By Madla S.B. No. 956
76R6460 PB-F
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the regulation of certain insurance agents and to the
1-3 consolidation of insurance agent licenses; providing penalties.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 ARTICLE 1. GENERAL PROVISIONS APPLICABLE TO
1-6 ALL INSURANCE AGENTS
1-7 SECTION 1.01. Article 21.01, Insurance Code, is amended to
1-8 read as follows:
1-9 Art. 21.01. PURPOSE; CONSOLIDATION OF LICENSES; APPLICATION;
1-10 CERTIFICATE OF AUTHORITY OR LICENSE REQUIRED; RULEMAKING AUTHORITY
1-11 Sec. 1. PURPOSE. It is the intent of the legislature to
1-12 simplify and reform the regulation of insurance agents in this
1-13 state by consolidating the types of licenses issued to insurance
1-14 agents under this subchapter. This subchapter is also intended to
1-15 promote uniformity in the licensing, examination, continuing
1-16 education, and disciplinary requirements for agents.
1-17 Sec. 2. CERTIFICATE OF AUTHORITY OR LICENSE REQUIRED. It
1-18 shall not be lawful for any person to act [within this State], as
1-19 an agent or otherwise, in soliciting or receiving applications for
1-20 insurance of any kind whatever in this state, or in any manner to
1-21 aid in the transaction of the business of any insurance company
1-22 incorporated in this state [State], or out of it, without first
1-23 procuring a license or certificate of authority from the department
1-24 [Board].
2-1 Sec. 3. APPLICATION. (a) Except as otherwise provided by
2-2 this code, this subchapter applies to each person licensed in
2-3 accordance with:
2-4 (1) Section 4, Article 1.14-2, of this code;
2-5 (2) Section 7, Article 3.75, of this code;
2-6 (3) Subsection (c), Article 5.13-1, of this code;
2-7 (4) Article 10.37-3 of this code;
2-8 (5) Article 16.24A of this code;
2-9 (6) Section 9, Article 17.25, of this code;
2-10 (7) Article 21.07 of this code;
2-11 (8) Article 21.07-1 of this code;
2-12 (9) Chapter 29, Acts of the 54th Legislature, Regular
2-13 Session, 1955 (Article 21.07-2, Vernon's Texas Insurance Code);
2-14 (10) the Managing General Agents' Licensing Act
2-15 (Article 21.07-3, Vernon's Texas Insurance Code);
2-16 (11) Chapter 407, Acts of the 63rd Legislature,
2-17 Regular Session, 1973 (Article 21.07-4, Vernon's Texas Insurance
2-18 Code);
2-19 (12) Article 21.07-6 of this code;
2-20 (13) Article 21.07-7 of this code;
2-21 (14) Article 21.11 of this code;
2-22 (15) Article 21.14 of this code;
2-23 (16) Article 21.14-1 of this code;
2-24 (17) Article 21.14-2 of this code;
2-25 (18) Article 23.23A of this code; or
2-26 (19) a specialty license program established by the
2-27 department.
3-1 (b) Except as otherwise provided by law, each reference in
3-2 this code and other laws of this state to a particular type of
3-3 license authorizing an agent to engage in the business of insurance
3-4 in this state means a license designation as made by amendment,
3-5 enactment, or reenactment of or to Subchapter A, Chapter 21, of
3-6 this code by the 76th Legislature, Regular Session, 1999, or
3-7 subsequent amendments to that subchapter. A reference in this
3-8 subchapter to a statutory provision applies to all reenactments,
3-9 revisions, or amendments of that provision.
3-10 Sec. 4. RULES. The commissioner may adopt rules as
3-11 necessary to implement this subchapter and to meet the minimum
3-12 requirements of federal law and regulations.
3-13 SECTION 1.02. Article 21.01-1, Insurance Code, is amended to
3-14 read as follows:
3-15 Art. 21.01-1. AGENTS' QUALIFYING EXAMINATION; CONTINUING
3-16 EDUCATION REQUIREMENTS FOR AGENTS
3-17 Sec. 1. EXAMINATION ADMINISTRATION. (a) The commissioner
3-18 [State Board of Insurance] may[, at its discretion,] accept
3-19 examinations administered by a testing service as satisfying the
3-20 examination requirements of persons seeking license as agents,
3-21 [solicitors,] counselors, or adjusters under this code. The
3-22 commissioner [State Board of Insurance] may negotiate agreements
3-23 with such testing services to include performance of examination
3-24 development, test scheduling, examination site arrangements, and
3-25 test administration, grading, reporting and analysis. The
3-26 commissioner [State Board of Insurance] may require such testing
3-27 services to correspond directly with the applicants with regard to
4-1 the administration of such examinations and that such testing
4-2 services collect fees for administering such examinations directly
4-3 from the applicants. The commissioner [State Board of Insurance]
4-4 may stipulate that any agreements with such testing services
4-5 provide for the administration of examinations in specific locales
4-6 and at specified frequencies. The commissioner [State Board of
4-7 Insurance] shall retain the authority to establish the scope and
4-8 type of all examinations. Prior to negotiating and making any
4-9 agreement with any testing service as authorized hereby, the
4-10 commissioner [State Board of Insurance] shall hold a public hearing
4-11 [thereon] in accordance with Chapter 2001, Government Code [the
4-12 provisions of Section 5 of the Administrative Procedure and Texas
4-13 Register Act (Article 6252-13a, Vernon's Texas Civil Statutes)],
4-14 and shall adopt such rules[, regulations,] and standards as may be
4-15 deemed appropriate by the commissioner [Board] to implement the
4-16 authority granted in this article [Article].
4-17 (b) The commissioner may appoint advisory boards consisting
4-18 of any of the following persons: persons holding a license for
4-19 which the respective examinations are intended, persons who are
4-20 employed by insurance companies appointing such licensees, persons
4-21 acting as general agents or managers, persons teaching insurance at
4-22 an accredited college or university in Texas, persons who are
4-23 citizens of the State of Texas but who are not of any of the
4-24 preceding descriptions, or any combination of such persons. The
4-25 function of such advisory boards will be to make recommendations to
4-26 the commissioner [State Board of Insurance] or the testing service
4-27 with respect to the scope, type, and conduct of such examinations
5-1 and the times and places within the state where they shall be held.
5-2 The members of such advisory boards shall serve without pay but
5-3 shall be reimbursed for their reasonable expenses in attending
5-4 meetings of their respective advisory boards.
5-5 (c) In the absence of an agreement with a testing service,
5-6 the department [State Board of Insurance] shall administer any
5-7 required qualifying examination in accordance with this article
5-8 [the provisions of the respective statutes governing the issuance
5-9 of the license sought by the applicant]. The commissioner may
5-10 adopt rules relating to the scope, type, and conduct of the written
5-11 examinations and the times and places in this state at which the
5-12 examinations will be conducted. The commissioner's rules may
5-13 designate textbooks, manuals, and other materials to be studied by
5-14 applicants in preparation for examinations conducted under this
5-15 subsection. Those textbooks, manuals, or other materials may
5-16 consist of material available to an applicant by purchase from the
5-17 publisher or of material prepared at the direction of the
5-18 commissioner and distributed to an applicant on request and on
5-19 payment of the reasonable cost of the material. All examination
5-20 questions shall be prepared from the contents of the textbooks,
5-21 manuals, and other materials designated or prepared by the
5-22 commissioner under this subsection.
5-23 (d) Not later than the 30th day after the date on which a
5-24 licensing examination is administered under this code, the
5-25 department shall notify each examinee of the results of the
5-26 examination. However, if an examination is graded or reviewed by a
5-27 testing service, the department shall notify each examinee
6-1 [examinees] of the results of the examination not later than the
6-2 14th day after the date on which the department receives the
6-3 results from the testing service. If the notice of examination
6-4 results graded or reviewed by a testing service will be delayed for
6-5 longer than 90 days after the examination date, the department
6-6 shall notify the examinee of the reason for the delay before the
6-7 90th day. The department may require a testing service to notify
6-8 examinees of the results of an examination.
6-9 (e) If requested in writing by a person who fails a
6-10 licensing examination administered under this code, the department
6-11 shall furnish the person with an analysis of the person's
6-12 performance on the examination.
6-13 Sec. 2. EXAMINATION OF LICENSE APPLICANT. (a) Each
6-14 applicant for a license to act as an insurance agent in this state
6-15 must submit to a personal written examination that is prescribed by
6-16 the department and administered in the English or Spanish language,
6-17 and must pass the examination to the satisfaction of the
6-18 department. The examination shall determine the applicant's
6-19 competence with respect to:
6-20 (1) the type of insurance contracts for which the
6-21 applicant seeks a license;
6-22 (2) the laws of this state regulating the business of
6-23 insurance; and
6-24 (3) the ethical obligations and duties of an insurance
6-25 agent.
6-26 (b) The department shall charge each applicant an
6-27 examination fee in an amount determined by the department as
7-1 necessary for administration of the examination. The fee must
7-2 accompany each application to take the examination. The fee is
7-3 nonrefundable other than for failure of the applicant to appear and
7-4 take the examination after the applicant has given at least 24
7-5 hours' notice of an emergency situation to the department and
7-6 received the department's approval of refund of the fee.
7-7 (c) The commissioner shall prescribe a limited written
7-8 licensing examination for applicants for a limited license under
7-9 Article 21.07-1 or Article 21.14 of this code. A limited
7-10 examination shall be administered according to the provisions of
7-11 this article and shall determine the applicant's competence and
7-12 understanding of:
7-13 (1) the general principles of insurance contracts;
7-14 (2) the laws of this state regulating the business of
7-15 insurance; and
7-16 (3) the ethical obligations and duties of an insurance
7-17 agent.
7-18 (d) The department may not require a person to take an
7-19 examination under this article if the person is:
7-20 (1) an applicant for the renewal of a license issued
7-21 by the department, and the applicant obtained the license by
7-22 successful completion of a written examination;
7-23 (2) an applicant whose license expired less than one
7-24 year before the date of the application, if the previous license
7-25 was not denied, revoked, or suspended by the commissioner;
7-26 (3) a partnership, corporation, or bank;
7-27 (4) an applicant for a life, accident, and health
8-1 license who has attained the designation of chartered life
8-2 underwriter (CLU);
8-3 (5) an applicant for a life and health insurance
8-4 counselor license who has attained the designation of chartered
8-5 life underwriter (CLU), chartered financial consultant (ChFC), or
8-6 certified financial planner (CFP);
8-7 (6) an applicant for a property and casualty license
8-8 who has attained the designation of chartered property and casualty
8-9 underwriter (CPCU);
8-10 (7) an applicant for a specialty license issued by the
8-11 department; or
8-12 (8) a nonresident individual who is exempt from the
8-13 examination requirement under Article 21.11 of this code.
8-14 Sec. 3. CONTINUING EDUCATION REQUIREMENTS. (a) The
8-15 department has exclusive jurisdiction for all matters relating to
8-16 the continuing education of insurance agents who are licensed under
8-17 this code.
8-18 (b) Except as provided by Subsection (d) of this section,
8-19 each individual who holds a license issued by the department shall
8-20 complete continuing education. All required continuing education
8-21 hours must be completed before the expiration date of the
8-22 individual's license. An individual who holds a life, accident,
8-23 and health license, a life and health insurance counselor license,
8-24 or a property and casualty license shall complete 15 hours of
8-25 continuing education annually. The agent may not be required to
8-26 complete more than 15 continuing education hours annually,
8-27 including an agent who holds more than one license for which
9-1 continuing education is required. An individual who holds a
9-2 limited life, accident, and health license or a limited property
9-3 and casualty license shall complete five hours of continuing
9-4 education annually. Each individual who holds a license issued by
9-5 the department shall complete 10 hours of continuing education in
9-6 ethics during each license renewal period. At least 50 percent of
9-7 all required continuing education hours must be completed in a
9-8 classroom setting or a classroom equivalent setting approved by the
9-9 department. The department may grant reciprocity to license
9-10 holders who complete continuing education requirements in other
9-11 professions or in association with professional designations in an
9-12 insurance-related field.
9-13 (c) On a timely written request of an agent, the department
9-14 may extend the time for the agent to comply with the continuing
9-15 education requirements of this section or may exempt the agent from
9-16 some or all of the requirements for a licensing period if the
9-17 department finds that the agent is unable to comply with the
9-18 requirements because of illness, medical disability, or another
9-19 extenuating circumstance beyond the control of the agent. The
9-20 commissioner by rule shall prescribe the criteria for an exemption
9-21 or extension under this subsection.
9-22 (d) An individual who has continuously held a license issued
9-23 under this code to operate as an insurance agent for the 20 years
9-24 preceding September 1, 1999, is exempt from the continuing
9-25 education requirements of this section. The commissioner by rule
9-26 may provide for other reasonable exemptions.
9-27 (e) The department shall certify continuing education
10-1 programs for agents. Only a program that satisfies the criteria
10-2 established by rule by the commissioner may receive certification.
10-3 The certification criteria shall be designed to ensure that
10-4 continuing education programs enhance the knowledge, understanding,
10-5 and professional competence of the license holder. A nonrefundable
10-6 certification fee, in an amount set by the commissioner as
10-7 necessary for administering the program, must accompany each
10-8 application for certification of a continuing education program.
10-9 The fee shall be established by rule and based on a graduated scale
10-10 according to the number of hours required to complete the program.
10-11 (f) Each continuing education program provider shall
10-12 register with the department as a course provider. The department
10-13 shall assess a registration fee for each application for
10-14 registration as a provider, set by the commissioner in an amount
10-15 necessary for the proper administration of this section. The
10-16 commissioner may adopt rules establishing the requirements for
10-17 continuing education program providers. The department may
10-18 negotiate agreements with independent contractors under which the
10-19 independent contractor certifies and registers continuing education
10-20 programs and providers. The department may require those
10-21 independent contractors to correspond directly with providers with
10-22 regard to the administration of continuing education programs, and
10-23 the contractors may collect fees from the providers for
10-24 administration of the programs. The department retains the
10-25 authority to establish the scope and type of continuing education
10-26 requirements for each type of license.
10-27 (g) The commissioner may appoint an advisory council to
11-1 furnish the commissioner with information and assistance in the
11-2 conduct of the continuing education program for agents licensed
11-3 under this subchapter. If an advisory council is appointed, it
11-4 must be composed of nine members, four of whom must be public
11-5 members. The public members are entitled to reimbursement for
11-6 their reasonable travel expenses in attending meetings of the
11-7 advisory council, subject to any applicable limit in the General
11-8 Appropriations Act. A public member may not:
11-9 (1) be an officer, director, or employee of an
11-10 insurance company, insurance agency, agent, broker, adjuster, or
11-11 any other business entity regulated by the department;
11-12 (2) be a person required to register with the Texas
11-13 Ethics Commission under Chapter 305, Government Code; or
11-14 (3) be related to a person described by Subdivision
11-15 (1) or (2) of this subsection within the second degree by affinity
11-16 or consanguinity, as determined under Chapter 573, Government Code.
11-17 SECTION 1.03. Section 2, Article 21.01-2, Insurance Code, is
11-18 redesignated as Section 1A, Article 21.01-2, Insurance Code, and
11-19 amended to read as follows:
11-20 Sec. 1A [2]. EXPIRATION AND RENEWAL OF LICENSES. (a)
11-21 Except as provided by a staggered renewal system adopted under
11-22 Subsection (h) of this section, each agent license issued by the
11-23 department expires on the fifth anniversary of the date of
11-24 issuance unless suspended or revoked by the commissioner. A person
11-25 may renew a [an unexpired] license that has not expired or has not
11-26 been suspended or revoked by filing a properly completed renewal
11-27 application with the department in the form prescribed by the
12-1 department and paying to the department before the expiration date
12-2 of the license the required renewal fee. A renewal fee paid under
12-3 this section is nonrefundable.
12-4 (b) On the filing of a completed renewal application not
12-5 later than the expiration date of the license accompanied by the
12-6 renewal fee set by the commissioner, the original license continues
12-7 in force until:
12-8 (1) the department issues the renewal license; or
12-9 (2) the commissioner issues an order revoking the
12-10 license.
12-11 (c) If a person's license has been expired for 90 days or
12-12 less, the person may renew the license by filing a renewal
12-13 application with the department in the form prescribed by the
12-14 department and paying to the department the required renewal fee
12-15 and an additional [a] fee that is equal to one-half of the renewal
12-16 [license] fee[, if any,] for the license.
12-17 (d) If a person's license has been expired for more than 90
12-18 days but less than one year, the person may not renew the license,
12-19 but is entitled to a new license without taking the applicable
12-20 examination if the person submits to the department a new
12-21 application, the license fee, and an additional fee equal to
12-22 one-half of the license fee.
12-23 (e) [(c)] If a person's license has been expired for one
12-24 year or more [longer than 90 days], the person may not renew the
12-25 license. The person may obtain a new license by submitting to
12-26 reexamination, if examination is required for original issuance of
12-27 the license, and complying with the requirements and procedures for
13-1 obtaining an original license.
13-2 (f) The [However, the] department may renew without
13-3 reexamination an expired license of a person who was licensed in
13-4 this state, moved to another state, and is currently licensed and
13-5 has been in continual practice in the other state for the two years
13-6 preceding application. The person must pay to the department a fee
13-7 that is equal to the license fee.
13-8 (g) [(d)] At least 30 days before the expiration of a
13-9 person's license, the department shall send written notice of the
13-10 impending license expiration to the person at the person's last
13-11 known mailing address according to the records of the department.
13-12 (h) [(e)] The commissioner by rule may adopt a system under
13-13 which licenses expire on various dates during a licensing period.
13-14 For the licensing period in which the license expiration is
13-15 changed, license fees shall be prorated [on a monthly basis] so
13-16 that each license holder shall pay only that portion of the license
13-17 fee that is allocable to the period [number of months] during which
13-18 the license is valid. On renewal of the license on the new
13-19 expiration date, the total license renewal fee is payable. The
13-20 commissioner shall adopt a system under which a person who holds
13-21 more than one license may renew all the licenses held in a single
13-22 process.
13-23 (i) [(f)] This section is not applicable to a license issued
13-24 under Article 21.07-6 or 21.07-7 of this code.
13-25 SECTION 1.04. Article 21.01-2, Insurance Code, is amended by
13-26 adding Section 2A to read as follows:
13-27 Sec. 2A. PROHIBITED ACTIVITIES. (a) A person licensed
14-1 under this code who receives a commission or other consideration
14-2 for services as an insurance agent may not receive an additional
14-3 fee for those services provided to the same client except for a fee
14-4 described by Article 21.35A or 21.35B of this code.
14-5 (b) An insurer or licensed insurance agent engaged in the
14-6 business of insurance in this state may not pay, directly or
14-7 indirectly, and may not accept, any commission or other valuable
14-8 consideration to or from any person for services performed by that
14-9 person as an insurance agent in this state unless the person holds
14-10 a license to act as an insurance agent as required by the laws of
14-11 this state. This subsection does not prevent the payment or
14-12 receipt of renewal or other deferred commissions to or by any
14-13 person solely because the person has ceased to hold a license to
14-14 act as an insurance agent.
14-15 (c) An insurance agent licensed under this code may not pay,
14-16 allow, or give, or offer to pay, allow, or give, directly or
14-17 indirectly, to any person who is not a licensed insurance agent,
14-18 any rebate of premiums payable, commission, paid employment, or
14-19 contract for service, or any other valuable consideration or
14-20 inducement, that is not specified in the policy or contract of
14-21 insurance for or on account of the solicitation or negotiation of
14-22 contracts of insurance.
14-23 (d) In addition to any other penalty imposed under this
14-24 code, a person who is determined by the department to have
14-25 committed conduct described by this subsection is barred from
14-26 receiving a license as an insurance agent before the fifth
14-27 anniversary of the date of the determination. This subsection
15-1 applies to a person who:
15-2 (1) acts as an insurance agent without holding a
15-3 license under this code;
15-4 (2) solicits a contract of insurance or acts as an
15-5 insurance agent without having been appointed or designated by an
15-6 authorized insurance company, association, or organization to do so
15-7 as provided by this code;
15-8 (3) solicits any contract of insurance or acts as an
15-9 agent for a person, including an insurance company, association, or
15-10 organization, not authorized to engage in the business of insurance
15-11 in this state; or
15-12 (4) as an officer or representative of an insurance
15-13 company, knowingly contracts with or appoints as an agent a person
15-14 who does not hold a valid and outstanding license.
15-15 (e) A person who has had an insurance license revoked in
15-16 this state or any other state may not solicit or otherwise transact
15-17 business under Chapter 10 of this code unless it is determined by
15-18 the department to be in the public interest, for good cause shown,
15-19 to allow the person to act in that capacity.
15-20 (f) A person who has had an insurance license revoked in
15-21 this state or any other state may not act as an officer, director,
15-22 member, manager, or partner, or as a shareholder with a controlling
15-23 interest, of an entity licensed under this subchapter unless it is
15-24 determined by the department to be in the public interest, for good
15-25 cause shown, to allow the person to act in that capacity.
15-26 (g) A property and casualty agent may not knowingly grant,
15-27 write, or permit a greater amount of insurance against loss by fire
16-1 than the reasonable value of the subject of the insurance.
16-2 SECTION 1.05. Section 5, Article 21.01-2, Insurance Code, is
16-3 redesignated as Section 3A, Article 21.01-2, Insurance Code, and
16-4 amended to read as follows:
16-5 Sec. 3A [5]. DENIAL OR REFUSAL OF LICENSE APPLICATION;
16-6 SUSPENSION OR REVOCATION OF LICENSES; DISCIPLINE OF LICENSE
16-7 HOLDERS. (a) In addition to any other remedy available under
16-8 Section 7, Article 1.10, of this code, the [The] department may
16-9 [shall] refuse to issue an original license, revoke, suspend, or
16-10 refuse to renew a license, place on probation a person whose
16-11 license has been suspended, assess an administrative penalty, or
16-12 reprimand a license holder for a violation of this code, another
16-13 insurance law of this state, or a rule of the commissioner [or the
16-14 board]. If a license suspension is probated, the commissioner may
16-15 require the person to:
16-16 (1) report regularly to the department on matters that
16-17 are the basis of the probation;
16-18 (2) limit the person's practice to the areas
16-19 prescribed by the department; or
16-20 (3) continue or review professional education until
16-21 the person attains a degree of skill satisfactory to the
16-22 commissioner in those areas that are the basis of the probation.
