
109-3 [(6) has been convicted of a felony involving fraud or
109-4 breach of fiduciary duty.]
109-5 [(d) Registrants under this section shall disclose such
109-6 registration when making an oral, written, or electronic
109-7 communication to solicit or receive an application for the sale of
109-8 insurance.]
109-9 [(e) The commissioner shall adopt rules to implement the
109-10 provisions of this section.]
109-11 [Sec. 21. FEES, DISPOSITION OF; APPROPRIATIONS. The fees
109-12 herein provided for, when collected, shall be deposited in the
109-13 State Treasury to the credit of the State Board of Insurance
109-14 operating fund; provided that no expenditures shall be made from
109-15 said fund except under authority of the Legislature as set forth in
109-16 the General Appropriation Bill; provided further that no
109-17 appropriation shall ever be made out of the General Revenue Fund
109-18 for the purpose of administering this article or any provision
109-19 thereof.]
109-20 [Sec. 22. REBATES OR INDUCEMENTS FORBIDDEN. It shall be
109-21 unlawful for any local recording agent to pay, allow, give or offer
109-22 to pay, allow or give, directly or indirectly, any rebate of
109-23 premiums payable, any commission, or any paid employment or
109-24 contract for service of any kind or anything of value whatsoever,
109-25 or any valuable consideration or inducement whatever, not specified
109-26 in the policy or contract of insurance for or on account of the
110-1 solicitation or negotiation of contracts of insurance on property
110-2 or risks in this State to any person, firm or corporation, other
110-3 than a duly licensed solicitor appointed by such local recording
110-4 agent, or to another local recording agent.]
110-5 [It shall be unlawful for any solicitor to pay, allow or give
110-6 or offer to pay, allow or give, directly or indirectly, any rebate
110-7 of premiums payable, any commission, or any paid employment or
110-8 contract for service of any kind, or anything of value whatsoever,
110-9 or any valuable consideration or inducement whatever, not specified
110-10 in the policy or contract of insurance, for or on account of the
110-11 solicitation or negotiation of contracts of insurance on property
110-12 or risks in this State to any person, firm or corporation.]
110-13 [Sec. 23. REPEAL; LAWS NOT IN CONFLICT NOT AFFECTED; ACT
110-14 CUMULATIVE. All laws or parts of laws pertaining to any phase of
110-15 the insurance business, which are in conflict with this article,
110-16 shall be and the same are hereby repealed; but all laws, Civil and
110-17 Criminal, affecting insurance agents, and/or insurance companies or
110-18 insurance carriers or the insurance business, which are not in
110-19 conflict herewith, shall not be affected by the provisions of this
110-20 article; but this article shall be deemed cumulative of such laws.]
110-21 [Sec. 24. VIOLATION OF ACT. Any person or any member of any
110-22 firm, or any corporation or bank, or any officer, director,
110-23 shareholder or employee of any corporation or bank who violates any
110-24 of the provisions of Sections 4, 15 and 22 of this Article shall be
110-25 guilty of a misdemeanor, and on conviction in a court of competent
110-26 jurisdiction, shall be punished by a fine of not less than One
111-1 Dollar ($1.00) nor more than One Hundred Dollars ($100.00).]
111-2 [Sec. 25. ENFORCEMENT OF ARTICLE. The Attorney General, or
111-3 any District or County Attorney, or the Board of Insurance
111-4 Commissioners, may institute any injunction proceeding or such
111-5 other proceeding to enforce the provisions of this article, and to
111-6 enjoin any person, firm or corporation from engaging or attempting
111-7 to engage in any of the business in violation of this article or
111-8 any of the provisions thereof. The provisions of this section are
111-9 cumulative of the other penalties or remedies provided for in this
111-10 article.]
111-11 [Sec. 26. ADMINISTRATION OF ARTICLE. The administration of
111-12 the provision of this article shall be vested in the Board of
111-13 Insurance Commissioners, and of the administrative officer of the
111-14 various counties in which the violation of any provision of this
111-15 article may occur; and the personnel charged with the direct
111-16 supervision of the article, except the regularly elected law
111-17 enforcement officers and their appointees, shall be responsible to
111-18 and serve at the will of the Board of Insurance Commissioners. It
111-19 shall be the duty of the Board of Insurance Commissioners and the
111-20 Attorney General, and of the District and County Attorneys in
111-21 counties where violations of this article may occur, to see that
111-22 its provisions are at all times obeyed, and to make such
111-23 investigations as will prevent or detect the violation of any
111-24 provision thereof. The Board of Insurance Commissioners shall at
111-25 once lay before the District or County Attorney of the proper
111-26 county, any evidence which shall come to its knowledge, of
112-1 criminality or threatened criminality under this article. In the
112-2 event of the neglect or refusal of such Attorney to institute and
112-3 prosecute such violation, or to enforce the other remedies provided
112-4 by this article, the Board shall submit such evidence to the
112-5 Attorney General, who is hereby authorized to proceed therein with
112-6 all the rights, privileges and powers conferred by law upon
112-7 District or County Attorneys. Provided, any person having
112-8 knowledge of the violation of the provisions of this article may
112-9 file a complaint for such violation with the proper officers as in
112-10 other misdemeanor cases. The Board of Insurance Commissioners is
112-11 given the power and authority, as a requisite for granting or
112-12 renewing a license to insurance companies or insurance carriers,
112-13 their local recording agents or solicitors, to require answers
112-14 under oath to any questions propounded by the said Board or under
112-15 its authority, and touching any phase of insurance business in the
112-16 State of Texas in which said insurance company or insurance
112-17 carrier, or such person or firm, shall be engaged, and to require
112-18 such person or firm seeking appointment as local recording agent to
112-19 submit his books, records, and accounts, insofar as they may be
112-20 material to any phase of insurance business, to examination and
112-21 inspection by the Board or any person acting under its authority.]
