SRC-JBJ, S.B. 414 77(R)BILL ANALYSIS Senate Research CenterS.B. 414 By: Madla Business & Commerce 6/28/2001 Enrolled DIGEST AND PURPOSE The Gramm-Leach-Bliley Act (Act), enacted by Congress in 1999, makes significant changes to the delivery of financial services. The Act requires increased uniformity in insurance agent licensing criteria among the various states. S.B. 414 revises the insurance agent licensing framework to allow proper implementation of the Gramm-Leach-Bliley Act in Texas. RULEMAKING AUTHORITY Rulemaking authority is expressly granted to the commissioner of insurance in SECTIONS 1.01, 1.02, 1.03, 1.05, 1.06, 1.11, 4.05, 6.02 and 6.05 (Section 4, Article 21.01; Sections 1 and 3, Article 21.01-1; Section 1A, 3A, and 5A, Article 21.01-2, Section 2, Article 21.07; Section 5, Article 21.11; and Sections 2 and 3A, Article 1.14-2, Insurance Code) of this bill. SECTION BY SECTION ANALYSIS ARTICLE 1. GENERAL PROVISIONS APPLICABLE TO ALL INSURANCE AGENTS Sets forth amendments to existing provisions and establishes new provisions regarding the general application of insurance regulation to all insurance agents and regarding the consolidation of the licensure process. ARTICLE 2. LIFE, ACCIDENT AND HEALTH LICENSES Sets forth new provisions regarding the regulation and licensing of life, accident, and health insurance agents. ARTICLE 3. PROPERTY AND CASUALTY LICENSES Deletes existing provisions regarding the licensing of certain agents and sets forth new provisions regarding the regulation and licensing of property and casualty insurance agents. ARTICLE 4. NONRESIDENT AGENT LICENSE Sets forth amendments to provisions regarding the regulation and licensing of nonresident insurance agents. ARTICLE 5. ADJUSTER LICENSE Sets forth amendments to provisions regarding the regulation and licensing of adjusters. ARTICLE 6. SURPLUS LINES Sets forth amendments to provisions regarding the regulation and licensing of surplus lines agents. ARTICLE 7. CONFORMING AMENDMENTS Sets forth amendments to various related provisions to conform them to the substantive changes set out in this Act. ARTICLE 8. REPEALER SECTION 8.01. The following laws are repealed: Repealer: Sections 4(f), (g), and (h), Article 1.14-2 (Surplus Lines Agent's License), Insurance Code. Repealer: Section 15 (Violation by Agent), Article17.25, Insurance Code. Repealer: Section 1 (Application), Section 3 (Licensing by Endorsement), Section 4 (Continuing Education), and Section 6 (Statutory References), Article 21.01-2, Insurance Code. Repealer: Article 21.02-1 (Penalty for Unlawfully Acting as Agent), Insurance Code. Repealer: Article 21.05 (Who May Not Be Agents), Insurance Code. Repealer: Article 21.06 (Certificates for Agents), Insurance Code. Repealer: Article 21.07 (Licensing of Agents), Insurance Code, the following sections: Section 1B (Licensing of limited liability companies); Section 1C (Licensing of Banks); Section 3 (Issuance of License Under Certain Circumstances); Section 3B (Resident Status; Certain Nonresidents Maintaining Office In State); Section 4 (Examination of Applicant for License to Write Health and Accident Insurance); Section 4A (Examination of Applicant for License to Write Life Insurance Upon Any One Life in Excess of $15,000); Section 5 (Failure of Applicant to Qualify for License); Section 6A (Coverage for Vehicle Used as Security); Section 7 (Expiration and Renewal of License); Section 8 (Temporary License); Section 9 (Insurance Carrier to Notify State Board of Insurance of Termination of Contract; Communications Privileged); Section 10 (Denial, Refusal, Suspension or Revocation of Licenses); Section 10A (Ineligibility Based on Felony Conviction); Section 11 (Judicial Review of Acts of State Board of Insurance); Section 12 (Penalty); Section 13 (Texas Department of Insurance May Establish Rules and Regulations); Section 14 (Fees and Use of Funds); Section 15 (Dual Licensing); Section 15A (Certain Agents for Stipulated Premium Companies); Section 16. (Wording on License); Section 17 (Expiration of Existing Licenses); Section 18 (Assignment of Agent's Commissions); Section 19 (Agent for United States Military Personnel in Foreign Countries); and Section 20 (Duplicate License; Fee); Repealer: Article 21.07A. (Penalty for Acting As, or Employing, Life, Health, or Accident Insurance Agent Without License), Insurance Code. Repealer: Chapter 213, Acts of the 54th Legislature, Regular Session, 1955 (Article 21.07-1, V.T.I.C.) (Legal Reserve Life Insurance Agents; Examination; Licenses). Repealer: Article 21.07-3, V.T.I.C. (Managing General Agents' Licensing Act); the following sections: Section 4A (Persons Other Than Licensed Managing General Agents Who May Share in Profits of a Managing General Agent); Section 4B (Continuing Requirements for Licensed Corporations); Section 4C (Security for Liability); Section 5 (Issuance of Licenses to Those Presently Acting as Managing General Agents, Renewals); Section 6 (Examination Required; Exceptions); Section 6A (Continuing Education); Section 8 (Conduct of Examinations); Section 9 (Expiration of License; Renewal); Section 10 (Fees); Section 12 (Denial, Refusal, Suspension, or Revocation of Licenses); Section 13 (Notice and Hearings); Section 14 (Judicial Review of Acts of Commissioner); Section 15 (Notice to Last Address); Section 17 (Fees Collected); and Section 20 (Enforcement of Act); Repealer: Section 2(d) (Rights of License Holder), Article 21.11 (Nonresident Holder), Insurance Code. Repealer: Section 14 (Penalty), Article 21.14-1 (Licensing of Risk Managers), Insurance Code. Repealer: Article 21.15 (Revocation of Agent's Certificate), Insurance Code. Repealer: Article 21.15-2 (Penalty for Soliciting Without Certificate of Authority), Insurance Code. Repealer: Article 21.15-3 (Agent Procuring by Fraudulent Representation; Penalty) Insurance Code. Repealer: Article 21.15-4 (Agent or Physician Making False Statement; Penalty), Insurance Code. Repealer: Article 21.15-7 (Interim Study of Agents and Agents' Licenses Statutes by Commissioner), Insurance Code. Repealer: Section 10 (Unlawful and Prohibited Practices; Penalties), Article 21.58A, Insurance Code. Repealer: Article 23.23 (Regulation of Agents), Insurance Code ARTICLE 9. GRANDFATHER CLAUSE; TRANSITION Sets forth provisions for the enactment of and transition to the changes in law as provided by this Act. ARTICLE 10. EFFECTIVE DATE; TRANSITION SECTION 10.01. Effective date: September 1, 2001. Provides that Section 3, Article 21.01-1, Insurance Code, as amended by this Act, applies to continuing education requirements for insurance agents for a renewal of a license that occurs on or after January 1, 2003.