16-23 (b) If the department proposes to refuse to issue an
16-24 original license, or to suspend, revoke, or refuse to renew a
16-25 license, the person affected is entitled to a hearing conducted by
16-26 the State Office of Administrative Hearings in accordance with
16-27 Article 1.33B of this code. Notice of the hearing shall be
17-1 provided to the person and to any insurance carrier appearing on
17-2 the application as desiring that the license be issued.
17-3 (c) The department may discipline a license holder or deny a
17-4 license application under this article if the department determines
17-5 that the applicant or license holder, individually or through any
17-6 officer, director, or shareholder:
17-7 (1) has wilfully violated any provision of the
17-8 insurance laws of this state;
17-9 (2) has intentionally made a material misstatement in
17-10 the license application;
17-11 (3) has obtained, or attempted to obtain, a license by
17-12 fraud or misrepresentation;
17-13 (4) has misappropriated, converted to the applicant's
17-14 or holder's own use, or illegally withheld money belonging to:
17-15 (A) an insurer;
17-16 (B) a health maintenance organization; or
17-17 (C) an insured, enrollee, or beneficiary;
17-18 (5) has engaged in fraudulent or dishonest acts or
17-19 practices;
17-20 (6) has materially misrepresented the terms and
17-21 conditions of an insurance policy or contract, including a contract
17-22 relating to membership in a health maintenance organization;
17-23 (7) has made or issued, or caused to be made or
17-24 issued, any statement misrepresenting or making incomplete
17-25 comparisons regarding the terms or conditions of an insurance or
17-26 annuity contract legally issued by an insurer or a membership
17-27 issued by a health maintenance organization to induce the owner of
18-1 the contract or membership to forfeit or surrender the contract or
18-2 membership or allow it to lapse for the purpose of replacing the
18-3 contract or membership with another;
18-4 (8) is convicted of a felony;
18-5 (9) has offered or given a rebate of an insurance
18-6 premium or commission to an insured or enrollee;
18-7 (10) is not actively engaged in the soliciting or
18-8 writing of insurance for the public generally as required by
18-9 Section 2(c), Article 21.07, of this code; or
18-10 (11) has obtained or attempted to obtain a license,
18-11 not for the purpose of holding the license holder or applicant out
18-12 to the general public as an agent, but primarily for the purpose of
18-13 soliciting, negotiating, or procuring insurance or annuity
18-14 contracts or memberships covering:
18-15 (A) the applicant or license holder;
18-16 (B) a member of the applicant's or license
18-17 holder's family; or
18-18 (C) a business associate of the applicant or
18-19 license holder.
18-20 (d) An individual whose license application is denied or
18-21 whose license has been revoked under this article may not apply for
18-22 any license as an insurance agent before the fifth anniversary of:
18-23 (1) the effective date of the denial or revocation; or
18-24 (2) if the applicant or license holder seeks judicial
18-25 review of the department's action, the date of the final court
18-26 order or decree affirming that action.
18-27 (e) The commissioner may deny a timely application filed
19-1 under Subsection (d) of this section if the applicant does not show
19-2 good cause why the denial or revocation of the previous license
19-3 application or license should not be considered a bar to the
19-4 issuance of a new license. This subsection does not apply to an
19-5 applicant whose license application was denied for failure to:
19-6 (1) pass a required written examination; or
19-7 (2) submit a properly completed license application.
19-8 (f) Instead of or in addition to taking disciplinary action
19-9 under this section, the department may order that a license holder
19-10 who is currently afflicted with a disability be placed on
19-11 disability probation under the terms and conditions specified under
19-12 Article 21.15-6 of this code and department rules.
19-13 (g) This section applies to a person, other than a title
19-14 insurance company, licensed under Chapter 9 of this code. [The
19-15 commissioner shall prescribe procedures by which all decisions to
19-16 deny, suspend, or revoke a license, or to refuse to renew a
19-17 license, are made by or are appealable to the commissioner.]
19-18 SECTION 1.06. Article 21.01-2, Insurance Code, is amended by
19-19 adding Sections 4A, 5A, and 6A to read as follows:
19-20 Sec. 4A. JUDICIAL REVIEW. A license applicant or license
19-21 holder may appeal as provided by Article 1.04 of this code if:
19-22 (1) the commissioner:
19-23 (A) refuses an application for a license as
19-24 provided by this article; or
19-25 (B) suspends, revokes, or refuses to renew a
19-26 license at a hearing as provided by this article; or
19-27 (2) the applicant or license holder is dissatisfied
20-1 with another action of the commissioner.
20-2 Sec. 5A. AUTOMATIC FINES. (a) To expedite the department's
20-3 processing of certain violations of this code, the commissioner may
20-4 establish by rule monetary fines for certain violations. Violations
20-5 for which the fines may be assessed include a failure to:
20-6 (1) obtain the total number of continuing education
20-7 hours before the renewal date of the license;
20-8 (2) timely report a change of address to the
20-9 department; or
20-10 (3) notify the department of an administrative action
20-11 taken against the agent by another state's insurance regulator.
20-12 (b) This section may not be construed to limit the
20-13 department's authority to take any other disciplinary action
20-14 against a license holder as provided under another provision of
20-15 this code.
20-16 (c) If a person disputes the assessment of a fine under this
20-17 section, the matter is a contested case subject to Chapter 2001,
20-18 Government Code.
20-19 Sec. 6A. ENFORCEMENT OF SUBCHAPTER. The attorney general, a
20-20 district or county attorney, or the department acting through the
20-21 commissioner may institute an injunction proceeding or any other
20-22 proceeding to enforce this subchapter and to enjoin any person,
20-23 firm, corporation, or bank from engaging or attempting to engage in
20-24 the business of insurance in violation of this code or any other
20-25 insurance law of this state. The provisions of this section are
20-26 cumulative of the other penalties or remedies provided by this
20-27 article.
21-1 SECTION 1.07. Article 21.04, Insurance Code, is amended to
21-2 read as follows:
21-3 Art. 21.04. LICENSE HOLDER [SOLICITOR] DEEMED COMPANY'S
21-4 AGENT. Any person who solicits an application for life, accident,
21-5 or health insurance, or property or casualty insurance, shall, in
21-6 any controversy between the insured or the insured's beneficiary
21-7 and the company issuing any policy upon such application or between
21-8 the insured or the insured's dependents and that company, be
21-9 regarded as the agent of the company, and not the agent of the
21-10 insured, but such agent shall not have the power to waive, change
21-11 or alter any of the terms or conditions of the application or
21-12 policy.
21-13 SECTION 1.08. Article 21.06, Insurance Code, is amended to
21-14 read as follows:
21-15 Art. 21.06. AUTHORITY TO APPOINT [CERTIFICATES FOR] AGENTS.
21-16 Each [such] foreign or domestic insurance company shall, by
21-17 resolution of its board of directors, designate an [some] officer
21-18 or agent who is empowered to appoint or employ its agents [or
21-19 solicitors] in this State, and such officer or agent shall promptly
21-20 notify the department [Board] in writing of the name, title, and
21-21 address of each person so appointed or employed. The authority of
21-22 that designee to act on behalf of the insurance company continues
21-23 in force, [Upon receipt of this notice, the Board shall issue to
21-24 him a certificate which shall include a copy of the certificate of
21-25 authority authorizing the company requesting it to do business in
21-26 this State, and the name and title of the person to whom the
21-27 certificate is issued. Such certificate,] unless sooner revoked by
22-1 the commissioner [Board] for cause or cancelled at the request of
22-2 the insurance company, [employing the holder thereof, shall
22-3 continue in force] until the first day of March next after its
22-4 issuance, and must be renewed annually.
22-5 SECTION 1.09. Section 1, Article 21.07, Insurance Code, is
22-6 amended to read as follows:
22-7 Sec. 1. APPLICABILITY OF ARTICLE [ACT]. [(a)] No person[,
22-8 corporation, or bank] shall act as an agent of any insurance
22-9 company, health maintenance organization, or [(i) local mutual aid
22-10 association, (ii) local mutual burial association, (iii) statewide
22-11 mutual assessment corporation, (iv) stipulated premium company, (v)
22-12 county mutual insurance company, (vi) casualty company writing
22-13 accident and health insurance, or (vii) any] other type of
22-14 insurance carrier licensed to do business in the State of Texas and
22-15 which insurance carrier's agents are required to be licensed under
22-16 the provisions of this code [Article, on the date that this Act
22-17 shall become effective,] unless that person [individual or entity]
22-18 shall have first procured a license from the department as [in this
22-19 Article is] provided by this subchapter, and no such insurance
22-20 carrier shall appoint any person[, corporation, or bank] to act as
22-21 its agent unless such person[, corporation, or bank] shall have
22-22 obtained a license under the provisions of this subchapter
22-23 [Article], and no such person[, corporation, or bank] who obtains a
22-24 license shall engage in business as an agent until that person
22-25 [individual or entity] shall have been appointed to act as an agent
22-26 by some duly authorized insurance carrier designated by the
22-27 provisions of this code [Article] and authorized to do business in
23-1 the State of Texas. [Any person, corporation, or bank desiring to
23-2 act as an agent of any insurance carrier licensed to do business in
23-3 the State of Texas and writing health and accident insurance may
23-4 obtain a separate license as an agent to write health and accident
23-5 insurance provided such person, corporation, or bank complies with
23-6 the provisions of this Article and has been appointed to act as an
23-7 agent by some duly authorized insurance carrier authorized to do
23-8 health and accident insurance business in the State of Texas.]
23-9 [(b) No insurer or licensed insurance agent doing business
23-10 in this State shall pay directly or indirectly any commission, or
23-11 other valuable consideration, to any person, corporation, or bank
23-12 for services as an insurance agent within this State, unless such
23-13 person, corporation, or bank shall hold a currently valid license
23-14 to act as an insurance agent as required by the laws of this State;
23-15 nor shall any person, corporation, or bank other than a duly
23-16 licensed insurance agent, accept any such commission or other
23-17 valuable consideration; provided, however, that the provisions of
23-18 this Section shall not prevent the payment or receipt of renewal or
23-19 other deferred commissions to or by any person solely because such
23-20 person, corporation, or bank has ceased to hold a license to act as
23-21 an insurance agent.]
23-22 [(c) A person who has had a license revoked under Section 10
23-23 of this Article may not solicit or otherwise transact business
23-24 under Chapter 10 of this code.]
23-25 SECTION 1.10. Section 1A, Article 21.07, Insurance Code, is
23-26 amended to read as follows:
23-27 Sec. 1A. DEFINITIONS. Unless the context clearly indicates
24-1 otherwise, in [In] this subchapter:
24-2 (1) "Agent" means a person who is an authorized agent
24-3 of an insurance company or health maintenance organization, any
24-4 person who is a sub-agent of an agent, and any other person who
24-5 performs the acts of an agent, whether through an oral, written, or
24-6 electronic communication or otherwise, in the solicitation of,
24-7 negotiation for, procurement of, or collection of premiums on an
24-8 insurance or annuity contract, or who represents or purports to
24-9 represent a health maintenance organization, including a health
24-10 maintenance organization offering only a single health care service
24-11 plan, in the solicitation of, negotiation for, procurement of, or
24-12 effectuation of membership in the health maintenance organization.
24-13 The term does not include:
24-14 (A) a regular salaried officer or employee of an
24-15 insurance company, health maintenance organization, or insurance
24-16 agent who:
24-17 (i) devotes substantially all of the
24-18 officer's or employee's time to activities other than the
24-19 solicitation of applications for insurance, annuity contracts, or
24-20 memberships;
24-21 (ii) does not receive a commission or
24-22 other compensation directly dependent on the business obtained; and
24-23 (iii) does not solicit or accept from the
24-24 public applications for insurance, annuity contracts, or
24-25 memberships;
24-26 (B) an employer or an employer's officers or
24-27 employees or the trustees of an employee benefit plan, to the
25-1 extent that those employers, officers, employees, or trustees are
25-2 engaged in the administration or operation of any program of
25-3 employee benefits involving the use of insurance or annuities
25-4 issued by an insurance company or memberships issued by a health
25-5 maintenance organization, if those employers, officers, employees,
25-6 or trustees are not compensated, directly or indirectly, by the
25-7 insurance company or health maintenance organization issuing the
25-8 insurance or annuity contracts or memberships;
25-9 (C) except as otherwise provided by this code, a
25-10 bank, a savings and loan association, or a credit union, or the
25-11 officers and employees of banks, savings and loan associations, or
25-12 credit unions, to the extent that those banks, savings and loan
25-13 associations, credit unions, or officers and employees collect and
25-14 remit premiums or charges by charging those premiums or charges
25-15 against accounts of depositors on the orders of those depositors;
25-16 or
25-17 (D) a person or the employee of a person who has
25-18 contracted to provide administrative, management, or health care
25-19 services to a health maintenance organization and who is
25-20 compensated for those services by the payment of an amount computed
25-21 as a percentage of the revenues, net income, or profit of the
25-22 health maintenance organization, if that method of compensation is
25-23 the sole basis for subjecting that person or the employee of the
25-24 person to this article.
25-25 (2) "Bank" means:
25-26 (A) a national banking association organized and
25-27 existing under the National Bank Acts (12 U.S.C. Section 21 et
26-1 seq.), as amended;
26-2 (B) a state bank organized and existing under
26-3 Subtitle A, Title 3, Finance Code;
26-4 (C) a state savings bank organized and existing
26-5 under Subtitle C, Title 3, Finance Code;
26-6 (D) a bank branch; or
26-7 (E) a bank operating subsidiary, as defined by
26-8 state or federal law.
26-9 (3) "Control" means the power to direct or cause the
26-10 direction of the management and policies of a license holder,
26-11 whether directly or indirectly. For the purposes of this
26-12 subchapter, a person is considered to control:
26-13 (A) a corporate license holder if the person,
26-14 individually or acting with others, directly or indirectly, holds
26-15 with the power to vote, owns, or controls, or holds proxies
26-16 representing, at least 10 percent of the voting stock or voting
26-17 rights of the corporate license holder; and
26-18 (B) a partnership if the person through a right
26-19 to vote or through any other right or power exercises rights in the
26-20 management, direction, or conduct of the business of the
26-21 partnership.
26-22 (4) "Corporation" means a legal entity that is
26-23 organized under the business corporations laws or limited liability
26-24 company laws of this state, another state, or a territory of the
26-25 United States and that has as one of its purposes the authority to
26-26 act as an insurance agent. The licensing and regulation of a
26-27 limited liability company is subject to all provisions of this
27-1 subchapter that apply to a corporation licensed under this
27-2 subchapter.
27-3 (5) "Individual" means a natural person. The term
27-4 includes a resident or a nonresident of this state.
27-5 (6) "Insurance company," "insurance carrier," or
27-6 "insurer" means an insurance company regulated by the department.
27-7 The term includes:
27-8 (A) any domestic or foreign, stock and mutual,
27-9 life, health, or accident insurance company;
27-10 (B) any domestic or foreign, stock and mutual,
27-11 fire and casualty insurance company;
27-12 (C) a Mexican casualty company;
27-13 (D) a domestic or foreign Lloyd's plan insurer;
27-14 (E) a domestic or foreign reciprocal or
27-15 interinsurance exchange;
27-16 (F) a domestic or foreign fraternal benefit
27-17 society;
27-18 (G) a stipulated premium insurance company;
27-19 (H) a nonprofit or for-profit legal service
27-20 corporation;
27-21 (I) a statewide mutual assessment company;
27-22 (J) a local mutual aid association;
27-23 (K) a local mutual burial association;
27-24 (L) an exempt association under Article 14.17 of
27-25 this code;
27-26 (M) a nonprofit hospital, medical, or dental
27-27 service corporation, including a company subject to Chapter 20 of
28-1 this code;
28-2 (N) a health maintenance organization;
28-3 (O) a county mutual insurance company; or
28-4 (P) a farm mutual insurance company.
28-5 (7) "Partnership" means an association of two or more
28-6 persons organized under the partnership laws or limited liability
28-7 partnership laws of this state, another state, or a territory of
28-8 the United States. The term includes a general partnership,
28-9 limited partnership, limited liability partnership, and limited
28-10 liability limited partnership.
28-11 (8) "Person" means an individual, partnership,
28-12 corporation, or bank.
28-13 (9) "Sub-agent" means any person, other than a
28-14 regular salaried officer or employee of an insurance company,
28-15 insurance carrier, or health maintenance organization, or of an
28-16 agent, engaging in activities described under Subdivision (1) of
28-17 this section who acts for or on behalf of an agent, whether through
28-18 an oral, written, or electronic communication or otherwise, in the
28-19 solicitation of, negotiation for, or procurement of an insurance or
28-20 annuity contract or health maintenance organization membership, or
28-21 the collection of premiums or charges on an insurance or annuity
28-22 contract or health maintenance organization membership, whether or
28-23 not the sub-agent is designated by the agent as a sub-agent or by
28-24 any other title. A sub-agent is an agent, for all purposes of this
28-25 subchapter, and wherever the term "agent" is used in this chapter,
28-26 it includes sub-agents whether or not a sub-agent is specifically
28-27 mentioned [Article, "person" means an individual or a general
29-1 partnership composed of two or more individuals or a limited
29-2 liability partnership registered with the Secretary of State under
29-3 Section 3.08, Texas Revised Partnership Act (Article 6132b-3.08,
29-4 Vernon's Texas Civil Statutes). The term "partnership" or "agency
29-5 partnership" as used in this Article means a general partnership or
29-6 a registered limited liability partnership].
29-7 SECTION 1.11. Section 2, Article 21.07, Insurance Code, is
29-8 amended to read as follows:
29-9 Sec. 2. APPLICATION FOR LICENSE; TO WHOM LICENSE MAY BE
29-10 ISSUED. (a) Any person[, corporation, or bank] that desires to
29-11 become an agent for an [a local mutual aid association, a local
29-12 mutual burial association, a statewide mutual assessment
29-13 corporation, a stipulated premium company, a county mutual]
29-14 insurance company or health maintenance organization [, a casualty
29-15 company writing accident and health insurance, or any other type of
29-16 insurance carrier licensed to do business in the State of Texas],
29-17 the agents of which are required to be licensed under this
29-18 subchapter [Article], shall submit to the department an application
29-19 for a license in the form required by the department.
29-20 (b) Each applicant for a license to act as an insurance
29-21 agent in this state shall file with the commissioner a completed
29-22 application on forms developed by the department. The commissioner
29-23 shall establish by rule the requirements for a properly completed
29-24 application.
29-25 (c) The commissioner may not grant a license as an insurance
29-26 agent to write any form of insurance unless the department finds
29-27 that:
30-1 (1) the applicant is or intends to be actively engaged
30-2 in the soliciting or writing of insurance for the public generally
30-3 and is to be actively engaged in the business of insurance; and
30-4 (2) the application is not made to evade the laws
30-5 against rebating and discrimination, either for the applicant or
30-6 for some other person.
30-7 (d) This section does not prohibit an applicant insuring
30-8 property that the applicant owns or in which the applicant has an
30-9 interest, but it is the intent of this section to prohibit coercion
30-10 of insurance and to preserve to each individual the right to choose
30-11 that individual's own agent or insurance company, and to prohibit
30-12 the licensing of a person to engage in the insurance business
30-13 principally to handle business that the applicant controls only
30-14 through ownership, mortgage or sale, family relationship, or
30-15 employment. An applicant for an original license must have a bona
30-16 fide intention to engage in business in which, in any calendar
30-17 year, at least 25 percent of the total volume of premiums is
30-18 derived from persons other than the applicant and from property
30-19 other than that on which the applicant controls the placing of
30-20 insurance through ownership, mortgage, sale, family relationship,
30-21 or employment.
30-22 (e) The department may not deny a license application solely
30-23 on the ground that the applicant will act only part-time as an
30-24 agent.
30-25 (f) Subject to Article 21.11 of this code, the [The
30-26 application must bear a signed endorsement by an officer or
30-27 properly authorized representative of the insurance carrier that
31-1 the individual applicant or each member of the partnership or each
31-2 officer, director, and shareholder of the corporation or the
31-3 responsible officer and employee of the bank is qualified to hold
31-4 that individual or the partnership, the corporation, or the bank
31-5 out in good faith to the general public as an insurance agent, and
31-6 that the insurance carrier desires that the applicant act as an
31-7 insurance agent to represent it in this State.]
31-8 [(c) The] department shall issue a license to an individual
31-9 to engage [or to a general partnership engaging] in the business of
31-10 insurance if the department finds that the individual:
31-11 (1) is at least 18 years of age;
31-12 (2) has passed the licensing examination required
31-13 under Article 21.01-1 of this code within the past 12 months;
31-14 (3) has not committed an act for which a license may
31-15 be denied under Article 21.01-2 of this code; and
31-16 (4) has submitted the application, appropriate fees,
31-17 and any other information required by the department.
31-18 (g) An individual engaging in the business of insurance as a
31-19 sole proprietorship under the authority of a license issued under
31-20 this subchapter may incorporate, but the corporation does not have
31-21 greater license authority than that granted to the license holder
31-22 in the holder's individual capacity.
31-23 (h) Each individual license holder shall notify the
31-24 department on a monthly basis of:
31-25 (1) a change of the license holder's mailing address;
31-26 (2) a conviction of the license holder of a felony; or
31-27 (3) an administrative action taken against the license
32-1 holder by the insurance regulator of another state [partner in the
32-2 partnership must be licensed individually as an agent under this
32-3 Article].