112-22 [Sec. 27. RULES. In addition to other rules required or
112-23 authorized by this article, the commissioner may adopt rules in
112-24 accordance with federal law applicable to the regulation of the
112-25 sale of insurance that are necessary and proper to carry out the
112-26 provisions of this article.]
113-1 ARTICLE 4. NONRESIDENT AGENT LICENSE
113-2 SECTION 4.01. Section 1, Article 21.11, Insurance Code, is
113-3 amended to read as follows:
113-4 Sec. 1. NONRESIDENT AGENT LICENSE. (a) The
113-5 [Notwithstanding Sections 3(a) and (b), Article 21.14, of this
113-6 code, the] department shall license a person who is not a resident
113-7 of this state to act as a nonresident agent if the department finds
113-8 that:
113-9 (1) the state in which the person resides accords the
113-10 same privilege to a person who is a resident of this state;
113-11 (2) the applicant for the nonresident license:
113-12 (A) if an individual:
113-13 (i) holds a license as an agent in the
113-14 state of residence and either obtained the license by passing a
113-15 written examination or held the license before the time a written
113-16 examination was required to obtain the license; or
113-17 (ii) subject to Subsection (b) of this
113-18 section, has passed the examination for an agent's license required
113-19 under Article 21.01-1 of this code and satisfies the requirements
113-20 adopted under Section 2, Article 21.07, of this code for licensing
113-21 of an individual; or
113-22 (B) if a corporation or partnership:
113-23 (i) has provided evidence of the authority
113-24 or ability to act as an agent in the entity's state of domicile;
113-25 (ii) has satisfied the requirements
113-26 adopted under Section 2, Article 21.07, of this code for licensing
114-1 of a corporation or partnership; and
114-2 (iii) is domiciled in a state that has
114-3 entered into a reciprocal agreement with the commissioner as
114-4 provided by Subsection (b) of this section; and
114-5 (3) the applicant or any officer, director,
114-6 shareholder, member, or partner of an applicant that is a business
114-7 entity, required to file biographical information with the
114-8 department under Article 21.07 of this code, has not:
114-9 (A) committed an act that constitutes grounds
114-10 for denial, suspension, or revocation of a license under Article
114-11 21.01-2 of this code; or
114-12 (B) had an insurance license suspended or
114-13 revoked by the department or the insurance regulator of another
114-14 state.
114-15 (b) The commissioner may enter into a reciprocal agreement
114-16 with the appropriate official of another state waiving the written
114-17 examination requirement for an applicant who is a resident of that
114-18 state if:
114-19 (1) a written examination is required of applicants
114-20 for an agent's license in the other state;
114-21 (2) the appropriate official of the other state
114-22 certifies that the applicant holds a license as an agent in the
114-23 other state and either passed a written examination to obtain the
114-24 license or was the holder of an agent's license before the time a
114-25 written examination was required; and
114-26 (3) in the other state, a resident of this state is
115-1 entitled to obtain an agent's license under the same conditions and
115-2 without discrimination as to fees or otherwise in favor of the
115-3 residents of the other state.
115-4 (c) A person who resides in a town through which the state
115-5 line runs and whose residence is located in the town in the
115-6 adjoining state may be licensed as a resident agent if the person
115-7 maintains the person's business office in this state [in accordance
115-8 with Article 21.14 of this code, subject to the limitations of this
115-9 article].
115-10 (d) The [(b) An applicant for issuance of a license under
115-11 this section must meet the requirements for issuance of a license
115-12 under Article 21.14 of this code, except that the] department may
115-13 [shall] waive any [of those] license requirements for an applicant
115-14 with a valid license from another state or jurisdiction if:
115-15 (1) that state or jurisdiction has license
115-16 requirements substantially equivalent to those of this state; or
115-17 (2) the waiver is necessary to promote uniformity
115-18 among the various states in regard to insurance agent licensing
115-19 requirements.
115-20 (e) The commissioner shall be the attorney for service of
115-21 process on whom all lawful process, notice, or demand may be served
115-22 in any legal proceeding against a nonresident agent licensed to
115-23 transact business in this state if:
115-24 (1) the nonresident agent fails to appoint or maintain
115-25 an attorney for service in this state;
115-26 (2) an attorney for service is appointed but cannot
116-1 with reasonable diligence be found; or
116-2 (3) the license of the nonresident agent is revoked.
116-3 SECTION 4.02. Subsections (a) and (b), Section 2, Article
116-4 21.11, Insurance Code, are amended to read as follows:
116-5 (a) Except as otherwise specifically provided by this code
116-6 [section], a license issued under this article to an individual who
116-7 is not a resident of this state grants the same rights and
116-8 privileges afforded to a resident license holder [under a license
116-9 issued under Article 21.14 of this code].
116-10 (b) A person who holds a license issued under this article
116-11 and who is in compliance with the continuing education requirements
116-12 of the person's state of residence is exempt from the continuing
116-13 education requirements imposed under Article 21.01-1 of this code
116-14 [may not:]
116-15 [(1) maintain an office in this state;]
116-16 [(2) solicit insurance business in this state by any
116-17 method, including an oral, written, or electronic communication; or]
116-18 [(3) employ solicitors or others to directly or
116-19 indirectly solicit insurance in this state].
