By Eiland H.B. No. 2101
2001S0577/1
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to imposing a requirement that certain insurance agents
1-3 obtain limited personal lines license.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Subchapter A, Chapter 21, Insurance Code, is
1-6 amended by adding Article 21.07-5 to read as follows:
1-7 Art. 21.07-5. LIMITED PERSONAL LINES LICENSE
1-8 Sec. 1. DEFINITIONS. (a) In this article:
1-9 (1) "Agent" means a home office salaried employee or a
1-10 customer service representative.
1-11 (2) "Customer service representative" means a person
1-12 who is employed on a salaried basis to perform assigned duties only
1-13 in the office of a licensed insurance carrier, including explaining
1-14 insurance coverage, describing an insurance product, quoting
1-15 insurance premium rates, and issuing insurance binders.
1-16 (3) "Home office salaried employee" means a home
1-17 office salaried employee of a licensed insurance carrier who
1-18 solicits or receives an application for the sale of insurance
1-19 through an oral, written, or electronic communication.
1-20 (b) The term "agent," as defined in this section, does not
1-21 include a person licensed under another article of this code to
1-22 write insurance.
1-23 Sec. 2. LICENSE REQUIRED. A limited personal lines license
1-24 is required for an agent writing:
2-1 (1) personal automobile insurance;
2-2 (2) residential property insurance, including farm,
2-3 ranch, residential earthquake, and flood insurance;
2-4 (3) personal watercraft insurance;
2-5 (4) personal inland marine insurance;
2-6 (5) personal liability insurance, including farm and
2-7 ranch liability insurance; and
2-8 (6) umbrella or excess liability insurance providing
2-9 coverage when written over one or more underlying personal
2-10 automobile or residential property insurance policies.
2-11 Sec. 3. EXAMINATION. (a) Each applicant for a license
2-12 under this article must submit to a limited written licensing
2-13 examination and must pass the examination to the satisfaction of
2-14 the department.
2-15 (b) The commissioner shall prescribe the limited written
2-16 licensing examination required under Subsection (a) of this
2-17 section. The examination shall be administered according to rules
2-18 adopted by the commissioner and shall determine the applicant's
2-19 competence and understanding of:
2-20 (1) the basic principles of insurance contracts;
2-21 (2) the basic laws of this state regulating the
2-22 business of insurance; and
2-23 (3) the ethical obligations and duties of an agent.
2-24 Sec. 4. DISCIPLINE OF LICENSE HOLDERS. A limited personal
2-25 lines license shall be suspended and the license holder may be
2-26 disciplined for any act for which an agent may be disciplined under
3-1 Article 21.01-2 of this section.
3-2 Sec. 5. CONTINUING EDUCATION. (a) An individual who holds
3-3 a limited personal lines license shall complete 10 hours of
3-4 continuing education annually. All required continuing education
3-5 hours must be completed before the expiration date of the
3-6 individual's license.
3-7 (b) An individual who has continuously held a license under
3-8 this article for at least 20 years is exempt from the continuing
3-9 education requirements of this section. The commissioner by rule
3-10 may provide for other reasonable exemptions.
3-11 (c) On a timely written request of an agent, the department
3-12 may extend the time for the agent to comply with the continuing
3-13 education requirements of this section or may exempt the agent from
3-14 some or all of the requirements for a licensing period if the
3-15 department finds that the agent is unable to comply with the
3-16 requirements because of illness, medical disability, or another
3-17 extenuating circumstance beyond the control of the agent. The
3-18 commissioner by rule shall prescribe the criteria for an exemption
3-19 or extension under this subsection.
3-20 (d) The department shall certify continuing education
3-21 programs for agents. Only a program that satisfies the criteria
3-22 established by rule by the commissioner may receive certification.
3-23 Sec. 6. RULES. The commissioner may adopt rules as
3-24 necessary to implement this article.
3-25 SECTION 2. Section 20, Article 21.14, Insurance Code, is
3-26 amended to read as follows:
4-1 Sec. 20. LIFE, HEALTH AND ACCIDENT INSURANCE, INAPPLICABLE
4-2 TO; OTHER EXCEPTIONS. The provisions of this article do not apply
4-3 to the Life, Health and Accident Insurance business or the Life,
4-4 Health and Accident Department of the companies engaged therein,
4-5 nor shall it apply to any of the following, namely:
4-6 (a) Any actual full-time home office salaried employee of
4-7 any insurance carrier licensed to do business in Texas[, other than
4-8 an employee who solicits or receives an application for the sale of
4-9 insurance through an oral, written, or electronic communication in
4-10 accordance with Section 20A of this article].
4-11 (b) Any actual attorney in fact and its actual traveling
4-12 salaried representative as to business transacted through such
4-13 attorney in fact or salaried representative of any reciprocal
4-14 exchange or interinsurance exchange admitted to do business in
4-15 Texas.
4-16 (c) Any adjuster of losses, and/or inspector of risks, for
4-17 an insurance carrier licensed to do business in Texas.
4-18 (d) Any General Agent or State Agent or Branch Manager
4-19 representing an admitted and licensed insurance company or carrier,
4-20 or insurance companies or carriers, in a supervisory capacity.
4-21 (e) The actual attorney in fact for any Lloyds.
4-22 (f) All incorporated or unincorporated mutual insurance
4-23 companies, their agents and representatives, organized and/or
4-24 operating under and by authority of Chapters 16 and 17 of this
4-25 code.
4-26 (g) Nothing in this entire article shall ever be construed
5-1 to apply to any member, agent, employee, or representative of any
5-2 county or farm mutual insurance company as exempted under Chapters
5-3 16 and 17 of this code.
5-4 (h) Nothing in this article shall apply to the group motor
5-5 vehicle insurance business or the group motor vehicle department of
5-6 the companies engaged in that business.
5-7 (i) Salaried employees not involved in solicitation or
5-8 negotiation of insurance in the office of a local recording agent
5-9 who devote their full time to clerical and administrative services,
5-10 including the incidental taking of information from customers and
5-11 receipt of premiums in the office of a local recording agent,
5-12 provided the employees do not receive any commissions and their
5-13 compensation is not varied by the volume of premiums taken and
5-14 received.
5-15 SECTION 3. Section 20A, Article 21.14, Insurance Code, is
5-16 repealed.
5-17 SECTION 4. (a) A person who, immediately before the
5-18 effective date of this Act, was registered with the commissioner of
5-19 insurance as a full-time home office employee under Section 20A,
5-20 Article 21.14, Insurance Code, is entitled to a limited personal
5-21 lines license as provided by Article 21.07-5, Insurance Code, as
5-22 added by this Act.
5-23 (b) A license issued under this section expires on the
5-24 second anniversary of the date of issuance and may not be renewed
5-25 unless the license holder passes the limited written licensing
5-26 examination required under Section 3, Article 21.07-5, Insurance
6-1 Code, as added by this Act, before the second anniversary of the
6-2 date the license was issued.
6-3 SECTION 5. (a) This Act takes effect September 1, 2001.
6-4 (b) Section 5, Article 21.07-5, Insurance Code, as added by
6-5 this Act, applies to continuing education requirements for a
6-6 renewal of a license that occurs on or after January 1, 2003.