32-4 (i) [(d)] The department shall issue a license to a
32-5 corporation or partnership if the department finds that:
32-6 (1) [That] the corporation or partnership is:
32-7 (A) organized under the laws of this state or
32-8 any other state or territory of the United States;
32-9 (B) admitted to conduct business in this state
32-10 by the secretary of state, if so required; and
32-11 (C) authorized by its articles of incorporation
32-12 or its partnership agreement to act as an insurance agent [a Texas
32-13 corporation organized or existing under the Texas Business
32-14 Corporation Act or the Texas Professional Corporation Act (Article
32-15 1528e, Vernon's Texas Civil Statutes) having its principal place of
32-16 business in the State of Texas and having as one of its purposes
32-17 the authority to act as an agent covered by this Article];
32-18 (2) the corporation or partnership meets the
32-19 definition of that entity adopted under Section 1A of this article;
32-20 [That every officer, director, and shareholder of the corporation
32-21 is individually licensed under the provisions of this Article, or
32-22 that every officer and director of the corporation is individually
32-23 licensed under this Article, that the corporation is a wholly owned
32-24 subsidiary of a parent corporation that is licensed under this
32-25 Article, and that every shareholder of the parent corporation is
32-26 individually licensed under this Article; and]
32-27 (3) at least one officer of the corporation or one
33-1 active partner of the partnership and all other persons performing
33-2 any acts of an agent on behalf of the corporation or partnership in
33-3 this state are individually licensed by the department separately
33-4 from the corporation or partnership;
33-5 (4) the [That such] corporation or partnership will
33-6 have the ability to pay any sums up to $25,000 which it might
33-7 become legally obligated to pay on account of any claim made
33-8 against it by any customer and caused by any negligent act, error,
33-9 or omission of the corporation or partnership or any person for
33-10 whose acts the corporation or partnership is legally liable in the
33-11 conduct of its business under this code [Article]. The term
33-12 "customer" means any person, firm, or corporation to whom such
33-13 corporation or partnership sells or attempts to sell a policy of
33-14 insurance, or from whom such corporation or partnership accepts an
33-15 application for insurance. Such ability shall be maintained
33-16 [proven] in one of the following ways:
33-17 (A) an errors and omissions policy insuring such
33-18 corporation or partnership against errors and omissions in at least
33-19 the sum of $100,000 with no more than a $10,000 deductible feature
33-20 issued by an insurance company licensed to do business in this
33-21 state [the State of Texas] or, if a policy cannot be obtained from
33-22 a company licensed to do business in this state [Texas], a policy
33-23 issued by a company not licensed to do business in this state after
33-24 [Texas on] filing an affidavit with the department stating the
33-25 inability to obtain coverage and receiving the commissioner's
33-26 approval; or
33-27 (B) a bond executed by such corporation or
34-1 partnership as principal and a surety company authorized to do
34-2 business in this state [State], as surety, in the principal sum of
34-3 $25,000, payable to the department for the use and benefit of
34-4 customers of such corporation or partnership, conditioned that such
34-5 corporation or partnership shall pay any final judgment recovered
34-6 against it by any customer[; or]
34-7 [(C) a deposit of cash or securities of the
34-8 class authorized by Articles 2.08 and 2.10, Insurance Code, as
34-9 amended, having a fair market value of $25,000 with the
34-10 comptroller. The comptroller is directed to accept and receive
34-11 such deposit and hold it exclusively for the protection of any
34-12 customer of such corporation recovering a final judgment against
34-13 such corporation. Such deposit may be withdrawn only upon filing
34-14 with the department evidence satisfactory to it that the
34-15 corporation has withdrawn from business and has no unsecured
34-16 liabilities outstanding, or that such corporation has provided for
34-17 the protection of its customers by furnishing an errors and
34-18 omissions policy or a bond as provided. Securities so deposited
34-19 may be exchanged from time to time for other qualified securities].
34-20 A binding commitment to issue such a policy or bond[, or the tender
34-21 of such securities] shall be sufficient in connection with any
34-22 application for license;
34-23 (5) the corporation or partnership intends to be
34-24 actively engaged in the business of insurance as required under
34-25 Subsection (c) of this section;
34-26 (6) each branch location from which the corporation or
34-27 partnership will conduct its business in this state under authority
35-1 of an insurance license is separately registered with the
35-2 department;
35-3 (7) the corporation or partnership has submitted the
35-4 application, appropriate fees, and any other information required
35-5 by the department; and
35-6 (8) an officer, director, member, manager, partner, or
35-7 any other person who has the right or ability to control the
35-8 license holder has not:
35-9 (A) had a license suspended or revoked or been
35-10 the subject of any other disciplinary action by the insurance
35-11 regulator of this or any other state; or
35-12 (B) committed an act for which a license may be
35-13 denied under Article 21.01-2 of this code.
35-14 (j) Nothing contained in this section [herein] shall be
35-15 construed to permit any unlicensed employee or agent of any
35-16 corporation or partnership to perform any act of an agent under
35-17 this subchapter [Article] without obtaining a license.
35-18 (k) [If at any time, any corporation holding an agent's
35-19 license does not maintain the qualifications necessary to obtain a
35-20 license, the license of such corporation to act as an agent shall
35-21 be cancelled or denied in accordance with the provisions of
35-22 Sections 10 and 11 of this Article; provided, however, that should
35-23 any person who is not a licensed agent under this Article acquire
35-24 shares in such a corporation by devise or descent, that such person
35-25 shall have a period of 90 days from the date of acquisition within
35-26 which to obtain a license under this Article.]
35-27 [Should such an unlicensed person acquire shares in a
36-1 corporation and not dispose of them within a period of 90 days to a
36-2 licensed agent, then they must be purchased by the corporation for
36-3 their book value, that is, the value of said shares of stock as
36-4 reflected by the regular books and records of said corporation, as
36-5 of the date of the acquisition of said shares by said unlicensed
36-6 person. Should the corporation fail or refuse to so purchase such
36-7 shares, its license shall be cancelled.]
36-8 [Any such corporation shall have the power to redeem
36-9 the shares of any shareholder, or the shares of a deceased
36-10 shareholder, upon such terms as may be agreed upon by the board of
36-11 directors and such shareholder or such shareholder's personal
36-12 representative, or at a price and upon such terms as may be
36-13 provided in the articles of incorporation, the bylaws, or an
36-14 existing contract entered into between the shareholders of the
36-15 corporation.]
36-16 Each corporation or partnership licensed as an agent
36-17 under this subchapter [Article] shall file, under oath, on a form
36-18 developed by the department, biographical information for each [a
36-19 list of the names and addresses of all] of its executive officers
36-20 and[,] directors or unlicensed partners who administer the entity's
36-21 operations in this state, and shareholders who are in control of
36-22 the corporation, or any other partners who have the right or
36-23 ability to control the partnership. If any corporation or
36-24 partnership is owned, in whole or in part, by another entity, a
36-25 biographical form is required for each individual who is in control
36-26 of the parent entity[, and shareholders with its application for
36-27 renewal license].
37-1 (l) Each corporation or partnership shall notify the
37-2 department on a monthly basis of:
37-3 (1) the addition or removal of licensed agents
37-4 employed by the corporation or partnership to perform any act of an
37-5 agent in this state;
37-6 (2) a felony conviction of a licensed agent of the
37-7 entity or any individual associated with the corporation or
37-8 partnership who is required to file biographical information with
37-9 the department;
37-10 (3) an event that would require notification under
37-11 Article 1.30 of this code; and
37-12 (4) the addition or removal of an officer, director,
37-13 partner, member, or manager.
37-14 (m) The department shall issue a license to a bank in the
37-15 manner provided for the licensing of a corporation under this
37-16 section.
37-17 (n) A person may not acquire in any manner any ownership
37-18 interest in an entity licensed as an agent under this subchapter if
37-19 the person is, or after the acquisition would be, directly or
37-20 indirectly, in control of the license holder, or otherwise acquire
37-21 control of or exercise any control over the license holder, unless
37-22 the person has filed the following information with the department
37-23 under oath:
37-24 (1) a biographical form for each person by whom or on
37-25 whose behalf the acquisition of control is to be effected;
37-26 (2) a statement certifying that no person who is
37-27 acquiring an ownership interest in or control of the license holder
38-1 has been the subject of a disciplinary action taken by any state
38-2 insurance regulator;
38-3 (3) a statement certifying that, immediately on the
38-4 change of control, the license holder will be able to satisfy the
38-5 requirements for the issuance of the license to solicit the line or
38-6 lines of insurance for which it is licensed; and
38-7 (4) any additional information that the commissioner
38-8 may by rule prescribe as necessary or appropriate to the protection
38-9 of the insurance consumers of this state or as in the public
38-10 interest.
38-11 (o) If a person required to file a statement under
38-12 Subsection (n) of this section is a partnership, limited
38-13 partnership, syndicate, or other group, the commissioner may
38-14 require that the information required by Subdivisions (1)-(4) of
38-15 that subsection for an individual be provided regarding each
38-16 partner of the partnership or limited partnership, each member of
38-17 the syndicate or group, and each person who controls the partner or
38-18 member. If the partner, member, or person is a corporation or the
38-19 person required to file the statement under Subsection (n) of this
38-20 section is a corporation, the commissioner may require that the
38-21 information required by Subdivisions (1)-(4) of that subsection be
38-22 provided regarding:
38-23 (1) the corporation;
38-24 (2) each individual who is an executive officer or
38-25 director of the corporation; and
38-26 (3) each person who is directly or indirectly the
38-27 beneficial owner of more than 10 percent of the outstanding voting
39-1 securities of the corporation.
39-2 (p) The department may disapprove an acquisition of control
39-3 if, after notice and opportunity for hearing, the commissioner
39-4 determines that:
39-5 (1) immediately on the change of control the license
39-6 holder would not be able to satisfy the requirements for the
39-7 issuance of the license to solicit the line or lines of insurance
39-8 for which it is presently licensed;
39-9 (2) the competence, trustworthiness, experience, and
39-10 integrity of the persons who would control the operation of the
39-11 license holder are such that it would not be in the interest of the
39-12 insurance consumers of this state to permit the acquisition of
39-13 control; or
39-14 (3) the acquisition of control would violate this code
39-15 or another law of this state, another state, or the United States.
39-16 (q) Notwithstanding Subsection (o) of this section, a change
39-17 in control is considered approved if the department has not
39-18 proposed to deny the requested change before the 91st day after the
39-19 date of receipt by the department of all information required by
39-20 this section.
39-21 (r) The commissioner shall be the corporation's or
39-22 partnership's attorney for service of process on whom all lawful
39-23 process, notice, or demand may be served in any legal proceeding
39-24 against the corporation or partnership if:
39-25 (1) the corporation or partnership licensed to
39-26 transact business in this state fails to appoint or maintain an
39-27 attorney for service in this state;
40-1 (2) an attorney for service cannot with reasonable
40-2 diligence be found; or
40-3 (3) the license of a corporation or partnership is
40-4 revoked.
40-5 (s) If a corporation or partnership that holds an agent's
40-6 license does not maintain the qualifications necessary for issuance
40-7 of the license, the department shall deny, revoke, or suspend the
40-8 license of the corporation or partnership to act as an agent as
40-9 provided by Article 21.01-2 of this code.
40-10 [Each corporation shall notify the department upon any
40-11 change in its officers, directors, or shareholders not later than
40-12 the 30th day after the date on which the change becomes effective.]
40-13 [Except as provided by Subdivision (2) of this
40-14 subsection, a corporation may not own any interest in another
40-15 corporation licensed under this Article, and each owner of an
40-16 interest in a corporation licensed under this Article shall be a
40-17 natural person who holds a valid license issued under this Article.]
40-18 [(e) The department shall issue a license to a bank if the
40-19 department finds that:]
40-20 [(1) the bank satisfies the definition of Section 1C
40-21 of this Article;]
40-22 [(2) at least one officer of the bank and each
40-23 individual who will be performing any acts as an agent for the bank
40-24 are individually licensed under this Article; and]
40-25 [(3) the bank will have the ability to pay any sums up
40-26 to $25,000 that it might become legally obligated to pay on account
40-27 of any claim made against it by a customer and caused by a
41-1 negligent act, error, or omission of the bank or any person for
41-2 whose acts the bank is legally liable in the conduct of its
41-3 business under this Article. The term "customer" means any person,
41-4 firm, or corporation to whom the bank sells or attempts to sell a
41-5 policy of insurance or from whom the bank accepts an application
41-6 for insurance. That ability shall be proven through:]
41-7 [(A) an errors and omissions policy insuring the
41-8 bank against errors and omissions in at least the sum of $100,000
41-9 with not more than a $10,000 deductible feature, issued by an
41-10 insurance company licensed to do business in this state or, if a
41-11 policy cannot be obtained from a company licensed to do business in
41-12 this state, a policy issued by a company not licensed to do
41-13 business in this state on filing an affidavit with the department
41-14 stating the inability to obtain coverage and receiving the
41-15 department's approval;]
41-16 [(B) a bond executed by the bank as principal
41-17 and a surety company authorized to do business in this state, as
41-18 surety, in the principal sum of $25,000, payable to the department
41-19 for the use and benefit of customers of the bank, conditioned that
41-20 the bank shall pay any final judgment recovered against it by a
41-21 customer; or]
41-22 [(C) a deposit with the comptroller of cash or
41-23 securities of the class authorized by Articles 2.08 and 2.10 of
41-24 this code, with a fair market value of $25,000. The comptroller
41-25 shall accept and receive the deposit and hold it exclusively for
41-26 the protection of a customer of the bank who recovers a final
41-27 judgment against the bank. The deposit may be withdrawn only on
42-1 filing with the department satisfactory evidence that the bank has
42-2 withdrawn from the business of insurance and has no unsecured
42-3 liabilities outstanding or that the bank has provided for the
42-4 protection of its customers by furnishing an errors and omissions
42-5 policy or a bond as provided by this subdivision. Securities so
42-6 deposited may be exchanged from time to time for other qualified
42-7 securities.]
42-8 [A binding commitment to issue such a policy or bond,
42-9 or the tender of applicable securities, is sufficient in connection
42-10 with an application for license.]
42-11 [Nothing in this subsection permits an unlicensed
42-12 employee or agent of a bank to perform any act of an agent under
42-13 this Article without obtaining a license.]
42-14 [A bank licensed as an agent under this Article may
42-15 have additional offices from which the business of insurance is
42-16 conducted only in a place with a population of 5,000 or less and
42-17 must comply with the department's regulations regarding additional
42-18 offices.]
42-19 [A bank licensed as an agent under this Article must
42-20 maintain the insurance records of the bank, including all files
42-21 relating to customer complaints, separate from records relating to
42-22 the banking transactions of the bank.]
42-23 [If at any time, a bank that holds an agent's license
42-24 does not maintain the qualifications necessary to obtain a license,
42-25 the license of that bank to act as an agent shall be canceled or
42-26 denied in accordance with Sections 10 and 11 of this Article.]
42-27 [Each bank licensed as an agent under this Article
43-1 shall file under oath with its application for license renewal a
43-2 list of the name and address of each individual who will be acting
43-3 as an agent on behalf of the bank and of each officer and director
43-4 of the bank, as defined by Article 21.02 of this code, and other
43-5 biographical information as required by the department.]
43-6 [Each bank shall notify the department of any change in
43-7 its officers and directors, and any change in other persons who
43-8 will be acting as agents, as defined by Article 21.02 of this code,
43-9 and submit biographical information on those officers, directors,
43-10 and persons as required by the department not later than the 30th
43-11 day after the date on which the change takes effect.]
43-12 SECTION 1.12. Section 6, Article 21.07, Insurance Code, is
43-13 amended to read as follows:
43-14 Sec. 6. FILING OF [AGENT MAY BE LICENSED TO REPRESENT]
43-15 ADDITIONAL APPOINTMENTS [INSURERS]. (a) Except as specifically
43-16 prohibited by another provision of this code, an [Any] agent
43-17 licensed under this subchapter [Article] may represent and act as
43-18 an agent for more than one insurance carrier at any time while the
43-19 agent's license is in force, if the agent so desires. Any such
43-20 agent and the insurance carrier involved shall file with the
43-21 department [must give notice to the State Board of Insurance of]
43-22 any additional appointment [or appointments] authorizing the agent
43-23 to act as agent for an additional insurance carrier or carriers not
43-24 later than the 30th day after the effective date of the
43-25 appointment. The filing [Such notice] must include:
43-26 (1) [be accompanied by] a certificate from the [each]
43-27 insurance carrier to be named in the [each] additional appointment
44-1 that states[, and must state] that the [said] insurance company
44-2 desires to appoint the applicant as its agent;
44-3 (2)[. This notice shall also contain such] other
44-4 information as the commissioner [State Board of Insurance] may
44-5 require; and
44-6 (3)[. The agent shall be required to pay] a
44-7 nonrefundable fee in an amount [not to exceed $16 as] determined by
44-8 the commissioner [State Board of Insurance] for each additional
44-9 appointment for which the insurance carrier applies [applied for,
44-10 which fee shall accompany the notice. If approval of the
44-11 additional appointment is not received from the State Board of
44-12 Insurance before the eighth day after the date on which the
44-13 completed application and fee were received by the Board, the agent
44-14 and the insurance carrier, in the absence of notice of disapproval,
44-15 may assume that the Board approves the application, and the agent
44-16 may act for the insurance carrier].
44-17 (b) An appointment made under this Article to authorize an
44-18 agent to act as an agent for an insurance carrier continues in
44-19 effect without the necessity of renewal until it is terminated or
44-20 [and] withdrawn by the insurance carrier or agent. If the agent is
44-21 terminated for cause, the insurance carrier shall follow the
44-22 procedures established under Section 6B of [as provided by this
44-23 section or is otherwise terminated in accordance with] this
44-24 Article. Each renewal license issued to the agent authorizes the
44-25 agent to represent and act for the insurance carriers for which the
44-26 agent holds an appointment until the appointment is terminated or
44-27 withdrawn, and that agent is considered to be the agent of the
45-1 appointing insurance carriers for the purposes of this code
45-2 [Article].
45-3 (c) An agent appointed under this section may act on behalf
45-4 of the appointing carrier before the department receives the filing
45-5 made under this section.
45-6 SECTION 1.13. Article 21.07, Insurance Code, is amended by
45-7 adding Sections 6B, 6C, and 6D to read as follows:
45-8 Sec. 6B. INSURANCE CARRIER TO NOTIFY DEPARTMENT OF
45-9 TERMINATION OF CONTRACT; COMMUNICATION PRIVILEGED. (a) Each
45-10 insurance carrier shall, on termination of the appointment of an
45-11 agent for cause, immediately file with the department a statement
45-12 of the facts relating to the termination of the appointment and
45-13 the date and cause of the termination. On receipt of the statement
45-14 the department shall record the termination of the appointment of
45-15 that agent to represent the insurance carrier in this state.
45-16 (b) A document, record, statement, or other information
45-17 required to be made or disclosed to the department under this
45-18 section is a privileged and confidential communication and is not
45-19 admissible in evidence in any court action or proceeding except
45-20 under a subpoena issued by a court of record.
45-21 (c) An insurance carrier, an employee or agent of the
45-22 carrier, or any other person, acting without malice, is not liable
45-23 for providing the information required to be disclosed under this
45-24 section.
45-25 Sec. 6C. FEES; USE OF FUNDS. (a) The department shall
45-26 collect from each agent of an insurance carrier writing insurance
45-27 in this state under this code a nonrefundable license fee and a
46-1 nonrefundable appointment fee for each appointment by an insurance
46-2 carrier. These fees, together with examination fees, license fees,
46-3 and license renewal fees, shall be deposited to the credit of the
46-4 Texas Department of Insurance operating fund.
46-5 (b) The department may use any portion of the fees collected
46-6 to enforce this subchapter, may employ persons as it considers
46-7 necessary to investigate and make reports regarding alleged
46-8 violations of this code and misconduct on the part of agents, and
46-9 may pay the salaries and expenses of those persons and office
46-10 employees and other expenses necessary to enforce this subchapter
46-11 from the fees collected. A person employed by the department under
46-12 this section may administer the oath and examine under oath any
46-13 person considered necessary in gathering information and evidence
46-14 and may have that information and evidence reduced to writing if
46-15 considered necessary, and all such expenses shall be paid from the
46-16 fees.
46-17 (c) The department shall set the fees in amounts reasonable
46-18 and necessary to implement this subchapter.
46-19 Sec. 6D. DUPLICATE LICENSE FEE. The department shall
46-20 collect in advance from an agent requesting a duplicate license a
46-21 fee in an amount set by the department. The fee collected under
46-22 this section shall be deposited to the credit of the Texas
46-23 Department of Insurance operating fund.
46-24 ARTICLE 2. LIFE, ACCIDENT, AND HEALTH LICENSES
46-25 SECTION 2.01. Subchapter A, Chapter 21, Insurance Code, is
46-26 amended by adding Article 21.07-1 to read as follows:
46-27 Art. 21.07-1. TEXAS LIFE, ACCIDENT, AND HEALTH AGENTS
47-1 LICENSE ACT
47-2 Sec. 1. SHORT TITLE; APPLICATION. (a) This article may be
47-3 cited as the Texas Life, Accident, and Health Agents License Act.
47-4 (b) Each agent of an insurance company authorized to provide
47-5 life, accident, and health insurance coverage in this state is
47-6 subject to this article. This article applies to each person who:
47-7 (1) performs the acts of an agent, as defined by
47-8 Article 21.02 of this code, whether through oral, written, or
47-9 electronic communications or otherwise, by the solicitation of,
47-10 negotiation for, procurement of, or collection of premiums on an
47-11 insurance or annuity contract offered by any type of insurance
47-12 carrier authorized to sell life, accident, and health insurance
47-13 products in this state; or
47-14 (2) represents or purports to represent a health
47-15 maintenance organization in the solicitation, negotiation,
47-16 procurement, or effectuation of membership in the health
47-17 maintenance organization.