116-20 SECTION 4.03. Section 3, Article 21.11, Insurance Code, is
116-21 amended to read as follows:
116-22 Sec. 3. LIMITATIONS. (a) This article does not permit:
116-23 (1) any person or firm licensed solely as a broker in
116-24 the person's or firm's state of residence to be granted a license
116-25 under this article; or
116-26 (2) a holder of a license issued under this article to
117-1 act as a surplus lines agent under Article 1.14-2 of this code or
117-2 to perform any of the acts permitted under Article 1.14-2 of this
117-3 code, except as provided under Section 10, Article 21.54, of this
117-4 code[; or]
117-5 [(3) any person or firm who holds a license issued
117-6 under this article to engage in any form of direct solicitation of
117-7 insurance within this state].
117-8 (b) This subchapter [The commissioner shall revoke a
117-9 nonresident agent's license issued under this article if the
117-10 commissioner finds that the license was obtained or is being used
117-11 for the purpose of transacting insurance through a local recording
117-12 agent in a manner that permits the individual licensed under this
117-13 article, by subterfuge, to transact insurance as a local recording
117-14 agent.]
117-15 [(c) In the circumstances described by Subsection (b) of
117-16 this section, the commissioner shall also revoke the license of the
117-17 affected local recording agent.]
117-18 [(d) A license revoked under Subsection (b) or (c) of this
117-19 section is not subject to reissuance before the fifth anniversary
117-20 of the date the revocation is effective.]
117-21 [(e) The commissioner shall order that any insurance
117-22 transacted under an arrangement described by Subsection (b) of this
117-23 section be cancelled.]
117-24 [(f) Article 21.01-2 of this code] applies to licensing of a
117-25 nonresident agent under this article.
117-26 SECTION 4.04. Sections 4 and 5, Article 21.11, Insurance
118-1 Code, are amended to read as follows:
118-2 Sec. 4. HOME OFFICE EMPLOYEE. This article does not affect
118-3 the authority established under Section 7 [20], Article 21.14, of
118-4 this code of an actual full-time home office salaried employee of
118-5 an insurance carrier licensed to do business in this state.
118-6 Sec. 5. RULES. The commissioner may adopt rules as
118-7 necessary to implement this article and to meet the minimum
118-8 requirements of federal law and regulations.
118-9 ARTICLE 5. CONFORMING AMENDMENTS
118-10 SECTION 5.01. Section 1, Article 3.71, Insurance Code, is
118-11 amended to read as follows:
118-12 Sec. 1. Notwithstanding any contrary or inconsistent
118-13 provision of any law, two or more insurance companies authorized to
118-14 separately do such an insurance business in this state, including
118-15 stock companies, reciprocals, or inter-insurance exchanges, Lloyds'
118-16 associations, fraternal benefit societies and mutual companies of
118-17 all kinds, including state-wide mutual assessment corporations and
118-18 local mutual aid associations, and stipulated premium companies,
118-19 may join together to offer, sell and administer hospital, surgical
118-20 and medical expense insurance plans under a group policy covering
118-21 residents of this state who are sixty-five (65) years of age and
118-22 older and their spouses on which policy each insurance carrier
118-23 shall be severally liable, and such companies may agree with
118-24 respect to premium rates, policy provisions, sales, administrative,
118-25 technical and accounting procedures and other matters within the
118-26 scope of this Article. Such companies may issue such insurance
119-1 policies in their own names or in the name of an unincorporated
119-2 association, trust, or other organization formed for the sole
119-3 purposes of this Article and evidenced by a contract in writing
119-4 executed by the participating insurance companies, and any
119-5 unincorporated associations, trusts, or other organizations
119-6 heretofore formed for the sole purpose of this Article and
119-7 evidenced by a contract in writing executed by the participating
119-8 insurance companies is hereby ratified, confirmed and approved and
119-9 validated from the date of its formation. Any such policy may be
119-10 executed on behalf of the insurance companies by a duly authorized
119-11 person and need not be countersigned on behalf of any such company
119-12 by a resident agent. Any person who is licensed as a general life,
119-13 accident, and health [insurance] agent or as a general property and
119-14 casualty [local recording] agent [or as a solicitor] under Article
119-15 [the provisions of Articles 21.07,] 21.07-1[,] or [Article] 21.14
119-16 of this code [the Insurance Code of the State of Texas,] may act as
119-17 such agent in connection with policies of insurance or certificates
119-18 of insurance issued by any unincorporated association, trust or
119-19 other organization formed for the sole purposes of this Article
119-20 without the necessity of notifying the department [State Board of
119-21 Insurance] that such person is appointed to so act.
119-22 SECTION 5.02. Section 7, Article 3.75, Insurance Code, is
119-23 amended to read as follows:
119-24 Sec. 7. VARIABLE CONTRACT AGENTS LICENSE.
119-25 (a) Notwithstanding any other law of this state, no person shall
119-26 sell or offer for sale within this state a variable contract or do
120-1 or perform any act or thing in the sale, negotiation, making, or
120-2 consummating of any variable contract other than for himself,
120-3 unless such person shall have a valid and current license issued
120-4 under Article 21.07-1 of this code [certificate from the State
120-5 Board of Insurance] authorizing such person to act within this
120-6 state as a general life, accident, and health [variable] agent.
120-7 [No such certificate shall be issued unless and until said board is
120-8 satisfied, after examination, that such person is by training,
120-9 knowledge, ability, and character qualified to act as such agent.
120-10 Any such certificate may be withdrawn and cancelled by said board,
120-11 after notice and hearing, if it shall find that the holder thereof
120-12 does not then have the qualifications required for issue of such
120-13 certificate.]
120-14 (b) The licensing and regulation of a person acting as a
120-15 variable agent is subject to the same provisions applicable to the
120-16 licensing and regulation of other agents under Subchapter A,
120-17 Chapter 21, of this code. [The Commissioner of Insurance shall
120-18 collect in advance from variable agent applicants a nonrefundable
120-19 license fee in an amount not to exceed $50. Unless the State Board
120-20 of Insurance accepts a qualifying examination administered by a
120-21 testing service, as provided under Article 21.01-1, Insurance Code,
120-22 as amended, the Commissioner of Insurance shall collect in advance
120-23 from variable agent applicants an examination fee in an amount not
120-24 to exceed $20. The State Board of Insurance shall determine the
120-25 amount of the fees. A new examination fee shall be paid for each
120-26 and every examination. The examination fee shall not be returned
121-1 under any circumstance other than for failure to appear and take
121-2 the examination after the applicant has given at least 24 hours
121-3 notice of an emergency situation to the Commissioner of Insurance
121-4 and received the Commissioner's approval. All fees collected
121-5 pursuant to this section shall be deposited in the State Treasury
121-6 to the credit of the State Board of Insurance operating fund to be
121-7 used to administer the provisions of this section and Article
121-8 21.07-1, Insurance Code, as amended.]
121-9 [(c) Each license issued to a variable contract agent shall
121-10 expire two years following the date of issue, unless prior thereto
121-11 it is suspended or revoked by the Commissioner of Insurance.]
121-12 [(d) The Commissioner of Insurance shall suspend the license
121-13 of a variable agent during any period in which the agent does not
121-14 have an outstanding valid appointment. The Commissioner of
121-15 Insurance shall lift the suspension on receipt by the State Board
121-16 of Insurance of acceptable notice of a valid appointment.]
121-17 [(e) A license applicant or licensee whose license
121-18 application or license has been denied, refused, or revoked under
121-19 this section may not apply for any license as an insurance agent
121-20 before the first anniversary of the effective date of the denial,
121-21 refusal, or revocation, or, if the applicant or licensee seeks
121-22 judicial review of the denial, refusal, or revocation, before the
121-23 first anniversary of the date of the final court order or decree
121-24 affirming that action. The Commissioner of Insurance may deny an
121-25 application timely filed if the applicant does not show good cause
121-26 why the denial, refusal, or revocation of the previous license
122-1 application or license should not be considered a bar to the
122-2 issuance of a new license.]
122-3 [(f) Licenses which have not expired or which have not been
122-4 suspended or revoked may be renewed by filing with the State Board
122-5 of Insurance a completed renewal application and paying the
122-6 nonrefundable renewal fee set by the board in an amount not to
122-7 exceed $50 on or before the expiration date of the license in
122-8 accordance with Article 21.01-2 of this code.]
122-9 [(g) Any agent licensed under this article may represent and
122-10 act as an agent for more than one insurance carrier any time while
122-11 the license is in force, if the agent so desires. Any such agent
122-12 and the insurance carrier involved must give notice to the State
122-13 Board of Insurance of any additional appointment or appointments
122-14 authorizing the agent to act as agent for an additional insurance
122-15 carrier or carriers. Such notice shall be accompanied by a
122-16 certificate from each insurance carrier to be named in each
122-17 additional appointment that said insurance carrier desires to
122-18 appoint the applicant as its agent. This notice shall also contain
122-19 such other information as the State Board of Insurance may require.
122-20 The agent or company shall be required to pay a nonrefundable fee
122-21 in an amount not to exceed $16 as determined by the State Board of
122-22 Insurance for each additional appointment applied for, which fee
122-23 shall accompany the notice. If approval of the additional
122-24 appointment is not received from the board before the eighth day
122-25 after the date on which the completed application and fee were
122-26 received by the board, the agent and the insurance carrier, in the
123-1 absence of notice of disapproval, may assume that the board
123-2 approves the application, and the agent may act for the insurance
123-3 carrier. All fees collected pursuant to this section shall be
123-4 deposited in the State Treasury to the credit of the State Board of
123-5 Insurance operating fund to be used to administer the provisions of
123-6 this article and Article 21.07-1, Insurance Code, as amended.]
123-7 [(h) Duplicate License; Fee. The Commissioner of Insurance
123-8 shall collect in advance from agents requesting duplicate licenses
123-9 a fee not to exceed $20. The State Board of Insurance shall
123-10 determine the amount of the fee.]
123-11 SECTION 5.03. Subsection (c), Article 5.13-1, Insurance
123-12 Code, is amended to read as follows:
123-13 (c) The right of such insurers to issue prepaid legal
123-14 services contracts on individual, group, or franchise bases is
123-15 hereby recognized, and qualified agents of such insurers who are
123-16 licensed under Article 21.07-1 or [Articles 21.07 and] 21.14 of
123-17 this code [the Insurance Code, as amended, and Chapter 213, Acts of
123-18 the 54th Legislature, 1955, as amended (Article 21.07-1, Vernon's
123-19 Texas Insurance Code),] shall be authorized to write such coverages
123-20 under such rules [and regulations] as the commissioner [State Board
123-21 of Insurance] may prescribe.
123-22 SECTION 5.04. Chapter 10, Insurance Code, is amended by
123-23 adding Article 10.37-3 to read as follows:
123-24 Art. 10.37-3. AGENT'S LICENSE REQUIRED. (a) A person may
123-25 not solicit or procure insurance contracts on behalf of a fraternal
123-26 benefit society unless the person holds a license issued by the
124-1 department under this code or is specifically exempted from the
124-2 license requirement as provided by Section 2, Article 21.07-1, of
124-3 this code.
124-4 (b) The licensing and regulation of agents for fraternal
124-5 benefit societies under this chapter is subject to the requirements
124-6 adopted under Subchapter A, Chapter 21, of this code and other
124-7 existing or subsequent applicable laws governing the licensing of
124-8 those agents. A provision of such a law is applicable to a license
124-9 applicant and license holder under this chapter.
124-10 SECTION 5.05. Article 16.24A, Insurance Code, is amended to
124-11 read as follows:
124-12 Art. 16.24A. LICENSING OF AGENTS [FOR CROP INSURANCE].