47-18 Sec. 2. GENERAL LIFE, ACCIDENT, AND HEALTH LICENSE; LICENSE
47-19 REQUIRED. (a) A general life, accident, and health license is
47-20 required for each person who acts as:
47-21 (1) an agent writing life, accident, and health
47-22 insurance for a life insurance company;
47-23 (2) an agent writing only accident and health
47-24 insurance;
47-25 (3) an agent representing a health maintenance
47-26 organization;
47-27 (4) an agent writing fixed or variable annuity
48-1 contracts;
48-2 (5) an industrial life insurance agent for an
48-3 industrial company that writes only weekly premium life insurance
48-4 on a debit basis under Article 3.52 of this code;
48-5 (6) an agent writing:
48-6 (A) only life insurance in excess of $15,000 on
48-7 any one life for a stipulated premium insurance company;
48-8 (B) only accident and health insurance for a
48-9 stipulated premium insurance company; or
48-10 (C) both types of insurance described by
48-11 Paragraphs (A) and (B) of this subdivision;
48-12 (7) an agent writing life, accident, and health
48-13 insurance for any type of authorized life insurance company,
48-14 including a legal reserve life insurance company, domiciled in this
48-15 state, representing the insurer in a foreign country or territory
48-16 and either on a United States military installation or with United
48-17 States military personnel; or
48-18 (8) an agent writing any other type of insurance as
48-19 required by the commissioner for the protection of the insurance
48-20 consumers of this state.
48-21 (b) For the purposes of this subsection, a "combination
48-22 company" is an insurer that writes weekly premium life insurance or
48-23 monthly ordinary life insurance on a debit basis. A general life,
48-24 accident, and health license is required for each person who acts
48-25 as a combination life insurance agent for a combination company. A
48-26 combination company and a combination life insurance agent may also
48-27 write ordinary contracts of life insurance.
49-1 (c) Except as otherwise provided by this subsection, a
49-2 general life, accident, and health license is required for an agent
49-3 writing life, accident, and health insurance for a fraternal
49-4 benefit society under Chapter 10 of this code. A license is not
49-5 required for an agent, representative, or member of a fraternal
49-6 benefit society who devotes less than 50 percent of the person's
49-7 time to the solicitation or procurement of insurance contracts for
49-8 the society. A person who, in the preceding calendar year, has
49-9 solicited or procured the following amounts on any of the following
49-10 contracts of insurance on behalf of a fraternal benefit society is
49-11 presumed to have devoted 50 percent or more of the person's time to
49-12 the solicitation or procurement of insurance contracts:
49-13 (1) life insurance contracts that generate, in the
49-14 aggregate, more than $20,000 of direct premium for all lives
49-15 insured for the preceding calendar year, if:
49-16 (A) no permanent life insurance contract is
49-17 written that exceeds $10,000 coverage on an individual life; and
49-18 (B) no term life insurance contract is written
49-19 that exceeds $50,000 of coverage on an individual life;
49-20 (2) an insurance contract, other than a life insurance
49-21 contract, that the fraternal benefit society may write that insures
49-22 the individual lives of more than 25 persons; or
49-23 (3) a variable life insurance or variable annuity
49-24 contract.
49-25 Sec. 3. AUTHORITY TO WRITE ADDITIONAL PRODUCT LINES. A
49-26 person who holds a general life, accident, and health license
49-27 issued under the requirements of this subchapter may write
50-1 additional types of insurance contracts as provided under Section 5
50-2 of this article or under a specialty license program established by
50-3 the department.
50-4 Sec. 4. TEMPORARY LICENSE. (a) The department may issue a
50-5 temporary agent's license to an applicant for a license under
50-6 Section 2 of this article who is being considered for appointment
50-7 as an agent by an insurer or health maintenance organization. An
50-8 applicant for a temporary license is not required to pass a written
50-9 examination. A temporary license is valid for the 90 days after
50-10 the date of issuance. The department shall issue a temporary
50-11 license immediately on receipt by the department of a properly
50-12 completed application executed by the person in the form required
50-13 by Section 2, Article 21.07, of this code, accompanied by the
50-14 nonrefundable filing fee set by the department and a certificate
50-15 signed by an officer or properly authorized representative of the
50-16 insurer or health maintenance organization stating that:
50-17 (1) the applicant is being considered for appointment
50-18 by the insurer or health maintenance organization as its full-time
50-19 agent;
50-20 (2) the insurer or health maintenance organization
50-21 desires that the applicant be issued a temporary license; and
50-22 (3) the applicant will complete, under the insurer's
50-23 or health maintenance organization's supervision, at least 40 hours
50-24 of training as prescribed by Subsection (h) of this section not
50-25 later than the 14th day after the date on which the application,
50-26 certificate, and nonrefundable fee are delivered or mailed to the
50-27 department.
51-1 (b) If the temporary license is not received from the
51-2 department before the eighth day after the date on which the
51-3 application, certificate, and nonrefundable fee are delivered or
51-4 mailed to the department and the insurer or health maintenance
51-5 organization has not been notified that the application is denied,
51-6 the insurer or health maintenance organization may assume that the
51-7 temporary license will be issued in due course and the applicant
51-8 may proceed to act as an agent.
51-9 (c) A temporary license may not be renewed or issued more
51-10 than once in a consecutive six-month period to the same applicant.
51-11 (d) A temporary license may not be granted to a person who
51-12 does not intend to apply for a license to sell insurance or
51-13 memberships to the public generally.
51-14 (e) A temporary license may not be used to obtain
51-15 commissions from sales made to persons who have family, employment,
51-16 or business relationships with the temporary license holder. An
51-17 insurer or health maintenance organization may not knowingly pay,
51-18 directly or indirectly, to the holder of a temporary license under
51-19 this section, and a temporary license holder may not receive or
51-20 accept, a commission on the sale of a contract of insurance or
51-21 membership covering:
51-22 (1) the temporary license holder;
51-23 (2) a person related to the temporary license holder
51-24 by consanguinity or affinity;
51-25 (3) a person who is or has been during the past six
51-26 months the temporary license holder's employer, either as an
51-27 individual or as a member of a partnership, association, firm, or
52-1 corporation; or
52-2 (4) a person who is or who has been during the past
52-3 six months the employee of the temporary license holder.
52-4 (f) A person who has been issued a temporary license under
52-5 this section and is acting under the authority of the temporary
52-6 license may not engage in any insurance solicitation, sale, or
52-7 other agency transaction that results in or is intended to result
52-8 in the replacement of any existing individual life insurance policy
52-9 form or annuity contract that is in force, or receive, directly or
52-10 indirectly, any commission or other compensation that may or does
52-11 result from such a solicitation, sale, or other agency transaction.
52-12 A person who holds a permanent license may not circumvent or
52-13 attempt to circumvent the intent of this subsection by acting for
52-14 or with a person holding a temporary license. As used in this
52-15 subsection, "replacement" means a transaction in which a new life
52-16 insurance or annuity contract is to be purchased, and it is known
52-17 or should be known to the temporary agent that by reason of the
52-18 solicitation, sale, or other transaction the existing life
52-19 insurance or annuity contract has been or is to be:
52-20 (1) lapsed, forfeited, surrendered, or otherwise
52-21 terminated;
52-22 (2) converted to reduced paid-up insurance, continued
52-23 as extended term insurance, or otherwise reduced in value by the
52-24 use of nonforfeiture benefits or other policy values;
52-25 (3) amended so as to effect either a reduction in
52-26 benefits or in the term for which coverage would otherwise remain
52-27 in force or for which benefits would be paid;
53-1 (4) reissued with any reduction in cash value; or
53-2 (5) pledged as collateral or subjected to borrowing,
53-3 whether in a single loan or under a schedule of borrowing over a
53-4 period of time, for amounts in the aggregate exceeding 25 percent
53-5 of the loan value set forth in the policy.
53-6 (g) The department may cancel, suspend, or revoke the
53-7 temporary appointment powers of an insurer or health maintenance
53-8 organization if, after notice and opportunity for hearing, the
53-9 commissioner finds that that insurer or health maintenance
53-10 organization has abused the temporary appointment powers. An appeal
53-11 from the department's decision is subject to Article 1.04 of this
53-12 code. In considering whether abuse has occurred, the department
53-13 may consider:
53-14 (1) the number of temporary appointments made;
53-15 (2) the percentage of appointees sitting for
53-16 examination as agents under this article, as provided by Subsection
53-17 (j) of this section; and
53-18 (3) the number of appointees who pass the examination.
53-19 (h) The insurer or health maintenance organization shall
53-20 administer at least 40 hours of training to each applicant for a
53-21 temporary license not later than the 14th day after the date on
53-22 which the application, certificate, and nonrefundable fee are
53-23 delivered or mailed to the department. At least 10 hours must be
53-24 taught in a classroom setting, including an accredited college,
53-25 university, junior college, or community college, a business
53-26 school, or a private institute or classes sponsored by the insurer
53-27 or health maintenance organization and especially established for
54-1 this purpose. The training program must be designed to provide an
54-2 applicant with basic knowledge of:
54-3 (1) the broad principles of insurance, including the
54-4 licensing and regulatory laws of this state;
54-5 (2) the broad principles of health maintenance
54-6 organizations, including membership requirements and related
54-7 licensing and regulatory laws of this state; and
54-8 (3) the ethical obligations and duties of an agent.
54-9 (i) If the commissioner finds under Subsection (g) of this
54-10 section that an abuse of temporary appointment powers has occurred,
54-11 the commissioner may require the affected insurer or health
54-12 maintenance organization to file with the department a description
54-13 of the insurer's or health maintenance organization's training
54-14 program and may require the insurer or health maintenance
54-15 organization to obtain the approval of the department before
54-16 continuing to use the training program.
54-17 (j) Each insurer or health maintenance organization shall
54-18 ensure that, during any two consecutive calendar quarters, at least
54-19 70 percent of the insurer's or health maintenance organization's
54-20 applicants for temporary licenses sit for the required licensing
54-21 examination. At least 50 percent of the applicants taking the
54-22 examination must pass during that period.
54-23 (k) An insurer or health maintenance organization may not
54-24 make more than 250 appointments of temporary license holders during
54-25 a calendar year.
54-26 Sec. 5. LIMITED LIFE, ACCIDENT, AND HEALTH LICENSE. (a) In
54-27 this article:
55-1 (1) "Funeral prearrangement life insurance agent"
55-2 means an insurance agent who, subject to the limitations of this
55-3 section, writes only life insurance policies and fixed annuity
55-4 contracts to secure the delivery of funeral services and
55-5 merchandise under prepaid funeral contracts regulated by the Texas
55-6 Department of Banking under Chapter 154, Finance Code.
55-7 (2) "Job protection insurance" has the meaning
55-8 assigned by Article 25.01 of this code.
55-9 (b) This section applies to:
55-10 (1) a funeral prearrangement life insurance agent;
55-11 (2) an agent for an insurance company who writes only
55-12 job protection insurance;
55-13 (3) an agent for a stipulated premium company who
55-14 writes only life insurance not to exceed $15,000 on any one life;
55-15 (4) an agent for a local mutual aid association, a
55-16 local mutual burial association, or a statewide mutual aid
55-17 association;
55-18 (5) an agent writing policies or riders to policies
55-19 that provide only:
55-20 (A) lump-sum cash benefits in the event of
55-21 accidental death, death by accidental means, or dismemberment; or
55-22 (B) ambulance expense benefits in the event of
55-23 accident or sickness;
55-24 (6) an agent writing prepaid legal services contracts
55-25 under Article 5.13-1 or Chapter 23 of this code; and
55-26 (7) an agent writing any other type of insurance
55-27 required by the commissioner to be licensed for the protection of
56-1 the insurance consumers of this state.
56-2 (c) A person to whom this article applies must hold a
56-3 limited life, health, and accident license under this article. The
56-4 commissioner may adopt rules as necessary to implement this
56-5 article.
56-6 (d) Notwithstanding this section or any other law, a funeral
56-7 prearrangement life insurance agent may not:
56-8 (1) act as an agent for an insurance company unless
56-9 the agent acts under the supervision of a person, including a
56-10 corporation, who:
56-11 (A) holds a general life, accident, and health
56-12 license; and
56-13 (B) holds or is an authorized representative of
56-14 a holder of a permit issued by the Texas Department of Banking to
56-15 sell prepaid funeral benefits under Chapter 154, Finance Code;
56-16 (2) write any coverage or combination of coverages
56-17 with an initial guaranteed death benefit in excess of $15,000 on
56-18 any life; or
56-19 (3) act as an agent for more than one insurance
56-20 company.
56-21 (e) A person who holds a limited life, accident, and health
56-22 license issued under this section may write only the types of
56-23 insurance products described by this section.
56-24 (f) An applicant for a limited life, accident, and health
56-25 license is not eligible for a temporary license under Section 4 of
56-26 this article.
56-27 ARTICLE 3. PROPERTY AND CASUALTY LICENSES
57-1 SECTION 3.01. Article 21.14, Insurance Code, is amended to
57-2 read as follows:
57-3 Art. 21.14. TEXAS PROPERTY AND CASUALTY AGENTS LICENSE ACT
57-4 Sec. 1. SHORT TITLE; APPLICATION. (a) This article may be
57-5 cited as the Texas Property and Casualty Agents License Act.
57-6 (b) Each agent of an insurance company authorized to provide
57-7 property and casualty insurance coverage in this state is subject
57-8 to this article. This article applies to each person who performs
57-9 the acts of an agent, as defined by Article 21.02 of this code,
57-10 whether through oral, written, or electronic communications or
57-11 otherwise, by the solicitation of, negotiation for, procurement of,
57-12 or collection of premiums on an insurance contract offered by any
57-13 type of insurance carrier authorized to sell property and casualty
57-14 insurance products in this state, including:
57-15 (1) a fidelity or surety company;
57-16 (2) an inter-insurance exchange;
57-17 (3) a mutual company, including a farm mutual or a
57-18 county mutual;
57-19 (4) a reciprocal exchange; or
57-20 (5) a Lloyd's plan.
57-21 Sec. 2. GENERAL LIFE, ACCIDENT, AND HEALTH LICENSE; LICENSE
57-22 REQUIRED. A general property and casualty license is required for
57-23 each person who acts as:
57-24 (1) an agent writing property and casualty insurance
57-25 for an insurance carrier authorized to provide property and
57-26 casualty insurance coverage in this state;
57-27 (2) a sub-agent of a person licensed as an agent under
58-1 this article who solicits and binds insurance risks on behalf of
58-2 that agent;
58-3 (3) a salaried employee of an agent or sub-agent
58-4 described under Subdivision (1) or (2) of this subsection who
58-5 performs assigned duties that include binding insurance risks;
58-6 (4) an agent writing property and casualty insurance
58-7 for a county mutual insurance company; or
58-8 (5) an agent writing any other type of insurance as
58-9 required by the commissioner for the protection of the insurance
58-10 consumers of this state.
58-11 Sec. 3. AUTHORITY TO WRITE ADDITIONAL PRODUCT LINES. A
58-12 person who holds a general property and casualty license issued
58-13 under this subchapter may write additional types of insurance
58-14 contracts as provided under Section 6 of this article or under a
58-15 specialty license program established by the department.
58-16 Sec. 4. AUTHORITY TO WRITE ACCIDENT AND HEALTH INSURANCE. A
58-17 person who holds a general property and casualty license issued
58-18 under this subchapter may write health and accident insurance for a
58-19 property and casualty insurer authorized to sell those insurance
58-20 products in this state without holding a license issued under
58-21 Article 21.07-1 of this code.
58-22 Sec. 5. EMERGENCY LICENSE WITHOUT EXAMINATION. In the event
58-23 of the death or disability of a property and casualty agent or if a
58-24 property and casualty agent is found to be insolvent and unable to
58-25 pay for premiums as they become due to an insurer, the department
58-26 may issue to an applicant for a property and casualty license an
58-27 emergency property and casualty license without examination if it
59-1 is established to the satisfaction of the department that the
59-2 emergency license is necessary for the preservation of the agency
59-3 assets of a deceased, disabled, or insolvent property and casualty
59-4 agent. An emergency license is valid for 90 days in any 12
59-5 consecutive months and may be renewed by the department for an
59-6 additional 90 days during the 12-month period if the other
59-7 requirements of this subchapter are met.
59-8 Sec. 6. LIMITED PROPERTY AND CASUALTY LICENSE. (a)
59-9 Notwithstanding any other law, a limited property and casualty
59-10 license is required for each person who desires to act as an agent
59-11 writing:
59-12 (1) insurance only on growing crops under Article
59-13 21.14-2 of this code;
59-14 (2) only insurance for a farm mutual insurance company
59-15 as provided by Article 16.24A of this code;
59-16 (3) exclusively all forms of insurance authorized to
59-17 be solicited and written in this state that cover the ownership,
59-18 operation, maintenance, or use of a motor vehicle that is designed
59-19 for use on the public highways, including a trailer or semitrailer,
59-20 and the motor vehicle's accessories or equipment;
59-21 (4) prepaid legal services contracts under Article
59-22 5.13-1 or Chapter 23 of this code; or
59-23 (5) any other type of insurance as required by the
59-24 commissioner for the protection of the insurance consumers of this
59-25 state.
59-26 (b) Subsection (a)(1) of this section applies to a
59-27 production credit association or bank for a cooperative, as
60-1 provided under the farm credit system under 12 U.S.C. 2001 et seq.,
60-2 as amended.
60-3 (c) A person who holds a limited property and casualty
60-4 license issued under this subchapter may write only the types of
60-5 insurance products designated on the license by the department.
60-6 Sec. 7. FULL-TIME HOME OFFICE EMPLOYEES: MANDATORY
60-7 REGISTRATION, CONTINUING EDUCATION REQUIREMENTS, AND NOTIFICATION
60-8 TO CONSUMERS; DISCIPLINARY ACTIONS. (a) Each actual full-time
60-9 home office salaried employee of an insurance carrier licensed to
60-10 do business in this state who solicits or receives an application
60-11 for the sale of insurance through an oral, written, or electronic
60-12 communication shall register with the commissioner.
60-13 (b) An insurance carrier licensed to do business in this
60-14 state whose general plan of operation includes the use of employees
60-15 described by Subsection (a) of this section shall certify to the
60-16 commissioner that each of those employees receives at least 15
60-17 hours of continuing education annually. The continuing education
60-18 must be designed to give the employee:
60-19 (1) reasonable familiarity with:
60-20 (A) the broad principles of insurance;
60-21 (B) insurance licensing and regulatory laws; and
60-22 (C) the terms and conditions of the insurance
60-23 that the registrant transacts; and
60-24 (2) a fair and general understanding of the duties of
60-25 an insurer to an insured, including training in ethical
60-26 considerations.
60-27 (c) The registration of an actual full-time home office
61-1 salaried employee shall be suspended and the employer insurance
61-2 carrier may be disciplined for any act for which an agent may be
61-3 disciplined under Article 21.01-2 of this code.
61-4 (d) Each registrant under this section shall disclose the
61-5 fact of the registration when making an oral, written, or
61-6 electronic communication to solicit or receive an application for
61-7 the sale of insurance.
61-8 (e) Each person who registers under this section shall
61-9 submit a nonrefundable registration fee in an amount determined by
61-10 the department. [LICENSING OF LOCAL RECORDING AGENTS AND
61-11 SOLICITORS; LIFE, HEALTH AND ACCIDENT INSURANCE EXCEPTED; OTHER
61-12 EXCEPTIONS]
61-13 [Sec. 1. CLASSES OF AGENTS. Insurance agents, as that term
61-14 is defined in the laws of this State, shall for the purpose of this
61-15 article be divided into two classes: Local Recording Agents and
61-16 Solicitors.]
61-17 [Sec. 2. DEFINITIONS; CERTAIN ORDERS, SOCIETIES OR
61-18 ASSOCIATIONS NOT AFFECTED. (a) In this article:]
61-19 [(1) "Local Recording Agent" means a person or firm
61-20 engaged in soliciting and writing insurance, being authorized by an
61-21 insurance company or insurance carrier, including fidelity and
61-22 surety companies, to solicit business and to write, sign, execute,
61-23 and deliver policies of insurance, and to bind companies on
61-24 insurance risks, and who maintain an office and a record of such
61-25 business and the transactions which are involved, who collect
61-26 premiums on such business and otherwise perform the customary
61-27 duties of a local recording agent representing an insurance carrier
62-1 in its relation with the public; or a person or firm engaged in
62-2 soliciting and writing insurance, being authorized by an insurance
62-3 company or insurance carrier, including fidelity and surety
62-4 companies, to solicit business, and to forward applications for
62-5 insurance to the home office of the insurance companies and
62-6 insurance carriers, where the insurance company's and insurance
62-7 carrier's general plan of operation in this State provides for the
62-8 appointment and compensation of agents for insurance and for the
62-9 execution of policies of insurance by the home office of the
62-10 insurance company or insurance carrier, or by a supervisory office
62-11 of such insurance company or insurance carrier, and who maintain an
62-12 office and a record of such business and the transactions which are
62-13 involved, and who collect premiums on such business and otherwise
62-14 qualify and perform the customary duties of a local recording agent
62-15 representing an insurance carrier in its relation with the public.]
62-16 [(2) "Solicitor" means a person who is a bona fide
62-17 solicitor and engaged in the business of soliciting and binding
62-18 insurance risks on behalf of a local recording agent, and who
62-19 offices with such local recording agent, and who does not sign and
62-20 execute policies of insurance, and who does not maintain company
62-21 records of such transactions. This shall not be construed to make
62-22 a solicitor of a local recording agent, who places business of a
62-23 class which the rules of the company or carrier require to be
62-24 placed on application or to be written in a supervisory office. A
62-25 solicitor may bind insurance risks only with the express prior
62-26 approval of the local recording agent for whom the solicitor works.]
62-27 [(3) "Board" means the State Board of Insurance.]
63-1 [(4) "Company" or "Carrier" means any insurance
63-2 company, corporation, inter-insurance exchange, mutual, reciprocal,
63-3 association, Lloyds or other insurance carrier licensed to transact
63-4 business in the State of Texas other than as excepted herein.]
63-5 [(5) "Insurance service representative" means a
63-6 solicitor employed on a salaried basis who performs assigned duties
63-7 only within the office of a local recording agent, which may
63-8 include binding insurance risks, but only with the express prior
63-9 approval of the local recording agent for whom the representative
63-10 works.]
63-11 [(b) Nothing contained in this article shall be so construed
63-12 as to affect or apply to orders, societies, or associations which
63-13 admit to membership only persons engaged in one or more crafts or
63-14 hazardous occupations in the same or similar lines of business, and
63-15 the ladies' societies, or ladies' auxiliary to such orders,
63-16 societies or associations, or any secretary of a Labor Union or
63-17 organization, or any secretary or agent of any fraternal benefit
63-18 society, which does not operate at a profit, except that a person
63-19 who has had a license revoked under Section 16 of this article may
63-20 not solicit or otherwise transact business under Chapter 10 of this
63-21 code.]
63-22 [Sec. 3. APPLICATION FOR LICENSE; TO WHOM LICENSE MAY BE
63-23 ISSUED. (a) When any person, partnership, registered limited
63-24 liability partnership, limited liability company, corporation, or
63-25 bank shall desire to engage in business as a local recording agent
63-26 for an insurance company, or insurance carrier, that person or
63-27 entity shall make application for a license to the Texas Department
64-1 of Insurance, in such form as the Department may require. Such
64-2 application shall bear a signed endorsement by a general, state or
64-3 special agent of a qualified insurance company, or insurance
64-4 carrier that applicant or each member of the partnership or each
64-5 stockholder of the corporation or each member of the limited
64-6 liability company is a resident of this state.]
64-7 [(b) The Department shall issue a license to an individual
64-8 or a general partnership or a limited liability partnership
64-9 registered with the Secretary of State under Section 3.08, Texas
64-10 Revised Partnership Act (Article 6132b-3.08, Vernon's Texas Civil
64-11 Statutes), engaging in the business of insurance. The Department
64-12 may not issue a license to a partnership if an inactive partner who
64-13 is not subject to Section 3a of this article has an interest in the
64-14 partnership principally to have written and be compensated therefor
64-15 for insurance on property controlled through ownership, mortgage or
64-16 sale, family relationship, or employment; and provided further,
64-17 that all licensed agents must be residents of Texas. Provided,
64-18 that a person who resides in a town through which the state line
64-19 runs and whose residence is in the town in the adjoining state may
64-20 be licensed, if the person's business office is being maintained in
64-21 this state. All persons acting as agent or solicitor for health
64-22 and accident insurance within the provisions hereof, and who
64-23 represent only fire and casualty companies, and not life insurance
64-24 companies, shall be required to procure only one license, and such
64-25 license as is required under the provisions of this article.]
64-26 [(c) The Department shall issue a license to a corporation
64-27 if the Department finds:]
65-1 [(1) That the corporation is a Texas corporation
65-2 organized or existing under the Texas Business Corporation Act or
65-3 the Texas Professional Corporation Act having its principal place
65-4 of business in the State of Texas and having as one of its purposes
65-5 the authority to act as a local recording agent; and]
65-6 [(2) That every officer, director and shareholder of
65-7 the corporation is individually licensed as a local recording agent
65-8 under the provisions of this Insurance Code, except as may be
65-9 otherwise permitted by this Section or Section 3a of this article,
65-10 or that every officer and director of the corporation is
65-11 individually licensed as a local recording agent under this
65-12 Insurance Code, that the corporation is a wholly owned subsidiary
65-13 of a parent corporation that is licensed as a local recording agent
65-14 under this Insurance Code, and that every shareholder of the parent
65-15 corporation is individually licensed as a local recording agent
65-16 under this Insurance Code, and except as specifically provided by
65-17 this article, that no shareholder of the corporation is a corporate
65-18 entity; and]
65-19 [(3) That such corporation will have the ability to
65-20 pay any sums up to $25,000 which it might become legally obligated
65-21 to pay on account of any claim made against it by any customer and
65-22 caused by any negligent act, error or omission of the corporation
65-23 or any person for whose acts the corporation is legally liable in
65-24 the conduct of its business as a local recording agent. The term
65-25 "customer" as used herein shall mean any person, firm or
65-26 corporation to whom such corporation sells or attempts to sell a
65-27 policy of insurance, or from whom such corporation accepts an
66-1 application for insurance. Such ability shall be proven in one of
66-2 the following ways:]
66-3 [(A) An errors and omissions policy insuring
66-4 such corporation against errors and omissions, in at least the sum
66-5 of $100,000 with no more than a $10,000 deductible feature or the
66-6 sum of at least $300,000 with no more than a $25,000 deductible
66-7 feature, issued by an insurance company licensed to do business in
66-8 the State of Texas or, if a policy cannot be obtained from a
66-9 company licensed to do business in Texas, a policy issued by a
66-10 company not licensed to do business in Texas, on filing an
66-11 affidavit with the Texas Department of Insurance stating the
66-12 inability to obtain coverage and receiving the Department's
66-13 approval; or]
66-14 [(B) A bond executed by such corporation as
66-15 principal and a surety company authorized to do business in this
66-16 state, as surety, in the principal sum of $25,000, payable to the
66-17 Texas Department of Insurance for the use and benefit of customers
66-18 of such corporation, conditioned that such corporation shall pay
66-19 any final judgment recovered against it by any customer; or]
66-20 [(C) A deposit of cash or securities of the
66-21 class authorized by Articles 2.08 and 2.10 of this Code, having a
66-22 fair market value of $25,000 with the comptroller. The comptroller
66-23 is hereby authorized and directed to accept and receive such
66-24 deposit and hold it exclusively for the protection of any customer
66-25 of such corporation recovering a final judgment against such
66-26 corporation. Such deposit may be withdrawn only upon filing with
66-27 the Department evidence satisfactory to it that the corporation has
67-1 withdrawn from business, and has no unsecured liabilities
67-2 outstanding, or that such corporation has provided for the
67-3 protection of its customers by furnishing an errors and omissions
67-4 policy or a bond as hereinbefore provided. Securities so deposited
67-5 may be exchanged from time to time for other qualified securities.]
67-6 [A binding commitment to issue such a policy or bond,
67-7 or the tender of such securities, shall be sufficient in connection
67-8 with any application for license.]
67-9 [Nothing contained herein shall be construed to permit
67-10 any unlicensed employee or agent of any corporation to perform any
67-11 act of a local recording agent without obtaining a local recording
67-12 agent's license. The Department shall not require a corporation to
67-13 take the examination provided in Section 6 of this Article 21.14.]
67-14 [If at any time, any corporation holding a local
67-15 recording agent's license does not maintain the qualifications
67-16 necessary to obtain a license, the license of such corporation to
67-17 act as a local recording agent shall be cancelled or denied in
67-18 accordance with the provisions of Sections 16, 17 and 18 of this
67-19 Article 21.14; provided, however, that should any person who is
67-20 not a licensed local recording agent acquire shares in such a
67-21 corporation by devise or descent, they shall have a period of 90
67-22 days from date of acquisition within which to obtain a license as a
67-23 local recording agent or to dispose of the shares to a licensed
67-24 local recording agent except as may be permitted by Section 3a of
67-25 this article.]
67-26 [Should such an unlicensed person, except as may be
67-27 permitted by Section 3a of this article, acquire shares in such a
68-1 corporation and not dispose of them within said period of 90 days
68-2 to a licensed local recording agent, then they must be purchased by
68-3 the corporation for their book value, that is, the value of said
68-4 shares of stock as reflected by the regular books and records of
68-5 said corporation, as of the date of the acquisition of said shares
68-6 by said unlicensed person. Should the corporation fail or refuse
68-7 to so purchase such shares, its license shall be cancelled.]
68-8 [Any such corporation shall have the power to redeem
68-9 the shares of any shareholder, or the shares of a deceased
68-10 shareholder, upon such terms as may be agreed upon by the Board of
68-11 Directors and such shareholder or his personal representative, or
68-12 at such price and upon such terms as may be provided in the
68-13 Articles of Incorporation, the Bylaws, or an existing contract
68-14 entered into between the shareholders of the corporation.]
68-15 [Each corporation licensed as a local recording agent
68-16 shall file, under oath, a list of the names and addresses of all of
68-17 its officers, directors and shareholders with its application for
68-18 renewal license.]
68-19 [Each corporation licensed as a local recording agent
68-20 shall notify the Texas Department of Insurance upon any change in
68-21 its officers, directors or shareholders not later than the 30th day
68-22 after the date on which the change became effective.]
68-23 [The term "firm" as it applies to local recording
68-24 agents in Sections 2, 12 and 16 of this Article 21.14 shall be
68-25 construed to include corporations.]
68-26 [(d) The department shall issue a license to a bank if the
68-27 department finds that:]
69-1 [(1) the bank is a national banking association
69-2 organized and existing under the National Bank Acts (12 U.S.C.
69-3 Section 21 et seq.), a state bank organized and existing under the
69-4 Texas Banking Act (Article 342-1.001 et seq., Vernon's Texas Civil
69-5 Statutes), a state savings bank organized and existing under the
69-6 Texas Savings Bank Act (Article 489e, Vernon's Texas Civil
69-7 Statutes), or a bank operating subsidiary, as defined by state or
69-8 federal law, that is located and doing business in this state in a
69-9 place with a population of 5,000 or less;]
69-10 [(2) at least one officer of the bank and each
69-11 individual who will be performing any acts of an agent for the bank
69-12 are individually licensed under this Article; and]
69-13 [(3) the bank will have the ability to pay any sums up
69-14 to $25,000 that it might become legally obligated to pay on account
69-15 of any claim made against it by a customer and caused by a
69-16 negligent act, error, or omission of the bank or any person for
69-17 whose acts the bank is legally liable in the conduct of its
69-18 business as a local recording agent. The term "customer" means any
69-19 person, firm, or corporation to whom the bank sells or attempts to
69-20 sell a policy of insurance or from whom the bank accepts an
69-21 application for insurance. That ability shall be proven through:]
69-22 [(A) an errors and omissions policy insuring the
69-23 bank against errors and omissions, in at least the sum of $100,000
69-24 with not more than a $10,000 deductible feature, or the sum of at
69-25 least $300,000 with not more than a $25,000 deductible feature,
69-26 issued by an insurance company licensed to do business in this
69-27 state or, if a policy cannot be obtained from a company licensed to
70-1 do business in this state, a policy issued by a company not
70-2 licensed to do business in this state, on filing an affidavit with
70-3 the department stating the inability to obtain coverage and
70-4 receiving the department's approval;]
70-5 [(B) a bond executed by the bank as principal
70-6 and a surety company authorized to do business in this state, as
70-7 surety, in the principal sum of $25,000, payable to the department
70-8 for the use and benefit of customers of the bank, conditioned that
70-9 the bank shall pay any final judgment recovered against it by a
70-10 customer; or]
70-11 [(C) a deposit with the comptroller of cash or
70-12 securities of the class authorized by Articles 2.08 and 2.10 of
70-13 this code, with a fair market value of $25,000. The comptroller
70-14 shall accept and receive the deposit and hold it exclusively for
70-15 the protection of a customer of the bank who recovers a final
70-16 judgment against the bank. The deposit may be withdrawn only on
70-17 filing with the department satisfactory evidence that the bank has
70-18 withdrawn from the business of insurance and has no unsecured
70-19 liabilities outstanding or that the bank has provided for the
70-20 protection of its customers by furnishing an errors and omissions
70-21 policy or a bond as provided by this subsection. Securities so
70-22 deposited may be exchanged from time to time for other qualified
70-23 securities.]
70-24 [A binding commitment to issue such a policy or bond,
70-25 or the tender of applicable securities, is sufficient in connection
70-26 with an application for license.]
70-27 [Nothing in this subsection shall be construed to
71-1 permit an unlicensed employee or agent of a bank to perform any act
71-2 of a local recording agent without obtaining a local recording
71-3 agent's license. The department may not require a bank to take the
71-4 examination provided by Section 6 of this Article.]
71-5 [A bank licensed as an agent under this Article may
71-6 have additional offices from which the business of insurance is
71-7 conducted only in a place with a population of 5,000 or less and
71-8 must comply with the department's regulations regarding additional
71-9 offices.]
71-10 [A bank licensed as an agent under this article must
71-11 maintain its insurance records, including all files relating to and
71-12 reflecting customer complaints, separate from records relating to
71-13 banking transactions of the bank.]
71-14 [If a bank that holds a local recording agent's license
71-15 does not maintain the qualifications necessary to obtain a license,
71-16 the license of that bank to act as a local recording agent shall be
71-17 canceled or denied in accordance with Sections 16 and 18 of this
71-18 article.]
71-19 [Each bank licensed as a local recording agent shall
71-20 file under oath with its application for license renewal a list of
71-21 the name and address of each individual who will be acting as an
71-22 agent on behalf of the bank and of each officer and director of the
71-23 bank, as defined by Article 21.02 of this code, and other
71-24 biographical information as required by the department.]
71-25 [Each bank licensed as a local recording agent shall
71-26 notify the department of any change in its officers and directors
71-27 and any change in other persons who will be performing any acts of
72-1 an agent, as defined by Article 21.02 of this code, and submit
72-2 biographical information on those officers, directors, and persons
72-3 as required by the department not later than the 30th day after the
72-4 date on which the change takes effect.]
72-5 [The term "firm," as that term applies to local
72-6 recording agents in Sections 2, 12, and 16 of this article,
72-7 includes corporations and banks.]
72-8 [(e) The term "partnership" or "agency partnership" as used
72-9 in this Article means a general partnership or a registered limited
72-10 liability partnership domiciled in Texas.]
72-11 [(f) In this Article, the term "corporation" or
72-12 "corporations" shall mean a corporation organized under the Texas
72-13 Business Corporation Act, The Texas Professional Corporation Act
72-14 (Article 1528e, Vernon's Texas Civil Statutes), or a Texas
72-15 domiciled limited liability company organized or existing under the
72-16 Texas Limited Liability Company Act (Article 1528n, Vernon's Texas
72-17 Civil Statutes) having its principal place of business in this
72-18 state and having as one of its purposes the authority to act as an
72-19 insurance agent. Each officer, manager, and member of a limited
72-20 liability company must be licensed under this Article. The
72-21 licensing and regulation of a limited liability company shall be
72-22 subject to the same provisions and requirements of this Article
72-23 that are applicable to corporations licensed under this Article.]
72-24 [(g) In this article, the term "bank" means a national
72-25 banking association organized and existing under the National Bank
72-26 Acts (12 U.S.C. Section 21 et seq.), a state bank organized and
72-27 existing under the Texas Banking Act (Article 342-1.001 et seq.,
73-1 Vernon's Texas Civil Statutes), a state savings bank organized and
73-2 existing under the Texas Savings Bank Act (Article 489e, Vernon's
73-3 Texas Civil Statutes), a bank branch, or a bank operating
73-4 subsidiary, as defined by state or federal law, that is located and
73-5 doing business in this state in a place with a population of 5,000
73-6 or less. A bank operating subsidiary, as defined by state or
73-7 federal law, located and doing business in a place in this state
73-8 with a population of 5,000 or less may own a licensed corporate
73-9 agent that is also located and doing business in a place with a
73-10 population of 5,000 or less, and is subject to Section 3a(5) of
73-11 this Article.]
73-12 [Sec. 3a. PERSONS OTHER THAN LICENSED LOCAL RECORDING AGENTS
73-13 WHO MAY SHARE IN PROFITS OF LOCAL RECORDING AGENT. (1) Upon the
73-14 death of a duly licensed local recording agent who is a member of
73-15 an agency partnership, the surviving spouse and children, if any,
73-16 of such deceased partner, or a trust for such surviving spouse and
73-17 children, may share in the profits of such agency partnership
73-18 during the lifetime of such surviving spouse or such children, as
73-19 the case may be, if and as provided by a written partnership
73-20 agreement, or in the absence of any written agreement, if and as
73-21 agreed by the surviving partner or partners and the surviving
73-22 spouse, the trustee, and the legal representative of the surviving
73-23 child or children. Such surviving spouse and any such surviving
73-24 children or trusts shall not be required to qualify as local
73-25 recording agents to participate in such profits, but shall not do
73-26 or perform any act of a local recording agent on behalf of such
73-27 partnership without having qualified as a local recording agent;
74-1 provided, however, that a duly licensed local recording agent who
74-2 is a member of an agency partnership may, with the approval of the
74-3 other members of the partnership, transfer an interest in the
74-4 agency partnership to his children or a trust for same, and may
74-5 operate such interest for their use and benefit; and such children
74-6 or trusts may share in the profits of such agency partnership.
74-7 Such child or children or trusts shall not be required to qualify
74-8 as a local recording agent to participate in such profits, but
74-9 shall not do or perform any act of a local recording agent on
74-10 behalf of such partnership without having qualified as a local
74-11 recording agent.]
74-12 [(2) Upon the death of a duly licensed local recording
74-13 agent, who is a sole proprietorship, unless otherwise provided by
74-14 the last will of such deceased agent, the surviving spouse and
74-15 children, if any, of such deceased agent, or a trust for such
74-16 spouse or children, may share in the profits of the continuance of
74-17 the agency business of said deceased agent, provided such agency
74-18 business is continued by a duly licensed local recording agent.
74-19 Said surviving spouse, trusts or children, may participate in such
74-20 profits during the lifetime of such surviving spouse and said
74-21 children. Said surviving spouse, trusts or children shall not be
74-22 required to qualify as local recording agents in order to
74-23 participate in the profits of such agency, but shall not do or
74-24 perform any act of a local recording agent in connection with the
74-25 continuance of such agency business without first having been duly
74-26 licensed as a local recording agent; provided, however, that a
74-27 duly licensed local recording agent who is a sole proprietorship
75-1 may transfer an interest in his agency to his children, or a trust
75-2 for same, and may operate such interest for their use and benefit;
75-3 and such children may share in the profits of such local recording
75-4 agency during their lifetime, and during such time shall not be
75-5 required to qualify as a local recording agent in order to
75-6 participate in such profits, but shall not do or perform any act of
75-7 a local recording agent in connection with such agency business
75-8 without first having been duly licensed as a local recording agent.]
75-9 [(3) Upon the death of a shareholder in a corporate licensed
75-10 local recording agency, the surviving spouse and children, if any,
75-11 of such deceased shareholder, or a trust for such surviving spouse
75-12 and children, may share in the profits of such corporate agency
75-13 during the lifetime of such surviving spouse or children, as the
75-14 case may be, if and as provided by a contract entered into by and
75-15 between all of the shareholders and the corporation. Any such
75-16 surviving spouse, surviving children, or trusts shall not be
75-17 required to individually qualify as a local recording agent in
75-18 order to participate in such profits, but shall not do or perform
75-19 any act of a local recording agency on behalf of such corporation
75-20 without having qualified as a local recording agent; provided,
75-21 however, that a shareholder in a corporate licensed local recording
75-22 agent, may, if provided by a contract entered into by and between
75-23 all of the shareholders and the corporation, transfer an interest
75-24 in the agency to his children or a trust for same, and such
75-25 children or trusts may share in the profits of such agency to the
75-26 extent of such interest during their lifetime. Such children or
75-27 trusts shall not be required to qualify as a local recording agent
76-1 to participate in such profits, but shall not do or perform any act
76-2 of a local recording agent on behalf of such corporation without
76-3 having qualified as a local recording agent.]
76-4 [(4) Except as provided in Subsections (1), (2), and (3)
76-5 above, and as may be provided in Section 6a, Article 21.14 of the
76-6 Insurance Code, no person shall be entitled to perform any act of a
76-7 local recording agent nor in any way participate as a partner or
76-8 corporate shareholder in the profits of any local recording agent,
76-9 without first having qualified as a duly licensed local recording
76-10 agent and having successfully passed the examination required by
76-11 the Insurance Code; provided, however, that all persons, or trusts
76-12 for any person, that received licenses before March 1, 1963, as
76-13 silent, inactive, or non-active partners, or who are silent,
76-14 inactive, or non-active partners in an agency which was so
76-15 qualified before such date, shall continue to receive licenses, or
76-16 renewals thereof, as partners in such agency or in any successor
76-17 agency, providing: (a) that such persons are members of an agency
76-18 in which there is at least one partner who has qualified as a duly
76-19 licensed local recording agent; (b) that such non-active partner
76-20 or partners do not actively solicit insurance; and (c) that such
76-21 agency is not a limited partnership.]
76-22 [(5) Notwithstanding any provision of this article or this
76-23 code to the contrary, a bank located and doing business in a place
76-24 with a population of 5,000 or less that owns a licensed bank
76-25 operating subsidiary, as defined by state or federal law, that is
76-26 also located and doing business in a place with a population of
76-27 5,000 or less may receive profits from the licensed bank operating
77-1 subsidiary. To advertise under the bank name or participate in the
77-2 insurance operation other than by receiving profits from the
77-3 insurance business, the bank must hold an agent license. Nothing
77-4 in this section permits a bank or any affiliate to pay commissions
77-5 or other valuable consideration to any nonlicensed employees, and a
77-6 bank may not pay, credit, or otherwise reward particular
77-7 nonlicensed units or geographic locations of the bank or any of its
77-8 affiliates with a portion of the commission.]
77-9 [Sec. 4. ACTING WITHOUT LICENSE FORBIDDEN. (a) It shall be
77-10 unlawful for any person, firm, partnership, corporation or bank, or
77-11 any partner, officer, director, employee, or shareholder of a
77-12 corporation, or any officer, director, or employee of a bank to act
77-13 as a local recording agent or solicitor in procuring business for
77-14 any insurance company, corporation, interinsurance exchange,
77-15 mutual, reciprocal, association, Lloyds or other insurance carrier,
77-16 until that person or entity shall have in force the license
77-17 provided for herein.]