124-13 (a) No person or firm shall solicit, write, sign, execute or
124-14 deliver insurance policies, bind insurance risks, collect premiums,
124-15 or otherwise act in the capacity of an insurance agent [a local
124-16 recording agent] in the solicitation or sale of [crop] insurance
124-17 for a farm mutual insurance company unless the person or firm holds
124-18 a license issued [is licensed] under Subchapter A, Chapter 21,
124-19 [Article 21.14] of this code.
124-20 (b) A farm mutual insurance company may not appoint and act
124-21 through an agent [who qualifies for a license as an agricultural
124-22 insurance agent] under Article 21.14-2 of this code.
124-23 SECTION 5.06. Section 9, Article 17.25, Insurance Code, is
124-24 amended to read as follows:
124-25 Sec. 9. AGENTS' LICENSE. Agents [or solicitors] for such
124-26 companies shall be licensed and appointed as provided by Subchapter
125-1 A, Chapter 21, [in Article 21.07 or 21.14] of this Code.
125-2 SECTION 5.07. Sections 4, 19, and 21, Managing General
125-3 Agents' Licensing Act (Article 21.07-3, Vernon's Texas Insurance
125-4 Code), are amended to read as follows:
125-5 Sec. 4. REDEMPTION OF SHARES [APPLICATION FOR LICENSE; TO
125-6 WHOM LICENSE MAY BE ISSUED]. [(a) Each applicant for license
125-7 shall be a resident of Texas and file a written sworn application
125-8 on forms furnished by the Commissioner. The applicant shall
125-9 include in the application the names and addresses of the
125-10 applicant's officers, directors, shareholders, or partners, if
125-11 applicable, and affiliates.]
125-12 [(b) The Commissioner shall issue a license to an individual
125-13 applicant upon successful completion of the examination and
125-14 compliance with the other requirements of this Act.]
125-15 [(c) The Commissioner shall issue a license to a general
125-16 partnership, or to a limited liability partnership registered with
125-17 the Secretary of State under Section 3.08, Texas Revised
125-18 Partnership Act (Article 6132b-3.08, Vernon's Texas Civil
125-19 Statutes), engaging in the business of insurance if each of the
125-20 partners is licensed as an agent under this Act. The term
125-21 "partnership" or "agency partnership" as used in this Act means a
125-22 general partnership or a registered limited liability partnership.]
125-23 [(d) The Commissioner shall issue a license to a corporation
125-24 on finding:]
125-25 [(1) that the corporation is a Texas corporation
125-26 having its principal place of business in the State of Texas and
126-1 having as one of its purposes the authority to act as a managing
126-2 general agent; and]
126-3 [(2) that every officer, director, and shareholder of
126-4 the corporation is individually licensed as a managing general
126-5 agent under the provisions of this Insurance Code; provided,
126-6 however, that in the event ownership of the shares of such
126-7 corporation is acquired through devise or descent by an unlicensed
126-8 shareholder, the corporation shall still be entitled to a license
126-9 if such unlicensed shareholder qualifies as a licensed managing
126-10 general agent or disposes of the shares to a licensed managing
126-11 general agent within 90 days after the date of such stock
126-12 acquisition. If an unlicensed person acquires shares in such a
126-13 corporation and does not qualify to be licensed as a managing
126-14 general agent and the person does not dispose of the shares within
126-15 the 90-day period to a licensed managing general agent, the shares
126-16 must be purchased by the corporation for the value of the shares of
126-17 stock as reflected by the regular books and records of the
126-18 corporation on the date of the acquisition of the shares by the
126-19 unlicensed person. If the corporation fails or refuses to purchase
126-20 the shares, the corporation's license shall be cancelled.]
126-21 [(e)] A corporation may redeem the shares of any shareholder
126-22 or the shares of a deceased shareholder, on terms agreed on by the
126-23 board of directors and the shareholder or the shareholder's
126-24 personal representative or at a price and on terms provided in the
126-25 articles of incorporation, the bylaws, or an existing contract
126-26 entered into between the shareholders of the corporation.
127-1 [(f) Nothing contained herein shall be construed to permit
127-2 any unlicensed shareholder or any employee or agent of any
127-3 corporation licensed as a managing general agent to perform any act
127-4 of a managing general agent without obtaining a managing general
127-5 agent's license.]
127-6 [(g) If at any time, any person holding a managing general
127-7 agent's license does not maintain the qualifications necessary to
127-8 obtain a license, the license of such person to act as a managing
127-9 general agent shall be cancelled or denied in accordance with the
127-10 other provisions of this Act.]
127-11 [(h) Nothing in this section shall prevent any shareholder
127-12 from selling or otherwise transferring stock in any corporation to
127-13 a company or managing general agent licensed to do business in
127-14 Texas, nor prevent any such company or managing general agent from
127-15 owning all or any portion of the stock of such corporation.]
127-16 [(i) Each corporation licensed as a managing general agent
127-17 shall notify the Commissioner of any change in its officers,
127-18 directors, or shareholders not later than the 30th day after the
127-19 date on which the change takes effect.]
127-20 [(j) In this Act the term "corporation" shall mean a
127-21 corporation organized under the Texas Business Corporation Act or a
127-22 Texas domiciled limited liability company organized or existing
127-23 under the Texas Limited Liability Company Act (Article 1528n,
127-24 Vernon's Texas Civil Statutes) having its principal place of
127-25 business in this state and having as one of its purposes the
127-26 authority to act as a managing general insurance agent. Each
128-1 officer, manager, and member of a limited liability company must be
128-2 licensed under this Act. The licensing and regulation of a limited
128-3 liability company shall be subject to the same provisions and
128-4 requirements of this Act that are applicable to corporations
128-5 licensed under this Act.]