77-18 [(b) No insurer doing business in this state shall pay
77-19 directly or indirectly any commission, or other valuable
77-20 consideration, to any person, firm, partnership, corporation, or
77-21 bank for services as a local recording agent within this state,
77-22 unless such person, firm, partnership, corporation, or bank shall
77-23 hold a currently valid license and appointment to act as a local
77-24 recording agent as required by the laws of this state; nor shall
77-25 any person, firm, partnership, corporation, or bank other than a
77-26 duly licensed and appointed local recording agent accept any such
77-27 commission or other valuable consideration; provided, however,
78-1 that nothing contained in this subsection shall prohibit an
78-2 assigned risk pool or assigned risk plan, duly authorized to
78-3 operate by the laws of this state, from paying commissions, or
78-4 other valuable consideration, to a duly licensed person, firm,
78-5 partnership, corporation, or bank for services as a local recording
78-6 agent.]
78-7 [(c) No licensed local recording agent, managing general
78-8 agent, or surplus lines agent doing business in this state shall
78-9 pay directly or indirectly any commission, or other valuable
78-10 consideration, to any person, firm, partnership, corporation, or
78-11 bank for services as a local recording agent within this state,
78-12 unless such person, firm, partnership, corporation, or bank shall
78-13 hold a currently valid license to act as a local recording agent as
78-14 required by the laws of this state; nor shall any person, firm,
78-15 partnership, corporation, or bank other than a duly licensed local
78-16 recording agent accept any such commission or other valuable
78-17 consideration.]
78-18 [(d) No local recording agent doing business in this state
78-19 shall pay directly or indirectly any commission, or other valuable
78-20 consideration, to any person for services as a solicitor within
78-21 this state, unless such person shall hold a currently valid license
78-22 and appointment to act as a solicitor for such local recording
78-23 agent as required by the laws of this state; nor shall any person
78-24 other than a duly licensed and appointed solicitor accept any such
78-25 commission or other valuable consideration.]
78-26 [Sec. 5. ACTIVE AGENTS OR SOLICITORS ONLY TO BE LICENSED.
78-27 No license shall be granted to any person, firm, partnership,
79-1 corporation, or bank as a local recording agent or to a person as a
79-2 solicitor, for the purpose of writing any form of insurance, unless
79-3 it is found by the department that such person, firm, partnership,
79-4 corporation, or bank is or intends to be, actively engaged in the
79-5 soliciting or writing of insurance for the public generally; that
79-6 each person or individual of a firm is a resident of Texas and is
79-7 to be actively engaged in good faith in the business of insurance,
79-8 and that the application is not being made in order to evade the
79-9 laws against rebating and discrimination either for the applicant
79-10 or for some other person, firm, partnership, corporation, or bank.
79-11 Nothing herein contained shall prohibit an applicant insuring
79-12 property which the applicant owns or in which the applicant has an
79-13 interest; but it is the intent of this Section to prohibit coercion
79-14 of insurance and to preserve to each citizen the right to choose
79-15 that individual's own agent or insurance carrier, and to prohibit
79-16 the licensing of an individual, firm, partnership, corporation, or
79-17 bank to engage in the insurance business principally to handle
79-18 business which the applicant controls only through ownership,
79-19 mortgage or sale, family relationship or employment, which shall be
79-20 taken to mean that an applicant who is making an original
79-21 application for license shall show the department that the
79-22 applicant has a bona fide intention to engage in business in which,
79-23 in any calendar year, at least twenty-five per cent (25%) of the
79-24 total volume of premiums shall be derived from persons or
79-25 organizations other than applicant and from property other than
79-26 that on which the applicant shall control the placing of insurance
79-27 through ownership, mortgage, sale, family relationship or
80-1 employment. Nothing herein contained shall be construed to
80-2 authorize a partnership, corporation, or bank to receive a license
80-3 as a solicitor.]
80-4 [Sec. 5a. REQUIREMENTS AS TO KNOWLEDGE OR INSTRUCTION FOR
80-5 LOCAL RECORDING AGENT'S LICENSE. (a) Every applicant for local
80-6 recording agent's license from and after October 1, 1971, shall
80-7 upon the successful passage of the examination for local recording
80-8 agent's license as promulgated by the State Board of Insurance
80-9 pursuant to the provisions of this Article 21.14 be issued a
80-10 temporary local recording agent's license. The holder of a
80-11 temporary local recording agent's license shall have the same
80-12 authority and be subject to the same provisions of the law as local
80-13 recording agents until such temporary license shall expire. Each
80-14 such temporary license so issued shall expire upon the happening of
80-15 any one of the following, whichever shall first occur, to wit:]
80-16 [(i) The issuance of a local recording agent's license
80-17 to such person;]
80-18 [(ii) One year from date of issuance of the temporary
80-19 local recording agent's license.]
80-20 [Each such person receiving a temporary license as set out
80-21 above shall within one (1) year from the issue date of such
80-22 temporary license complete to the satisfaction of the State Board
80-23 of Insurance one of the following courses of study:]
80-24 [(i) Classroom courses in insurance satisfactory to
80-25 the State Board of Insurance at a school, college, junior college
80-26 or extension thereof; or]
80-27 [(ii) An insurance company or agents' association
81-1 school approved by the State Board of Insurance; or]
81-2 [(iii) A correspondence course in insurance approved
81-3 by the State Board of Insurance.]
81-4 [Upon the successful completion of any one of the above
81-5 courses of study within the one year period, the temporary agent
81-6 shall then be entitled to receive from the State Board of Insurance
81-7 his local recording agent's license.]
81-8 [(b) Provided, however, none of the provisions of this
81-9 section shall apply to the following:]
81-10 [(1) To any person holding a license as a local
81-11 recording agent upon the effective date of this Act.]
81-12 [(2) To any person applying for an emergency local
81-13 recording agent's license under the provisions of Section 6a of
81-14 Article 21.14 of the Insurance Code of Texas.]
81-15 [(3) To any person who holds the designation Chartered
81-16 Property and Casualty Underwriter (C.P.C.U.) from the American
81-17 Institute for C.P.C.U., the designation Certified Insurance
81-18 Counselor (C.I.C.) from the national Society of Certified Insurance
81-19 Counselors, or the designation Accredited Adviser in Insurance
81-20 (A.A.I.) from the Insurance Institute of America.]
81-21 [(4) To any person who has a bachelor's degree from a
81-22 four-year accredited college or university with a major in
81-23 insurance.]
81-24 [(5) To any person who within two (2) years
81-25 immediately preceding the filing of an application was a licensed
81-26 agent in good standing in the state from which the person moved to
81-27 Texas, provided such state makes similar provision for those agents
82-1 who may move from Texas to such state.]
82-2 [(6) To any person desiring to apply for a license to
82-3 solicit and write exclusively all forms of insurance authorized to
82-4 be solicited and written in Texas covering the ownership,
82-5 operation, maintenance or use of any motor vehicle, its accessories
82-6 and equipment, designed for use upon the public highways, including
82-7 trailers and semitrailers. Such person shall continue to apply for
82-8 and qualify to be licensed under the other provisions of Article
82-9 21.14 of the Insurance Code of Texas. Provided, such applicant
82-10 shall be required to take and pass, to the satisfaction of the
82-11 Texas Department of Insurance, an examination, promulgated by said
82-12 department, covering only those forms of insurance referred to in
82-13 this paragraph. Provided, when such a person so applies and
82-14 qualifies, the person shall be issued a license which shall contain
82-15 on the face of said license the following language: "Motor vehicle
82-16 insurance only." An agent holding such a limited license hereby
82-17 created shall solicit only those forms of insurance hereinabove
82-18 provided, but shall be subject to all other laws relating to local
82-19 recording agents.]
82-20 [(c) There is hereby created an Agents' Education Advisory
82-21 Board whose duties shall be to advise with and make recommendations
82-22 to the State Board of Insurance concerning the curriculum, course
82-23 content and schools to be approved under Subsection (a) above. The
82-24 members of said Advisory Board shall be appointed by the chairman
82-25 of the State Board of Insurance and shall serve for one year, from
82-26 September 1 to August 31, or until their successors are appointed.
82-27 Said Advisory Board shall be composed of the following persons:
83-1 Two (2) members, each of whom shall be a resident of Texas and have
83-2 a minimum of ten (10) years' experience as an executive of a fire
83-3 and casualty company doing business in Texas and whose company
83-4 operates an agents' school; two (2) members, each of whom shall be
83-5 a licensed local recording agent in Texas with a minimum of ten
83-6 (10) years' experience as an agent; and one (1) member who shall be
83-7 a teacher of insurance at a four-year accredited college or
83-8 university in Texas. Said Advisory Board shall meet at the offices
83-9 of the State Board of Insurance upon call of the chairman of the
83-10 State Board of Insurance and the members of said Advisory Board
83-11 shall be paid out of the Recording Agents License Fund for their
83-12 actual and necessary expenses incurred in connection with their
83-13 attendance at said meetings.]
83-14 [Sec. 5b. CONTINUING EDUCATION. (a) The State Board of
83-15 Insurance shall adopt a procedure for certifying and shall certify
83-16 continuing education programs for agents. Participation in the
83-17 programs is mandatory for all agents licensed under this article.
83-18 The State Board of Insurance shall exempt agents who have been
83-19 licensed for 20 years or more on or after September 1, 1992, and
83-20 shall have the rulemaking authority to provide for other reasonable
83-21 exemptions. No agent shall be required to complete more than 15
83-22 hours of continuing education per year. An agent licensed under
83-23 both Articles 21.07-1 and 21.14 of this code and any subsequent
83-24 amendments may elect to satisfy the continuing education
83-25 requirements of either article and shall not be required to
83-26 complete a total of more than 15 hours of continuing education per
83-27 year.]
84-1 [(b) On written request of the agent, the State Board of
84-2 Insurance may extend the time for the agent to comply with the
84-3 continuing education requirements of this section or may exempt the
84-4 agent from some or all of the requirements for a licensing period
84-5 if the board finds that the agent is unable to comply with the
84-6 requirements because of illness, medical disability, or another
84-7 extenuating circumstance beyond the control of the agent. The
84-8 criteria for such exemptions and extensions shall be established by
84-9 rule.]
84-10 [Sec. 5c. ADVISORY COUNCIL. (a) An advisory council of
84-11 nine members shall be appointed by the State Board of Insurance to
84-12 furnish the Board with information and assistance in the conduct of
84-13 the continuing education program for agents licensed under Articles
84-14 21.07-1 and 21.14.]
84-15 [(b) Four of the members of the advisory council must be
84-16 representatives of the general public. A public representative may
84-17 not be:]
84-18 [(1) an officer, director, or employee of an insurance
84-19 company, insurance agency, agent, broker, solicitor, adjuster, or
84-20 any other business entity regulated by the State Board of
84-21 Insurance;]
84-22 [(2) a person required to register with the secretary
84-23 of state under Chapter 305, Government Code; or]
84-24 [(3) related to a person described by Subdivision (1)
84-25 or (2) of this subsection within the second degree of affinity or
84-26 consanguinity.]
84-27 [Sec. 5d. JURISDICTION FOR CONTINUING EDUCATION.
85-1 Notwithstanding the rules or regulations of any other state agency,
85-2 the board has sole jurisdiction for all matters relating to the
85-3 continuing education of insurance agents who are licensed under
85-4 this Article.]
85-5 [Sec. 6. EXAMINATION REQUIRED; EXCEPTIONS. (a) If
85-6 applicant for a local recording agent's license has not prior to
85-7 date of such application, been licensed as a local recording agent,
85-8 or if the applicant for a solicitor's license has not been licensed
85-9 as a local recording agent or as a solicitor prior to date of such
85-10 application, the Board shall require such applicant to submit to a
85-11 written examination covering all kinds of insurance or contracts,
85-12 which license if granted, will permit the applicant to solicit.]
85-13 [(b) Any applicant for local recording agent's license who
85-14 has prior to the date of such application been licensed as a local
85-15 recording agent, shall be entitled to a local recording agent's
85-16 license without examination, provided the other requirements of
85-17 this article are met. Any applicant for solicitor's license who
85-18 has been licensed as a local recording agent or as a solicitor
85-19 prior to date of such application, shall be entitled to a
85-20 solicitor's license without an examination, provided the other
85-21 requirements of this article are met.]
85-22 [(c) The Board by rule shall apply different examination
85-23 standards to a solicitor employed as an insurance service
85-24 representative than those applied to other solicitors.]
85-25 [Sec. 6a. DEATH, DISABILITY OR INSOLVENCY; EMERGENCY LICENSE
85-26 WITHOUT EXAMINATION. In event of death or disability of a local
85-27 recording agent or in event a local recording agent is found to be
86-1 insolvent and unable to pay for premiums coming to his hands as
86-2 such local recording agent, the Board may issue to an applicant for
86-3 local recording agent's license an emergency local recording
86-4 agent's license for a period of ninety (90) days in any twelve (12)
86-5 consecutive months and at the Board's option, an additional period
86-6 up to ninety (90) days without an examination provided the other
86-7 requirements of this article are met and if it is established to
86-8 the satisfaction of the Board that such emergency license is
86-9 necessary for the preservation of the agency assets of a deceased
86-10 or disabled local recording agent or of an insolvent local
86-11 recording agent.]
86-12 [Sec. 7. CONDUCT OF EXAMINATIONS; NOTICE; MANUAL OF
86-13 QUESTIONS AND ANSWERS. Unless the State Board of Insurance accepts
86-14 a qualifying examination administered by a testing service, as
86-15 provided under Article 21.01-1, Insurance Code, as amended, all
86-16 examinations provided by this article shall be conducted by the
86-17 State Board of Insurance, and shall be held not less frequently
86-18 than one each sixty (60) days every year at times and places
86-19 prescribed by the State Board of Insurance, of which applicants
86-20 shall be notified by the State Board of Insurance in writing ten
86-21 (10) days prior to the date of such examinations, and shall be
86-22 conducted in writing in either the English or Spanish language.
86-23 Provided, further, that printed copies of a manual of questions and
86-24 answers thereto pertaining to the examination published under the
86-25 direction of the State Board of Insurance shall be made available
86-26 to all companies, general agents, and managers for the use of their
86-27 prospective agents, to all agents for the use of their prospective
87-1 solicitors in preparing for such examination. The questions to be
87-2 asked on such examination shall be based upon the questions and
87-3 answers contained in the manual.]
87-4 [Sec. 8. EXPIRATION OF LICENSE; RENEWAL. Except as may be
87-5 provided by a staggered renewal system adopted under Article
87-6 21.01-2 of this code, every license issued to a local recording
87-7 agent or a solicitor shall expire two years from the date of its
87-8 issue, unless a completed application to qualify for the renewal of
87-9 any such license shall be filed with the State Board of Insurance
87-10 and a nonrefundable fee paid on or before such date, in which event
87-11 the license sought to be renewed shall continue in full force and
87-12 effect until renewed or renewal is denied.]
87-13 [Sec. 9. FEES PAYABLE BEFORE EXAMINATION. Unless the State
87-14 Board of Insurance accepts a qualifying examination administered by
87-15 a testing service, as provided under Article 21.01-1, Insurance
87-16 Code, as amended, applicants required to be examined shall, at time
87-17 and place of examination, pay prior to being examined the following
87-18 fees: For a local recording agent's license a fee in an amount not
87-19 to exceed $50 as determined by the State Board of Insurance and for
87-20 a solicitor's license a fee in an amount not to exceed $20 as
87-21 determined by the State Board of Insurance. The fees paid under
87-22 this section shall not be returned for any reason other than
87-23 failure to appear and take the examination after the applicant has
87-24 given at least 24 hours' notice of an emergency situation to the
87-25 State Board of Insurance and received board approval. A new fee
87-26 shall be paid before each and every examination.]
87-27 [Sec. 10. RENEWAL FEES. (a) An applicant for the renewal
88-1 of a local recording agent's license shall pay, at the time the
88-2 renewal application is filed, a fee in an amount not to exceed $50
88-3 as determined by the State Board of Insurance. An applicant for
88-4 the renewal of a solicitor's license shall pay, at the time the
88-5 renewal application is filed, a fee in an amount not to exceed $20
88-6 as determined by the State Board of Insurance.]
88-7 [Sec. 11. ISSUANCE OF LICENSE. (a) Whenever the provisions
88-8 of this article have been complied with, the Board shall issue to
88-9 any applicant the license applied for where such applicant shall
88-10 have satisfactorily passed the examination prescribed by the State
88-11 Board of Insurance, and who shall possess the other qualifications
88-12 required by this article.]
88-13 [(b) The Commissioner of Insurance shall collect in advance
88-14 from agents requesting duplicate licenses a fee not to exceed $20.
88-15 The State Board of Insurance shall determine the amount of the fee.]
88-16 [Sec. 12. NOTICE TO COMMISSIONER OF INSURANCE OF APPOINTMENT
88-17 OF LOCAL RECORDING AGENT BY INSURANCE COMPANY. (a) After a person
88-18 or firm shall be granted a license as a local recording agent in
88-19 this state, that person or firm shall be authorized to act as such
88-20 local recording agent in this state, only after and during the time
88-21 such person or firm has been authorized so to do, by an insurance
88-22 company having a permit to do business in this state; and when so
88-23 authorized each company or carrier or its general or state or
88-24 special agent making the appointment shall immediately notify the
88-25 Commissioner of Insurance, on such form as the Commissioner may
88-26 require, of the appointment. If approval of an additional
88-27 appointment is not received from the Commissioner before the eighth
89-1 day after the date on which the completed application and fee were
89-2 received by the Commissioner, the agent and the insurance company
89-3 may assume that the Commissioner approves the application, and the
89-4 agent may act for the insurance company. The agent shall be
89-5 required to pay a nonrefundable fee of $16.00 for each appointment
89-6 applied for, which fee shall accompany the notice, and such person
89-7 or firm shall be presumed to be the agent for such company in this
89-8 state until such company or its general or state or special agent
89-9 shall have delivered written notice to the Commissioner of
89-10 Insurance that such appointment has been withdrawn.]
89-11 [(b) Every insurance carrier shall, upon termination for
89-12 cause of the appointment of any agent, immediately file with the
89-13 State Board of Insurance a statement of the facts relative to the
89-14 termination of the appointment and the date and cause thereof. The
89-15 Board shall thereupon record the termination of the appointment of
89-16 such agent to represent such insurance carrier in this state. The
89-17 agent terminated for cause shall receive from the insurance carrier
89-18 a copy of the notice sent to the State Board of Insurance.]
89-19 [(c) Any information, document, record or statement required
89-20 to be made or disclosed to the Board pursuant to this Article shall
89-21 be deemed confidential and privileged unless or until introduced as
89-22 evidence in an administrative hearing.]
89-23 [(d) No liability may be imposed on any insurance carrier,
89-24 its employees or agents, or any other person, acting without
89-25 malice, providing the information required to be disclosed pursuant
89-26 to this section.]
89-27 [Sec. 13. APPLICATION FOR SOLICITOR'S LICENSE. When any
90-1 local recording agent who has been appointed by an insurance
90-2 carrier having a permit to do business in this State shall desire
90-3 to appoint a solicitor in the operation of his business, he and a
90-4 company jointly shall make application for a license for such
90-5 solicitor to the Board of Insurance Commissioners, in such form as
90-6 the Board may require.]
90-7 [Sec. 14. NOTICE TO INSURANCE COMMISSIONERS OF SOLICITOR'S
90-8 APPOINTMENT; AUTHORITY TO SOLICIT. (a) No solicitor shall be
90-9 authorized to solicit insurance until after the State Board of
90-10 Insurance shall have been notified by a local recording agent of
90-11 his appointment, and no local recording agent shall accept business
90-12 tendered by a solicitor until such local recording agent has given
90-13 notice to the State Board of Insurance of such solicitor's
90-14 appointment as such, and until such solicitor has been licensed by
90-15 the State Board of Insurance. No solicitor shall have outstanding
90-16 at any time a notification of appointment from more than one local
90-17 recording agent, and a solicitor shall solicit insurance only in
90-18 the name of and for the account of the local recording agent by
90-19 whom he has been appointed.]
90-20 [(b) If approval of an appointment of a currently licensed
90-21 solicitor is not received from the Commissioner before the eighth
90-22 day after the date on which the completed application and
90-23 nonrefundable fee were received by the Commissioner, the solicitor
90-24 and local recording agent may assume that the Commissioner approves
90-25 the application, and the solicitor may act for the local recording
90-26 agent.]
90-27 [(c) A licensed solicitor's appointment may be terminated
91-1 either by the local recording agent who appointed the solicitor or
91-2 by the solicitor on the filing of notice with the Board of the
91-3 termination.]
91-4 [(d) Upon termination for cause of the appointment of any
91-5 solicitor, the local recording agent shall immediately file with
91-6 the State Board of Insurance a statement of the facts relative to
91-7 the termination of the appointment and the date and cause thereof.
91-8 The Board shall thereupon record the termination of the appointment
91-9 of such solicitor to represent such local recording agent. The
91-10 solicitor terminated for cause shall receive from the local
91-11 recording agent a copy of the notice sent to the State Board of
91-12 Insurance.]
91-13 [(e) Any information, document, record or statement required
91-14 to be made or disclosed to the Board pursuant to this Article shall
91-15 be deemed privileged and confidential unless or until introduced
91-16 into evidence in an administrative hearing.]
91-17 [(f) No liability may be imposed on any insurance carrier,
91-18 its employees or agents, or any other person, acting without
91-19 malice, providing the information required to be disclosed pursuant
91-20 to this section.]
91-21 [Sec. 15. FIRE INSURANCE IN EXCESS OF VALUE, WRITING OF
91-22 FORBIDDEN. It shall be unlawful for any local recording agent or
91-23 solicitor for an insurance company or insurance carrier knowingly
91-24 to grant, write or permit a greater amount of insurance against
91-25 loss by fire than the reasonable value of the subject of insurance.]
91-26 [Sec. 16. SUSPENSION OR REVOCATION OF LICENSE. (a) The
91-27 license of any local recording agent shall be suspended during a
92-1 period in which the agent does not have outstanding a valid
92-2 appointment to act as an agent for an insurance company. The Board
92-3 shall end the suspension on receipt of evidence satisfactory to the
92-4 board that the agent has a valid appointment. The Board shall
92-5 cancel the license of a solicitor if the solicitor does not have
92-6 outstanding a valid appointment to act as a solicitor for a local
92-7 recording agent, and shall suspend the license during a period that
92-8 the solicitor's local recording agent does not have outstanding a
92-9 valid appointment to act as an agent under this Article.]
92-10 [(b) The department may discipline any local recording agent
92-11 or solicitor or deny an application under Section 5, Article
92-12 21.01-2, of this code if it finds that the applicant, individually
92-13 or through any officer, director, or shareholder, for or holder of
92-14 such license:]
92-15 [(1) Has wilfully violated any provision of the
92-16 insurance laws of this state;]
92-17 [(2) Has intentionally made a material misstatement in
92-18 the application for such license;]
92-19 [(3) Has obtained, or attempted to obtain, such
92-20 license by fraud or misrepresentation;]
92-21 [(4) Has misappropriated or converted to the
92-22 applicant's or licensee's own use or illegally withheld money
92-23 belonging to an insurer or an insured or beneficiary;]
92-24 [(5) Has been guilty of fraudulent or dishonest acts;]
92-25 [(6) Has materially misrepresented the terms and
92-26 conditions of any insurance policies or contracts;]
92-27 [(7) Has made or issued, or caused to be made or
93-1 issued, any statement misrepresenting or making incomplete
93-2 comparisons regarding the terms or conditions of any insurance
93-3 contract legally issued by an insurance carrier for the purpose of
93-4 inducing or attempting to induce the owner of such contract to
93-5 forfeit or surrender such contract or allow it to expire for the
93-6 purpose of replacing such contract with another;]
93-7 [(8) Is convicted of a felony;]
93-8 [(9) Is guilty of rebating any insurance premium or
93-9 discriminating as between insureds;]
93-10 [(10) Is not engaged in the soliciting or writing of
93-11 insurance for the public generally as required by Section 5 of this
93-12 Article; or]
93-13 [(11) Is afflicted with a disability as that term is
93-14 defined by Subsection (a) of Article 21.15-6 of this code.]
93-15 [(c) The State Board of Insurance may order that a local
93-16 recording agent or solicitor who is afflicted with a disability be
93-17 placed on disability probation under the terms and conditions
93-18 specified under Article 21.15-6 of this code instead of taking
93-19 disciplinary action under Subsection (b) of this section.]
93-20 [(d) A license applicant or licensee whose license
93-21 application or license has been denied, refused, or revoked under
93-22 this section may not apply for any license as an insurance agent
93-23 before the first anniversary of the effective date of the denial,
93-24 refusal, or revocation, or, if the applicant or licensee seeks
93-25 judicial review of the denial, refusal, or revocation before the
93-26 first anniversary of the date of the final court order or decree
93-27 affirming that action. The Commissioner may deny an application
94-1 timely filed if the applicant does not show good cause why the
94-2 denial, refusal, or revocation of the previous license application
94-3 or license should not be considered a bar to the issuance of a new
94-4 license. This subsection does not apply to an applicant whose
94-5 license application was denied for failure to pass a required
94-6 written examination.]
94-7 [Sec. 18. APPEAL. If the Commissioner refuses an
94-8 application for license as provided by this article, or suspends,
94-9 revokes, or refuses to renew any license at a hearing as provided
94-10 by this article, and if the applicant or accused is dissatisfied
94-11 with the action of the Commissioner, the applicant or accused may
94-12 appeal from the action in accordance with Article 1.04 of this
94-13 Code.]
94-14 [Sec. 19. NOTICE TO LAST ADDRESS. Where notice to the
94-15 applicant or accused is provided for in any part of this article,
94-16 notice by registered mail to his last known address shall be
94-17 sufficient.]
94-18 [Sec. 20. LIFE, HEALTH AND ACCIDENT INSURANCE, INAPPLICABLE
94-19 TO; OTHER EXCEPTIONS. The provisions of this article do not apply
94-20 to the Life, Health and Accident Insurance business or the Life,
94-21 Health and Accident Department of the companies engaged therein,
94-22 nor shall it apply to any of the following, namely:]
94-23 [(a) Any actual full-time home office salaried
94-24 employee of any insurance carrier licensed to do business in Texas,
94-25 other than an employee who solicits or receives an application for
94-26 the sale of insurance through an oral, written, or electronic
94-27 communication in accordance with Section 20A of this article.]
95-1 [(b) Any actual attorney in fact and its actual
95-2 traveling salaried representative as to business transacted through
95-3 such attorney in fact or salaried representative of any reciprocal
95-4 exchange or interinsurance exchange admitted to do business in
95-5 Texas.]
95-6 [(c) Any adjuster of losses, and/or inspector of
95-7 risks, for an insurance carrier licensed to do business in Texas.]
95-8 [(d) Any General Agent or State Agent or Branch
95-9 Manager representing an admitted and licensed insurance company or
95-10 carrier, or insurance companies or carriers, in a supervisory
95-11 capacity.]
95-12 [(e) The actual attorney in fact for any Lloyds.]
95-13 [(f) All incorporated or unincorporated mutual
95-14 insurance companies, their agents and representatives, organized
95-15 and/or operating under and by authority of Chapters 16 and 17 of
95-16 this code.]
95-17 [(g) Nothing in this entire article shall ever be
95-18 construed to apply to any member, agent, employee, or
95-19 representative of any county or farm mutual insurance company as
95-20 exempted under Chapters 16 and 17 of this code.]
95-21 [(h) Nothing in this article shall apply to the group
95-22 motor vehicle insurance business or the group motor vehicle
95-23 department of the companies engaged in that business.]
95-24 [(i) Salaried employees not involved in solicitation
95-25 or negotiation of insurance in the office of a local recording
95-26 agent who devote their full time to clerical and administrative
95-27 services, including the incidental taking of information from
96-1 customers and receipt of premiums in the office of a local
96-2 recording agent, provided the employees do not receive any
96-3 commissions and their compensation is not varied by the volume of
96-4 premiums taken and received.]
96-5 [Sec. 20A. FULL-TIME HOME OFFICE SOLICITORS: MANDATORY
96-6 REGISTRATION, CONTINUING EDUCATION, AND NOTIFICATION TO CONSUMERS;
96-7 DISCIPLINARY ACTIONS. (a) Any actual full-time home office
96-8 salaried employee of any insurance carrier licensed to do business
96-9 in Texas who solicits or receives an application for the sale of
96-10 insurance through an oral, written, or electronic communication
96-11 shall register with the commissioner.]
96-12 [(b) Any insurance carrier licensed to do business in Texas
96-13 whose general plan of operation includes the use of employees
96-14 described in Subsection (a) of this section shall certify to the
96-15 commissioner that such employees receive continuing education of
96-16 not less than 15 hours per year designed to give such employees:]
96-17 [(1) reasonable familiarity with the broad principles
96-18 of insurance, with licensing and regulatory laws, and with
96-19 provisions, terms, and conditions of the insurance which the
96-20 registrant transacts; and]
96-21 [(2) a fair and general understanding of the
96-22 obligations and duties of an insurer to an insured, including
96-23 training in ethical considerations.]
96-24 [(c) The registration of any actual full-time home office
96-25 salaried employee shall be suspended and the employer insurance
96-26 carrier may be disciplined in accordance with the insurance laws of
96-27 this state, if the commissioner finds that the registrant:]
97-1 [(1) has wilfully violated any provision of this code,
97-2 the laws of this state, or a rule of the commissioner;]
97-3 [(2) has been guilty of fraudulent or dishonest acts;]
97-4 [(3) has materially misrepresented the terms and
97-5 conditions of any insurance policies or contracts;]
97-6 [(4) has made or issued, or caused to be made or
97-7 issued, any statement misrepresenting or making incomplete
97-8 comparisons regarding the terms or conditions of any insurance
97-9 contract legally issued by an insurance carrier for the purpose of
97-10 inducing or attempting to induce the owner of such contract to
97-11 forfeit or surrender such contract or allow it to expire for the
97-12 purpose of replacing such contract with another;]
97-13 [(5) is guilty of rebating any insurance premium or
97-14 discriminating as between insureds; or]
97-15 [(6) has been convicted of a felony involving fraud or
97-16 breach of fiduciary duty.]
97-17 [(d) Registrants under this section shall disclose such
97-18 registration when making an oral, written, or electronic
97-19 communication to solicit or receive an application for the sale of
97-20 insurance.]
97-21 [(e) The commissioner shall adopt rules to implement the
97-22 provisions of this section.]
97-23 [Sec. 21. FEES, DISPOSITION OF; APPROPRIATIONS. The fees
97-24 herein provided for, when collected, shall be deposited in the
97-25 State Treasury to the credit of the State Board of Insurance
97-26 operating fund; provided that no expenditures shall be made from
97-27 said fund except under authority of the Legislature as set forth in
98-1 the General Appropriation Bill; provided further that no
98-2 appropriation shall ever be made out of the General Revenue Fund
98-3 for the purpose of administering this article or any provision
98-4 thereof.]
98-5 [Sec. 22. REBATES OR INDUCEMENTS FORBIDDEN. It shall be
98-6 unlawful for any local recording agent to pay, allow, give or offer
98-7 to pay, allow or give, directly or indirectly, any rebate of
98-8 premiums payable, any commission, or any paid employment or
98-9 contract for service of any kind or anything of value whatsoever,
98-10 or any valuable consideration or inducement whatever, not specified
98-11 in the policy or contract of insurance for or on account of the
98-12 solicitation or negotiation of contracts of insurance on property
98-13 or risks in this State to any person, firm or corporation, other
98-14 than a duly licensed solicitor appointed by such local recording
98-15 agent, or to another local recording agent.]
98-16 [It shall be unlawful for any solicitor to pay, allow or give
98-17 or offer to pay, allow or give, directly or indirectly, any rebate
98-18 of premiums payable, any commission, or any paid employment or
98-19 contract for service of any kind, or anything of value whatsoever,
98-20 or any valuable consideration or inducement whatever, not specified
98-21 in the policy or contract of insurance, for or on account of the
98-22 solicitation or negotiation of contracts of insurance on property
98-23 or risks in this State to any person, firm or corporation.]
98-24 [Sec. 23. REPEAL; LAWS NOT IN CONFLICT NOT AFFECTED; ACT
98-25 CUMULATIVE. All laws or parts of laws pertaining to any phase of
98-26 the insurance business, which are in conflict with this article,
98-27 shall be and the same are hereby repealed; but all laws, Civil and
99-1 Criminal, affecting insurance agents, and/or insurance companies or
99-2 insurance carriers or the insurance business, which are not in
99-3 conflict herewith, shall not be affected by the provisions of this
99-4 article; but this article shall be deemed cumulative of such laws.]
99-5 [Sec. 24. VIOLATION OF ACT. Any person or any member of any
99-6 firm, or any corporation or bank, or any officer, director,
99-7 shareholder or employee of any corporation or bank who violates any
99-8 of the provisions of Sections 4, 15 and 22 of this Article shall be
99-9 guilty of a misdemeanor, and on conviction in a court of competent
99-10 jurisdiction, shall be punished by a fine of not less than One
99-11 Dollar ($1.00) nor more than One Hundred Dollars ($100.00).]
99-12 [Sec. 25. ENFORCEMENT OF ARTICLE. The Attorney General, or
99-13 any District or County Attorney, or the Board of Insurance
99-14 Commissioners, may institute any injunction proceeding or such
99-15 other proceeding to enforce the provisions of this article, and to
99-16 enjoin any person, firm or corporation from engaging or attempting
99-17 to engage in any of the business in violation of this article or
99-18 any of the provisions thereof. The provisions of this section are
99-19 cumulative of the other penalties or remedies provided for in this
99-20 article.]
99-21 [Sec. 26. ADMINISTRATION OF ARTICLE. The administration of
99-22 the provision of this article shall be vested in the Board of
99-23 Insurance Commissioners, and of the administrative officer of the
99-24 various counties in which the violation of any provision of this
99-25 article may occur; and the personnel charged with the direct
99-26 supervision of the article, except the regularly elected law
99-27 enforcement officers and their appointees, shall be responsible to
100-1 and serve at the will of the Board of Insurance Commissioners. It
100-2 shall be the duty of the Board of Insurance Commissioners and the
100-3 Attorney General, and of the District and County Attorneys in
100-4 counties where violations of this article may occur, to see that
100-5 its provisions are at all times obeyed, and to make such
100-6 investigations as will prevent or detect the violation of any
100-7 provision thereof. The Board of Insurance Commissioners shall at
100-8 once lay before the District or County Attorney of the proper
100-9 county, any evidence which shall come to its knowledge, of
100-10 criminality or threatened criminality under this article. In the
100-11 event of the neglect or refusal of such Attorney to institute and
100-12 prosecute such violation, or to enforce the other remedies provided
100-13 by this article, the Board shall submit such evidence to the
100-14 Attorney General, who is hereby authorized to proceed therein with
100-15 all the rights, privileges and powers conferred by law upon
100-16 District or County Attorneys. Provided, any person having
100-17 knowledge of the violation of the provisions of this article may
100-18 file a complaint for such violation with the proper officers as in
100-19 other misdemeanor cases. The Board of Insurance Commissioners is
100-20 given the power and authority, as a requisite for granting or
100-21 renewing a license to insurance companies or insurance carriers,
100-22 their local recording agents or solicitors, to require answers
100-23 under oath to any questions propounded by the said Board or under
100-24 its authority, and touching any phase of insurance business in the
100-25 State of Texas in which said insurance company or insurance
100-26 carrier, or such person or firm, shall be engaged, and to require
100-27 such person or firm seeking appointment as local recording agent to
101-1 submit his books, records, and accounts, insofar as they may be
101-2 material to any phase of insurance business, to examination and
101-3 inspection by the Board or any person acting under its authority.]
101-4 [Sec. 27. RULES. In addition to other rules required or
101-5 authorized by this article, the commissioner may adopt rules in
101-6 accordance with federal law applicable to the regulation of the
101-7 sale of insurance that are necessary and proper to carry out the
101-8 provisions of this article.]
101-9 ARTICLE 4. NONRESIDENT AGENT LICENSE
101-10 SECTION 4.01. Section 1, Article 21.11, Insurance Code, is
101-11 amended to read as follows:
101-12 Sec. 1. NONRESIDENT AGENT LICENSE. (a) The
101-13 [Notwithstanding Sections 3(a) and (b), Article 21.14, of this
101-14 code, the] department shall license a person who is not a resident
101-15 of this state to act as a nonresident agent if the department finds
101-16 that:
101-17 (1) the state in which the person resides accords the
101-18 same privilege to a person who is a resident of this state;
101-19 (2) the applicant for the nonresident license:
101-20 (A) if an individual:
101-21 (i) subject to Subsection (b) of this
101-22 section holds a license as an agent in the state of residence and
101-23 either obtained the license by passing a written examination or
101-24 held the license before the time a written examination was required
101-25 to obtain the license; or
101-26 (ii) has passed the examination for an
101-27 agent's license required under Article 21.01-1 of this code and
102-1 satisfies the requirements adopted under Section 2, Article 21.07,
102-2 of this code for licensing of an individual; or
102-3 (B) if a corporation or partnership:
102-4 (i) has provided evidence of the authority
102-5 or ability to act as an agent in the entity's state of domicile;
102-6 (ii) has satisfied the requirements
102-7 adopted under Section 2, Article 21.07, of this code for licensing
102-8 of a corporation or partnership; and
102-9 (iii) is domiciled in a state that has
102-10 entered into a reciprocal agreement with the commissioner as
102-11 provided by Subsection (b) of this section; and
102-12 (3) the applicant or any officer, director,
102-13 shareholder, member, or partner of an applicant that is a business
102-14 entity, required to file biographical information with the
102-15 department under Article 21.07 of this code, has not:
102-16 (A) committed an act that constitutes grounds
102-17 for denial, suspension, or revocation of a license under Article
102-18 21.01-2 of this code; or
102-19 (B) had an insurance license suspended or
102-20 revoked by the department or the insurance regulator of another
102-21 state.
102-22 (b) The commissioner may enter into a reciprocal agreement
102-23 with the appropriate official of another state waiving the written
102-24 examination requirement for an applicant who is a resident of that
102-25 state if:
102-26 (1) a written examination is required of applicants
102-27 for an agent's license in the other state;
103-1 (2) the appropriate official of the other state
103-2 certifies that the applicant holds a license as an agent in the
103-3 other state and either passed a written examination to obtain the
103-4 license or was the holder of an agent's license before the time a
103-5 written examination was required; and
103-6 (3) in the other state, a resident of this state is
103-7 entitled to obtain an agent's license under the same conditions and
103-8 without discrimination as to fees or otherwise in favor of the
103-9 residents of the other state.
103-10 (c) A person who resides in a town through which the state
103-11 line runs and whose residence is located in the town in the
103-12 adjoining state may be licensed as a resident agent if the person
103-13 maintains the person's business office in this state [in accordance
103-14 with Article 21.14 of this code, subject to the limitations of this
103-15 article].
103-16 (d) The [(b) An applicant for issuance of a license under
103-17 this section must meet the requirements for issuance of a license
103-18 under Article 21.14 of this code, except that the] department may
103-19 [shall] waive any [of those] license requirements for an applicant
103-20 with a valid license from another state or jurisdiction that has
103-21 license requirements substantially equivalent to those of this
103-22 state.
103-23 (e) The commissioner shall be the attorney for service of
103-24 process on whom all lawful process, notice, or demand may be served
103-25 in any legal proceeding against a nonresident agent licensed to
103-26 transact business in this state if:
103-27 (1) the nonresident agent fails to appoint or maintain
104-1 an attorney for service in this state;
104-2 (2) an attorney for service is appointed but cannot
104-3 with reasonable diligence be found; or
104-4 (3) the license of the nonresident agent is revoked.
104-5 SECTION 4.02. Sections 2(a) and (b), Article 21.11,
104-6 Insurance Code, are amended to read as follows:
104-7 (a) Except as otherwise specifically provided by this code
104-8 [section], a license issued under this article to an individual who
104-9 is not a resident of this state grants the same rights and
104-10 privileges afforded to a resident license holder [under a license
104-11 issued under Article 21.14 of this code].
104-12 (b) A person who holds a license issued under this article
104-13 and who is in compliance with the continuing education requirements
104-14 of the person's state of residence is exempt from the continuing
104-15 education requirements imposed under Article 21.01-1 of this code
104-16 [may not:]
104-17 [(1) maintain an office in this state;]
104-18 [(2) solicit insurance business in this state by any
104-19 method, including an oral, written, or electronic communication; or]
104-20 [(3) employ solicitors or others to directly or
104-21 indirectly solicit insurance in this state].
104-22 SECTION 4.03. Section 3, Article 21.11, Insurance Code, is
104-23 amended to read as follows:
104-24 Sec. 3. LIMITATIONS. (a) This article does not permit:
104-25 (1) any person or firm licensed solely as a broker in
104-26 the person's or firm's state of residence to be granted a license
104-27 under this article; or
105-1 (2) a holder of a license issued under this article to
105-2 act as a surplus lines agent under Article 1.14-2 of this code or
105-3 to perform any of the acts permitted under Article 1.14-2 of this
105-4 code, except as provided under Section 10, Article 21.54, of this
105-5 code[; or]
105-6 [(3) any person or firm who holds a license issued
105-7 under this article to engage in any form of direct solicitation of
105-8 insurance within this state].
105-9 (b) This subchapter [The commissioner shall revoke a
105-10 nonresident agent's license issued under this article if the
105-11 commissioner finds that the license was obtained or is being used
105-12 for the purpose of transacting insurance through a local recording
105-13 agent in a manner that permits the individual licensed under this
105-14 article, by subterfuge, to transact insurance as a local recording
105-15 agent.]
105-16 [(c) In the circumstances described by Subsection (b) of
105-17 this section, the commissioner shall also revoke the license of the
105-18 affected local recording agent.]
105-19 [(d) A license revoked under Subsection (b) or (c) of this
105-20 section is not subject to reissuance before the fifth anniversary
105-21 of the date the revocation is effective.]
105-22 [(e) The commissioner shall order that any insurance
105-23 transacted under an arrangement described by Subsection (b) of this
105-24 section be canceled.]
105-25 [(f) Article 21.01-2 of this code] applies to licensing of a
105-26 nonresident agent under this article.
105-27 SECTION 4.04. Sections 4 and 5, Article 21.11, Insurance
106-1 Code, are amended to read as follows:
106-2 Sec. 4. HOME OFFICE EMPLOYEE. This article does not affect
106-3 the authority established under Section 7 [20], Article 21.14, of
106-4 this code of an actual full-time home office salaried employee of
106-5 an insurance carrier licensed to do business in this state.
106-6 Sec. 5. RULES. The commissioner may adopt rules as
106-7 necessary to implement this article and to meet the minimum
106-8 requirements of federal law and regulations.
106-9 ARTICLE 5. CONFORMING AMENDMENTS
106-10 SECTION 5.01. Section 1, Article 3.71, Insurance Code, is
106-11 amended to read as follows:
106-12 Sec. 1. Notwithstanding any contrary or inconsistent
106-13 provision of any law, two or more insurance companies authorized to
106-14 separately do such an insurance business in this state, including
106-15 stock companies, reciprocals, or inter-insurance exchanges, Lloyds'
106-16 associations, fraternal benefit societies and mutual companies of
106-17 all kinds, including state-wide mutual assessment corporations and
106-18 local mutual aid associations, and stipulated premium companies,
106-19 may join together to offer, sell and administer hospital, surgical
106-20 and medical expense insurance plans under a group policy covering
106-21 residents of this state who are sixty-five (65) years of age and
106-22 older and their spouses on which policy each insurance carrier
106-23 shall be severally liable, and such companies may agree with
106-24 respect to premium rates, policy provisions, sales, administrative,
106-25 technical and accounting procedures and other matters within the
106-26 scope of this Article. Such companies may issue such insurance
106-27 policies in their own names or in the name of an unincorporated
107-1 association, trust, or other organization formed for the sole
107-2 purposes of this Article and evidenced by a contract in writing
107-3 executed by the participating insurance companies, and any
107-4 unincorporated associations, trusts, or other organizations
107-5 heretofore formed for the sole purpose of this Article and
107-6 evidenced by a contract in writing executed by the participating
107-7 insurance companies is hereby ratified, confirmed and approved and
107-8 validated from the date of its formation. Any such policy may be
107-9 executed on behalf of the insurance companies by a duly authorized
107-10 person and need not be countersigned on behalf of any such company
107-11 by a resident agent. Any person who is licensed as a general life,
107-12 accident, and health [insurance] agent or as a general property and
107-13 casualty [local recording] agent [or as a solicitor] under Article
107-14 [the provisions of Articles 21.07,] 21.07-1[,] or [Article] 21.14
107-15 of this code [the Insurance Code of the State of Texas,] may act as
107-16 such agent in connection with policies of insurance or certificates
107-17 of insurance issued by any unincorporated association, trust or
107-18 other organization formed for the sole purposes of this Article
107-19 without the necessity of notifying the department [State Board of
107-20 Insurance] that such person is appointed to so act.