128-6 Sec. 19. ADMINISTRATION AND REGULATION OF MANAGING GENERAL
128-7 AGENTS; VIOLATIONS OF ACT. (a) The licensing and regulation of a
128-8 person acting as a managing general agent is subject to the laws
128-9 and requirements applicable to the licensing and regulation of
128-10 other agents under Subchapter A, Chapter 21, Insurance Code.
128-11 (b) Any person, firm, or corporation who violates any of the
128-12 provisions of this Act or any rule, regulation, or order adopted
128-13 under this Act or Subchapter A, Chapter 21, Insurance Code, shall
128-14 be subject to:
128-15 (1) Sections 2A, 3A, 4A, 5A, and 6A, Article 21.01-2,
128-16 Insurance Code; and
128-17 (2) [sanctions under] Section 7, Article 1.10,
128-18 Insurance Code.
128-19 Sec. 21. ADMINISTRATION OF ACT. The administration of this
128-20 Act shall be vested in the commissioner, [State Board of Insurance]
128-21 who may establish, and from time to time amend, reasonable rules
128-22 [and regulations] for the administration of this Act.
128-23 SECTION 5.08. Article 22.14, Insurance Code, is amended to
128-24 read as follows:
128-25 Art. 22.14. LICENSING OF AGENTS. All agents of stipulated
128-26 premium companies shall be licensed in accordance with the
129-1 provisions of Subchapter A [Art. 21.07] of Chapter 21 of this Code.
129-2 SECTION 5.09. Chapter 23, Insurance Code, is amended by
129-3 adding Article 23.23A to read as follows:
129-4 Art. 23.23A. REGULATION OF AGENTS. The licensing and
129-5 regulation of an agent authorized to solicit prepaid legal services
129-6 contracts for corporations complying with this chapter is subject
129-7 to Subchapter A, Chapter 21, of this code.
129-8 ARTICLE 6. SURPLUS LINES
129-9 SECTION 6.01. Subdivision (1), Subsection (a), Section 2,
129-10 Article 1.14-2, Insurance Code, is amended to read as follows:
129-11 (1) "Surplus lines agent" means:
129-12 (A) [(i) is] an agent authorized under Article
129-13 21.14 who is granted a surplus lines license in accordance with
129-14 this Article; or
129-15 (B) [, (ii) is] a managing general agent who is
129-16 [(authorized to be licensed and] licensed under the Managing
129-17 General Agents' Licensing Act[, Acts, 1967, 60th Legislature,
129-18 Chapter 727, codified by Vernon as] (Article 21.07-3, Vernon's
129-19 Texas Insurance Code) who is granted a surplus lines license in
129-20 accordance with this Article and who complies with the provisions
129-21 of this Article, except it is not necessary that the managing
129-22 general agent be licensed as a general property and casualty
129-23 [recording] agent[, or (iii) is a nonresident insurance agent
129-24 authorized under Article 21.11 and who is granted a surplus lines
129-25 license for the limited purpose of acting on behalf of a purchasing
129-26 group operating in this state in the placement of liability
130-1 insurance for risks located in this state].
130-2 SECTION 6.02. Subdivision (2), Subsection (a), Section 2,
130-3 Article 1.14-2, Insurance Code, is amended to read as follows:
130-4 (2) A [Each "]surplus lines agent,["] as a condition
130-5 of being licensed as a surplus lines agent and as a condition of
130-6 continuing to be licensed as a surplus lines agent, shall offer the
130-7 proof of financial responsibility [solvency and demonstrate
130-8 capacity in respect of responsibility to insureds under policies of
130-9 surplus lines insurance, or in the alternative show proof of
130-10 adequate bond and surety] in respect of [his] transactions with
130-11 insureds under policies of surplus lines insurance [and] as
130-12 required by [the] reasonable rules [and regulations] of the
130-13 department [State Board of Insurance shall provide].
130-14 SECTION 6.03. Subdivision (3), Subsection (a), Section 2,
130-15 Article 1.14-2, Insurance Code, is amended to read as follows:
130-16 (3) Any surplus lines license granted to an agency
130-17 authorized under the Managing General Agents' Licensing Act
130-18 (Article 21.07-3, Vernon's Texas Insurance Code), but[, Acts, 1967,
130-19 60th Legislature, Chapter 727, that is] not [also] licensed under
130-20 Article 21.14 of this code, [the Insurance Code] shall be limited
130-21 to the acceptance of business originating through a regularly
130-22 licensed general property and casualty [recording] agent and does
130-23 [shall] not authorize the [such] surplus lines agency to transact
130-24 business directly with the applicant for insurance.