107-21 SECTION 5.02. Section 7, Article 3.75, Insurance Code, is
107-22 amended to read as follows:
107-23 Sec. 7. (a) Notwithstanding any other law of this state, no
107-24 person shall sell or offer for sale within this state a variable
107-25 contract or do or perform any act or thing in the sale,
107-26 negotiation, making, or consummating of any variable contract other
107-27 than for himself, unless such person shall have a valid and current
108-1 license issued under Article 21.07-1 of this code [certificate from
108-2 the State Board of Insurance] authorizing such person to act within
108-3 this state as a general life, accident, and health [variable]
108-4 agent. [No such certificate shall be issued unless and until said
108-5 board is satisfied, after examination, that such person is by
108-6 training, knowledge, ability, and character qualified to act as
108-7 such agent. Any such certificate may be withdrawn and canceled by
108-8 said board, after notice and hearing, if it shall find that the
108-9 holder thereof does not then have the qualifications required for
108-10 issue of such certificate.]
108-11 (b) The licensing and regulation of a person acting as a
108-12 variable agent is subject to the same provisions applicable to the
108-13 licensing and regulation of other agents under Subchapter A,
108-14 Chapter 21, of this code. [The Commissioner of Insurance shall
108-15 collect in advance from variable agent applicants a nonrefundable
108-16 license fee in an amount not to exceed $50. Unless the State Board
108-17 of Insurance accepts a qualifying examination administered by a
108-18 testing service, as provided under Article 21.01-1, Insurance Code,
108-19 as amended, the Commissioner of Insurance shall collect in advance
108-20 from variable agent applicants an examination fee in an amount not
108-21 to exceed $20. The State Board of Insurance shall determine the
108-22 amount of the fees. A new examination fee shall be paid for each
108-23 and every examination. The examination fee shall not be returned
108-24 under any circumstance other than for failure to appear and take
108-25 the examination after the applicant has given at least 24 hours
108-26 notice of an emergency situation to the Commissioner of Insurance
108-27 and received the Commissioner's approval. All fees collected
109-1 pursuant to this section shall be deposited in the State Treasury
109-2 to the credit of the State Board of Insurance operating fund to be
109-3 used to administer the provisions of this section and Article
109-4 21.07-1, Insurance Code, as amended.]
109-5 [(c) Each license issued to a variable contract agent shall
109-6 expire two years following the date of issue, unless prior thereto
109-7 it is suspended or revoked by the Commissioner of Insurance.]
109-8 [(d) The Commissioner of Insurance shall suspend the license
109-9 of a variable agent during any period in which the agent does not
109-10 have an outstanding valid appointment. The Commissioner of
109-11 Insurance shall lift the suspension on receipt by the State Board
109-12 of Insurance of acceptable notice of a valid appointment.]
109-13 [(e) A license applicant or licensee whose license
109-14 application or license has been denied, refused, or revoked under
109-15 this section may not apply for any license as an insurance agent
109-16 before the first anniversary of the effective date of the denial,
109-17 refusal, or revocation, or, if the applicant or licensee seeks
109-18 judicial review of the denial, refusal, or revocation, before the
109-19 first anniversary of the date of the final court order or decree
109-20 affirming that action. The Commissioner of Insurance may deny an
109-21 application timely filed if the applicant does not show good cause
109-22 why the denial, refusal, or revocation of the previous license
109-23 application or license should not be considered a bar to the
109-24 issuance of a new license.]
109-25 [(f) Licenses which have not expired or which have not been
109-26 suspended or revoked may be renewed by filing with the State Board
109-27 of Insurance a completed renewal application and paying the
110-1 nonrefundable renewal fee set by the board in an amount not to
110-2 exceed $50 on or before the expiration date of the license in
110-3 accordance with Article 21.01-2 of this code.]
110-4 [(g) Any agent licensed under this article may represent and
110-5 act as an agent for more than one insurance carrier any time while
110-6 the license is in force, if the agent so desires. Any such agent
110-7 and the insurance carrier involved must give notice to the State
110-8 Board of Insurance of any additional appointment or appointments
110-9 authorizing the agent to act as agent for an additional insurance
110-10 carrier or carriers. Such notice shall be accompanied by a
110-11 certificate from each insurance carrier to be named in each
110-12 additional appointment that said insurance carrier desires to
110-13 appoint the applicant as its agent. This notice shall also contain
110-14 such other information as the State Board of Insurance may require.
110-15 The agent or company shall be required to pay a nonrefundable fee
110-16 in an amount not to exceed $16 as determined by the State Board of
110-17 Insurance for each additional appointment applied for, which fee
110-18 shall accompany the notice. If approval of the additional
110-19 appointment is not received from the board before the eighth day
110-20 after the date on which the completed application and fee were
110-21 received by the board, the agent and the insurance carrier, in the
110-22 absence of notice of disapproval, may assume that the board
110-23 approves the application, and the agent may act for the insurance
110-24 carrier. All fees collected pursuant to this section shall be
110-25 deposited in the State Treasury to the credit of the State Board of
110-26 Insurance operating fund to be used to administer the provisions of
110-27 this article and Article 21.07-1, Insurance Code, as amended.]
111-1 [(h) Duplicate License; Fee. The Commissioner of Insurance
111-2 shall collect in advance from agents requesting duplicate licenses
111-3 a fee not to exceed $20. The State Board of Insurance shall
111-4 determine the amount of the fee.]
111-5 SECTION 5.03. Subsection (c), Article 5.13-1, Insurance
111-6 Code, is amended to read as follows:
111-7 (c) The right of such insurers to issue prepaid legal
111-8 services contracts on individual, group, or franchise bases is
111-9 hereby recognized, and qualified agents of such insurers who are
111-10 licensed under Article 21.07-1 or [Articles 21.07 and] 21.14 of
111-11 this code [the Insurance Code, as amended, and Chapter 213, Acts of
111-12 the 54th Legislature, 1955, as amended (Article 21.07-1, Vernon's
111-13 Texas Insurance Code),] shall be authorized to write such coverages
111-14 under such rules [and regulations] as the commissioner [State Board
111-15 of Insurance] may prescribe.
111-16 SECTION 5.04. Chapter 10, Insurance Code, is amended by
111-17 adding Article 10.37-3 to read as follows:
111-18 Art. 10.37-3. AGENT'S LICENSE REQUIRED. (a) A person may
111-19 not solicit or procure insurance contracts on behalf of a fraternal
111-20 benefit society unless the person holds a license issued by the
111-21 department under this code or is specifically exempted from the
111-22 license requirement as provided by Section 2, Article 21.07-1, of
111-23 this code.
111-24 (b) The licensing and regulation of agents for fraternal
111-25 benefit societies under this chapter is subject to the requirements
111-26 adopted under Subchapter A, Chapter 21, of this code and other
111-27 existing or subsequent applicable laws governing the licensing of
112-1 those agents. A provision of such a law is applicable to a license
112-2 applicant and license holder under this chapter.
112-3 SECTION 5.05. Article 16.24A, Insurance Code, is amended to
112-4 read as follows:
112-5 Art. 16.24A. LICENSING OF AGENTS [FOR CROP INSURANCE]. (a)
112-6 No person or firm shall solicit, write, sign, execute or deliver
112-7 insurance policies, bind insurance risks, collect premiums, or
112-8 otherwise act in the capacity of an insurance agent [a local
112-9 recording agent] in the solicitation or sale of [crop] insurance
112-10 for a farm mutual insurance company unless the person or firm holds
112-11 a license issued [is licensed] under Subchapter A, Chapter 21,
112-12 [Article 21.14] of this code.
112-13 (b) A farm mutual insurance company may not appoint and act
112-14 through an agent [who qualifies for a license as an agricultural
112-15 insurance agent] under Article 21.14-2 of this code.
112-16 SECTION 5.06. Section 9, Article 17.25, Insurance Code, is
112-17 amended to read as follows:
112-18 Sec. 9. AGENTS' LICENSE. Agents [or solicitors] for such
112-19 companies shall be licensed and appointed as provided by Subchapter
112-20 A, Chapter 21, [in Article 21.07 or 21.14] of this Code.
112-21 SECTION 5.07. Sections 4, 19, and 21, Managing General
112-22 Agents' Licensing Act (Article 21.07-3, Vernon's Texas Insurance
112-23 Code), are amended to read as follows:
112-24 Sec. 4. REDEMPTION OF SHARES [APPLICATION FOR LICENSE; TO
112-25 WHOM LICENSE MAY BE ISSUED]. [(a) Each applicant for license
112-26 shall be a resident of Texas and file a written sworn application
112-27 on forms furnished by the Commissioner. The applicant shall include
113-1 in the application the names and addresses of the applicant's
113-2 officers, directors, shareholders, or partners, if applicable, and
113-3 affiliates.]
113-4 [(b) The Commissioner shall issue a license to an individual
113-5 applicant upon successful completion of the examination and
113-6 compliance with the other requirements of this Act.]
113-7 [(c) The Commissioner shall issue a license to a general
113-8 partnership, or to a limited liability partnership registered with
113-9 the Secretary of State under Section 3.08, Texas Revised
113-10 Partnership Act (Article 6132b-3.08, Vernon's Texas Civil
113-11 Statutes), engaging in the business of insurance if each of the
113-12 partners is licensed as an agent under this Act. The term
113-13 "partnership" or "agency partnership" as used in this Act means a
113-14 general partnership or a registered limited liability partnership.]
113-15 [(d) The Commissioner shall issue a license to a corporation
113-16 on finding:]
113-17 [(1) that the corporation is a Texas corporation
113-18 having its principal place of business in the State of Texas and
113-19 having as one of its purposes the authority to act as a managing
113-20 general agent; and]
113-21 [(2) that every officer, director, and shareholder of
113-22 the corporation is individually licensed as a managing general
113-23 agent under the provisions of this Insurance Code; provided,
113-24 however, that in the event ownership of the shares of such
113-25 corporation is acquired through devise or descent by an unlicensed
113-26 shareholder, the corporation shall still be entitled to a license
113-27 if such unlicensed shareholder qualifies as a licensed managing
114-1 general agent or disposes of the shares to a licensed managing
114-2 general agent within 90 days after the date of such stock
114-3 acquisition. If an unlicensed person acquires shares in such a
114-4 corporation and does not qualify to be licensed as a managing
114-5 general agent and the person does not dispose of the shares within
114-6 the 90-day period to a licensed managing general agent, the shares
114-7 must be purchased by the corporation for the value of the shares of
114-8 stock as reflected by the regular books and records of the
114-9 corporation on the date of the acquisition of the shares by the
114-10 unlicensed person. If the corporation fails or refuses to purchase
114-11 the shares, the corporation's license shall be canceled.]
114-12 [(e)] A corporation may redeem the shares of any shareholder
114-13 or the shares of a deceased shareholder, on terms agreed on by the
114-14 board of directors and the shareholder or the shareholder's
114-15 personal representative or at a price and on terms provided in the
114-16 articles of incorporation, the bylaws, or an existing contract
114-17 entered into between the shareholders of the corporation.
114-18 [(f) Nothing contained herein shall be construed to permit
114-19 any unlicensed shareholder or any employee or agent of any
114-20 corporation licensed as a managing general agent to perform any act
114-21 of a managing general agent without obtaining a managing general
114-22 agent's license.]
114-23 [(g) If at any time, any person holding a managing general
114-24 agent's license does not maintain the qualifications necessary to
114-25 obtain a license, the license of such person to act as a managing
114-26 general agent shall be canceled or denied in accordance with the
114-27 other provisions of this Act.]
115-1 [(h) Nothing in this section shall prevent any shareholder
115-2 from selling or otherwise transferring stock in any corporation to
115-3 a company or managing general agent licensed to do business in
115-4 Texas, nor prevent any such company or managing general agent from
115-5 owning all or any portion of the stock of such corporation.]
115-6 [(i) Each corporation licensed as a managing general agent
115-7 shall notify the Commissioner of any change in its officers,
115-8 directors, or shareholders not later than the 30th day after the
115-9 date on which the change takes effect.]
115-10 [(j) In this Act the term "corporation" shall mean a
115-11 corporation organized under the Texas Business Corporation Act or a
115-12 Texas domiciled limited liability company organized or existing
115-13 under the Texas Limited Liability Company Act (Article 1528n,
115-14 Vernon's Texas Civil Statutes) having its principal place of
115-15 business in this state and having as one of its purposes the
115-16 authority to act as a managing general insurance agent. Each
115-17 officer, manager, and member of a limited liability company must be
115-18 licensed under this Act. The licensing and regulation of a limited
115-19 liability company shall be subject to the same provisions and
115-20 requirements of this Act that are applicable to corporations
115-21 licensed under this Act.]
115-22 Sec. 19. ADMINISTRATION AND REGULATION OF MANAGING GENERAL
115-23 AGENTS; VIOLATIONS OF ACT. (a) The licensing and regulation of a
115-24 person acting as a managing general agent is subject to the laws
115-25 and requirements applicable to the licensing and regulation of
115-26 other agents under Subchapter A, Chapter 21, Insurance Code.
115-27 (b) Any person, firm, or corporation who violates any of the
116-1 provisions of this Act or any rule, regulation, or order adopted
116-2 under this Act or Subchapter A, Chapter 21, Insurance Code, shall
116-3 be subject to:
116-4 (1) Sections 2A, 3A, 4A, 5A, and 6A, Article 21.01-2,
116-5 Insurance Code; and
116-6 (2) [sanctions under] Section 7, Article 1.10,
116-7 Insurance Code.
116-8 Sec. 21. ADMINISTRATION OF ACT. The administration of this
116-9 Act shall be vested in the commissioner, [State Board of Insurance]
116-10 who may establish, and from time to time amend, reasonable rules
116-11 [and regulations] for the administration of this Act.
116-12 SECTION 5.08. Article 22.14, Insurance Code, is amended to
116-13 read as follows:
116-14 Art. 22.14. LICENSING OF AGENTS. All agents of stipulated
116-15 premium companies shall be licensed in accordance with the
116-16 provisions of Subchapter A [Art. 21.07] of Chapter 21 of this Code.
116-17 SECTION 5.09. Chapter 23, Insurance Code, is amended by
116-18 adding Article 23.23A to read as follows:
116-19 Art. 23.23A. REGULATION OF AGENTS. The licensing and
116-20 regulation of an agent authorized to solicit prepaid legal services
116-21 contracts for corporations complying with this chapter is subject
116-22 to Subchapter A, Chapter 21, of this code.
116-23 ARTICLE 6. REPEALER
116-24 SECTION 6.01. The following laws are repealed:
116-25 (1) Section 15, Article 17.25, Insurance Code;
116-26 (2) Sections 15 and 15A, Texas Health Maintenance
116-27 Organization Act (Sections 20A.15 and 20A.15A, Vernon's Texas
117-1 Insurance Code);
117-2 (3) Sections 1, 3, 4, and 6, Article 21.01-2,
117-3 Insurance Code;
117-4 (4) Article 21.02-1, Insurance Code;
117-5 (5) Article 21.05, Insurance Code;
117-6 (6) the following sections of Article 21.07, Insurance
117-7 Code:
117-8 (A) Sections 1B and 1C;
117-9 (B) Section 3, as amended by Chapters 596 and
117-10 972, Acts of the 75th Legislature, Regular Session, 1997;
117-11 (C) Sections 3B, 4, 4A, 5, 7, 8, 9, 10, 10A, 11,
117-12 12, 13, 14, 15, 15A, 16, 17, 18, 19, and 20;
117-13 (D) Section 21, as added by Chapter 820, Acts of
117-14 the 75th Legislature, Regular Session, 1997; and
117-15 (E) Section 21, as added by Chapter 1196, Acts
117-16 of the 75th Legislature, Regular Session, 1997;
117-17 (7) Article 21.07A, Insurance Code;
117-18 (8) Chapter 213, Acts of the 54th Legislature, Regular
117-19 Session, 1955 (Article 21.07-1, Vernon's Texas Insurance Code);
117-20 (9) the following sections of the Managing General
117-21 Agents' Licensing Act (Article 21.07-3, Vernon's Texas Insurance
117-22 Code):
117-23 (A) Sections 4A, 4B, and 4C;
117-24 (B) Section 5(h);
117-25 (C) Sections 6 and 6A;
117-26 (D) Sections 8, 9, and 10;
117-27 (E) Sections 12, 13, 14, and 15;
118-1 (F) Section 17; and
118-2 (G) Section 20;
118-3 (10) Section 14, Article 21.14-1, Insurance Code;
118-4 (11) Article 21.15, Insurance Code;
118-5 (12) Article 21.15-2, Insurance Code;
118-6 (13) Article 21.15-3, Insurance Code;
118-7 (14) Article 21.15-4, Insurance Code;
118-8 (15) Article 21.15-7, Insurance Code;
118-9 (16) Section 10, Article 21.58A, Insurance Code; and
118-10 (17) Article 23.23, Insurance Code.
118-11 ARTICLE 7. GRANDFATHER CLAUSE; TRANSITION
118-12 SECTION 7.01. On the effective date of this Act, a person
118-13 who holds a license issued by the department that is in good
118-14 standing is:
118-15 (1) considered licensed under the applicable licensing
118-16 law as amended by this Act;
118-17 (2) entitled to act as an agent under the new license
118-18 type, subject to this article; and
118-19 (3) subject to the provisions of the Insurance Code as
118-20 amended by this Act.
118-21 SECTION 7.02. (a) A person who, immediately before the
118-22 effective date of this Act, holds an agent license issued by the
118-23 Texas Department of Insurance and who obtained that license by
118-24 passing a written examination is entitled to the appropriate
118-25 license as provided by Subchapter A, Chapter 21, Insurance Code, as
118-26 amended by this Act, without further examination.
118-27 (b) A person who, immediately before the effective date of
119-1 this Act, holds an agent license issued by the Texas Department of
119-2 Insurance before January 1, 1999, and who obtained that license
119-3 without taking a written examination, is entitled to the
119-4 appropriate license as provided by Subchapter A, Chapter 21,
119-5 Insurance Code, as amended by this Act, but must pass the
119-6 appropriate license examination not later than the second
119-7 anniversary of the date of issuance, to retain the license. The
119-8 license of a person who does not pass the license examination as
119-9 required by this subsection expires on the second anniversary of
119-10 the date of issuance and may not be renewed.
119-11 (c) A person who, immediately before the effective date of
119-12 this Act, holds an agent license issued by the Texas Department of
119-13 Insurance on or after January 1, 1999, and who obtained that
119-14 license without taking a written examination, is entitled to the
119-15 appropriate license as provided by Subchapter A, Chapter 21,
119-16 Insurance Code, as amended by this Act, but must pass the
119-17 appropriate license examination not later than May 31, 2000, to
119-18 retain the license. The license of a person who does not pass the
119-19 license examination as required by this subsection expires on May
119-20 31, 2000.
119-21 SECTION 7.03. (a) The Texas Department of Insurance may
119-22 issue a life, accident, and health license to a person who
119-23 solicited insurance on behalf of a fraternal benefit society
119-24 immediately before the effective date of this Act on submission to
119-25 the department by the person of the following:
119-26 (1) a certified statement from the fraternal benefit
119-27 society indicating the period of time the person has solicited
120-1 insurance on behalf of the fraternal benefit society;
120-2 (2) a completed license application form; and
120-3 (3) a nonrefundable application fee in an amount
120-4 determined by the department.
120-5 (b) To retain the license issued under Subsection (a) of
120-6 this section, a person who has solicited insurance on behalf of a
120-7 fraternal benefit society for less than two years as of the
120-8 effective date of this Act must pass the license examination
120-9 required under Subchapter A, Chapter 21, Insurance Code, not later
120-10 than the 180th day after the date of issuance of the license. The
120-11 license of a person who does not pass the license examination as
120-12 required by this subsection expires on the 180th day after the date
120-13 of issuance of the license and may not be renewed.
120-14 (c) To retain the license issued under Subsection (a) of
120-15 this section, a person who has solicited insurance on behalf of a
120-16 fraternal benefit society for two years or more as of the effective
120-17 date of this Act must pass the license examination required under
120-18 Subchapter A, Chapter 21, Insurance Code, not later than the second
120-19 anniversary of the date of issuance of the license. The license of
120-20 a person who does not pass the license examination as required by
120-21 this subsection expires on the second anniversary of the date of
120-22 issuance of the license and may not be renewed.
120-23 ARTICLE 8. EFFECTIVE DATE; TRANSITION; EMERGENCY
120-24 SECTION 8.01. (a) This Act takes effect September 1, 1999.
120-25 (b) Section 3, Article 21.01-1, Insurance Code, as amended
120-26 by this Act, applies to continuing education requirements for
120-27 insurance agents for a renewal of a license that occurs on or after
121-1 January 1, 2001.
121-2 SECTION 8.02. The importance of this legislation and the
121-3 crowded condition of the calendars in both houses create an
121-4 emergency and an imperative public necessity that the
121-5 constitutional rule requiring bills to be read on three several
121-6 days in each house be suspended, and this rule is hereby suspended.