130-25 SECTION 6.04. Subsection (b), Section 4, Article 1.14-2,
130-26 Insurance Code, is amended to read as follows:
131-1 (b) The department [Texas Department of Insurance] may issue
131-2 a surplus lines license to an applicant if the applicant submits a
131-3 properly completed license application and an application fee as
131-4 determined by the department and the department determines that the
131-5 applicant [an agent as defined by Subdivision (1) of Subsection (a)
131-6 of Section 2 of this article after the agent has]:
131-7 (1) is an individual who:
131-8 (A) is a resident of this state;
131-9 (B) is currently licensed as a general property
131-10 and casualty agent under Article 21.14 of this code or as a
131-11 managing general agent under the Managing General Agents' Licensing
131-12 Act (Article 21.07-3, Vernon's Texas Insurance Code);
131-13 (C) has passed the surplus lines license
131-14 examination administered under Article 21.01-1 of this code and
131-15 department rules; and
131-16 (D) provides proof of financial responsibility
131-17 as required under Section 2 of this article [remitted the
131-18 application fee set by the Texas Department of Insurance in an
131-19 amount not to exceed $50];
131-20 (2) is a corporation or partnership that:
131-21 (A) has at least one officer or director or at
131-22 least one active partner who:
131-23 (i) is a resident of this state; and
131-24 (ii) has passed the surplus lines license
131-25 examination required under this article;
131-26 (B) is currently licensed as a general property
132-1 and casualty agent under Article 21.14 of this code or as a
132-2 managing general agent under the Managing General Agents' Licensing
132-3 Act (Article 21.07-3, Vernon's Texas Insurance Code); and
132-4 (C) provides proof of financial responsibility
132-5 as required under Section 2 of this article [submitted a completed
132-6 license application on a form approved by the Texas Department of
132-7 Insurance]; or [and]
132-8 (3) is a nonresident insurance agent authorized under
132-9 Article 21.11 of this code who holds a general property and
132-10 casualty license from the department and whose authority as a
132-11 surplus lines agent is limited to acting on behalf of a purchasing
132-12 group operating in this state in the placement of liability
132-13 insurance for risks located in this state [passed a qualifying
132-14 examination approved by the Texas Department of Insurance. If the
132-15 agent is a general partnership or a registered limited liability
132-16 partnership, this examination must be met by each natural person
132-17 acting as a partner in that partnership. If the agent is a
132-18 corporation, this examination requirement must be met by each
132-19 natural person acting as an officer, director, or shareholder of
132-20 that corporation. If the agent is a limited liability company,
132-21 this examination requirement must be met by each natural person
132-22 acting as an officer, manager, and member of that limited liability
132-23 company].
132-24 SECTION 6.05. Subsection (c), Section 4, Article 1.14-2,
132-25 Insurance Code, is amended to read as follows:
132-26 (c) In addition to the requirements of this article, the
133-1 administration and regulation of a surplus lines agent's license
133-2 is governed by Subchapter A, Chapter 21, of this code, except that
133-3 Article 21.07 of this code does not apply to a license issued under
133-4 this article. [Unless the State Board of Insurance adopts a system
133-5 for staggered renewal of licenses, as provided by Article 21.01-2
133-6 of this code, each license issued under this section is for a
133-7 two-year term that expires on December 31; however, the term of the
133-8 initial licensing period shall expire on December 31 of the year
133-9 following the year in which the license is issued. A license may
133-10 be renewed for periods of two years.]
133-11 SECTION 6.06. Subsection (d), Section 4, Article 1.14-2,
133-12 Insurance Code, is amended to read as follows:
133-13 (d) If a license holder does not maintain the qualifications
133-14 necessary to obtain the license, the department may revoke or
133-15 suspend the license or deny the renewal of that license in
133-16 accordance with Article 21.01-2 of this code. [By filing a
133-17 completed written application in the form prescribed by the State
133-18 Board of Insurance and paying the nonrefundable renewal fee set by
133-19 the board in an amount not to exceed $50, an unexpired license may
133-20 be renewed on or before the expiration date of the license.]
133-21 ARTICLE 7. REPEALER
133-22 SECTION 7.01. The following laws are repealed:
133-23 (1) Subsections (f), (g), and (h), Section 4, Article
133-24 1.14-2, Insurance Code;
133-25 (2) Section 15, Article 17.25, Insurance Code;
133-26 (3) Sections 15 and 15A, Texas Health Maintenance
134-1 Organization Act (Sections 20A.15 and 20A.15A, Vernon's Texas
134-2 Insurance Code);
134-3 (4) Sections 1, 3, 4, and 6, Article 21.01-2,
134-4 Insurance Code;
134-5 (5) Article 21.02-1, Insurance Code;
134-6 (6) Article 21.05, Insurance Code;
134-7 (7) the following sections of Article 21.07, Insurance
134-8 Code:
134-9 (A) Sections 1B and 1C;
134-10 (B) Section 3, as amended by Chapters 596 and
134-11 972, Acts of the 75th Legislature, Regular Session, 1997;
134-12 (C) Sections 3B, 4, 4A, 5, 7, 8, 9, 10, 10A, 11,
134-13 12, 13, 14, 15, 15A, 16, 17, 18, 19, and 20;
134-14 (D) Section 21, as added by Chapter 820, Acts of
134-15 the 75th Legislature, Regular Session, 1997; and
134-16 (E) Section 21, as added by Chapter 1196, Acts
134-17 of the 75th Legislature, Regular Session, 1997;
134-18 (8) Article 21.07A, Insurance Code;
134-19 (9) Chapter 213, Acts of the 54th Legislature, Regular
134-20 Session, 1955 (Article 21.07-1, Vernon's Texas Insurance Code);
134-21 (10) the following provisions of the Managing General
134-22 Agents' Licensing Act (Article 21.07-3, Vernon's Texas Insurance
134-23 Code):
134-24 (A) Sections 4A, 4B, and 4C;
134-25 (B) Subsection (h), Section 5;
134-26 (C) Sections 6 and 6A;
135-1 (D) Sections 8, 9, and 10;
135-2 (E) Sections 12, 13, 14, and 15;
135-3 (F) Section 17; and
135-4 (G) Section 20;
135-5 (11) Section 14, Article 21.14-1, Insurance Code;
135-6 (12) Article 21.15, Insurance Code;
135-7 (13) Article 21.15-2, Insurance Code;
135-8 (14) Article 21.15-3, Insurance Code;
135-9 (15) Article 21.15-4, Insurance Code;
135-10 (16) Article 21.15-7, Insurance Code;
135-11 (17) Section 10, Article 21.58A, Insurance Code; and
135-12 (18) Article 23.23, Insurance Code.
135-13 ARTICLE 8. GRANDFATHER CLAUSE; TRANSITION
135-14 SECTION 8.01. On the effective date of this Act, a person
135-15 who holds a license issued by the Texas Department of Insurance
135-16 that is in good standing is:
135-17 (1) considered licensed under the applicable licensing
135-18 law as amended by this Act;
135-19 (2) entitled to act as an agent under the new license
135-20 type, subject to this article; and
135-21 (3) subject to the provisions of the Insurance Code as
135-22 amended by this Act.
135-23 SECTION 8.02. (a) A person who, immediately before the
135-24 effective date of this Act, holds an agent license issued by the
135-25 Texas Department of Insurance and who obtained that license by
135-26 passing a written examination, whether administered by the
136-1 insurance carrier, company, or state testing contractor, is
136-2 entitled to the appropriate license as provided by Subchapter A,
136-3 Chapter 21, Insurance Code, as amended by this Act, without further
136-4 examination.
136-5 (b) A person who, immediately before the effective date of
136-6 this Act, holds an agent license issued by the Texas Department of
136-7 Insurance before January 1, 1999, and who obtained that license
136-8 without taking a written examination or who actually solicited
136-9 insurance on behalf of a stipulated premium company, farm mutual
136-10 company, or county mutual insurance company before January 1, 1999,
136-11 is entitled to the appropriate license as provided by Subchapter A,
136-12 Chapter 21, Insurance Code, as amended by this Act, but must pass
136-13 the appropriate license examination not later than the second
136-14 anniversary of the date of issuance, to retain the license. The
136-15 license of a person who does not pass the license examination as
136-16 required by this subsection expires on the second anniversary of
136-17 the date of issuance and may not be renewed.
136-18 (c) A person who, immediately before the effective date of
136-19 this Act, holds an agent license issued by the Texas Department of
136-20 Insurance on or after January 1, 1999, and who obtained that
136-21 license without taking a written examination or who actually
136-22 solicited insurance on behalf of a stipulated premium company, farm
136-23 mutual company, or county mutual insurance company on or after
136-24 January 1, 1999, but before the effective date of this Act, is
136-25 entitled to the appropriate license as provided by Subchapter A,
136-26 Chapter 21, Insurance Code, as amended by this Act, but must pass
137-1 the appropriate license examination not later than May 31, 2000, to
137-2 retain the license. The license of a person who does not pass the
137-3 license examination as required by this subsection expires on May
137-4 31, 2000.
137-5 (d) A person who has actually solicited insurance on behalf
137-6 of a stipulated premium company, farm mutual company, or county
137-7 mutual insurance company for at least 24 months preceding the
137-8 effective date of this Act is entitled to the appropriate license
137-9 and any renewal license as provided by Subchapter A, Chapter 21,
137-10 Insurance Code, as amended by this Act, without further
137-11 examination.
137-12 SECTION 8.03. (a) The Texas Department of Insurance may
137-13 issue a life, accident, and health license to a person who
137-14 solicited insurance on behalf of a fraternal benefit society
137-15 immediately before the effective date of this Act on submission to
137-16 the department by the person of the following:
137-17 (1) a certified statement from the fraternal benefit
137-18 society indicating the period of time the person has solicited
137-19 insurance on behalf of the fraternal benefit society;
137-20 (2) a completed license application form; and
137-21 (3) a nonrefundable application fee in an amount
137-22 determined by the department.
137-23 (b) To retain the license issued under Subsection (a) of
137-24 this section, a person who has solicited insurance on behalf of a
137-25 fraternal benefit society for less than two years as of the
137-26 effective date of this Act must pass the license examination
138-1 required under Subchapter A, Chapter 21, Insurance Code, not later
138-2 than the 180th day after the date of issuance of the license. The
138-3 license of a person who does not pass the license examination as
138-4 required by this subsection expires on the 180th day after the date
138-5 of issuance of the license and may not be renewed.
138-6 SECTION 8.04. Notwithstanding any other law, the contract of
138-7 a surety who guarantees the promise of a bonded principal to appear
138-8 in court as directed by the court must provide that:
138-9 (1) the surety is not liable based on a default by the
138-10 principal until the first anniversary of the date on which the
138-11 court declares that the principal is in default; and
138-12 (2) the liability of the surety is fully discharged
138-13 if:
138-14 (A) it is shown that, before the first
138-15 anniversary of the date on which the court declares that the
138-16 principal is in default, the principal is placed in custody in any
138-17 jurisdiction; or
138-18 (B) the surety presents evidence satisfactory to
138-19 the court of any other good cause for the principal not being
138-20 present in court as directed.
138-21 ARTICLE 9. EFFECTIVE DATE; TRANSITION; EMERGENCY
138-22 SECTION 9.01. (a) This Act takes effect September 1, 1999.
138-23 (b) Section 3, Article 21.01-1, Insurance Code, as amended
138-24 by this Act, applies to continuing education requirements for
138-25 insurance agents for a renewal of a license that occurs on or after
138-26 January 1, 2001.
139-1 SECTION 9.02. The importance of this legislation and the
139-2 crowded condition of the calendars in both houses create an
139-3 emergency and an imperative public necessity that the
139-4 constitutional rule requiring bills to be read on three several
139-5 days in each house be suspended, and this rule is hereby suspended.
_______________________________ _______________________________
President of the Senate Speaker of the House
I hereby certify that S.B. No. 956 passed the Senate on
April 26, 1999, by a viva-voce vote; and that the Senate concurred
in House amendments on May 30, 1999, by a viva-voce vote.
_______________________________
Secretary of the Senate
I hereby certify that S.B. No. 956 passed the House, with
amendments, on May 23, 1999, by a non-record vote.
_______________________________
Chief Clerk of the House
Approved:
_______________________________
Date
_______________________________
Governor