1-1 By: Madla S.B. No. 414
1-2 (In the Senate - Filed January 25, 2001; January 29, 2001,
1-3 read first time and referred to Committee on Business and Commerce;
1-4 February 26, 2001, reported adversely, with favorable Committee
1-5 Substitute by the following vote: Yeas 7, Nays 0;
1-6 February 26, 2001, sent to printer.)
1-7 COMMITTEE SUBSTITUTE FOR S.B. No. 414 By: Van de Putte
1-8 A BILL TO BE ENTITLED
1-9 AN ACT
1-10 relating to the regulation of certain insurance agents and to the
1-11 consolidation of insurance agent licenses; providing penalties.
1-12 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-13 ARTICLE 1. GENERAL PROVISIONS APPLICABLE TO
1-14 ALL INSURANCE AGENTS
1-15 SECTION 1.01. Article 21.01, Insurance Code, is amended to
1-16 read as follows:
1-17 Art. 21.01. PURPOSE; CONSOLIDATION OF LICENSES; APPLICATION;
1-18 CERTIFICATE OF AUTHORITY OR LICENSE REQUIRED; RULEMAKING AUTHORITY
1-19 Sec. 1. PURPOSE. It is the intent of the legislature to:
1-20 (1) simplify and reform the regulation of insurance
1-21 agents in this state by consolidating the types of licenses issued
1-22 to insurance agents under this subchapter; and
1-23 (2) promote uniformity in the licensing, examination,
1-24 continuing education, and disciplinary requirements for agents in
1-25 this state and with other states.
1-26 Sec. 2. CERTIFICATE OF AUTHORITY OR LICENSE REQUIRED. It
1-27 shall not be lawful for any person to act [within this State], as
1-28 an agent or otherwise, in soliciting or receiving applications for
1-29 insurance of any kind whatever in this state, or in any manner to
1-30 aid in the transaction of the business of any insurance company
1-31 incorporated in this state [State], or out of it, without first
1-32 procuring a license or certificate of authority from the department
1-33 [Board].
1-34 Sec. 3. APPLICATION. Except as otherwise provided by this
1-35 code, this subchapter applies to each person licensed in accordance
1-36 with:
1-37 (1) Section 4, Article 1.14-2, of this code;
1-38 (2) Section 7, Article 3.75, of this code;
1-39 (3) Subsection (c), Article 5.13-1, of this code;
1-40 (4) Article 10.37-3 of this code;
1-41 (5) Article 16.24A of this code;
1-42 (6) Section 9, Article 17.25, of this code;
1-43 (7) Article 21.07 of this code;
1-44 (8) Article 21.07-1 of this code;
1-45 (9) Chapter 29, Acts of the 54th Legislature, Regular
1-46 Session, 1955 (Article 21.07-2, Vernon's Texas Insurance Code);
1-47 (10) the Managing General Agents' Licensing Act
1-48 (Article 21.07-3, Vernon's Texas Insurance Code);
1-49 (11) Chapter 407, Acts of the 63rd Legislature,
1-50 Regular Session, 1973 (Article 21.07-4, Vernon's Texas Insurance
1-51 Code);
1-52 (12) Article 21.07-6 of this code;
1-53 (13) Article 21.07-7 of this code;
1-54 (14) Article 21.09 of this code;
1-55 (15) Article 21.11 of this code;
1-56 (16) Article 21.14 of this code;
1-57 (17) Article 21.14-1 of this code;
1-58 (18) Article 21.14-2 of this code; or
1-59 (19) Article 23.23A of this code.
1-60 Sec. 4. RULES. The commissioner may adopt rules as
1-61 necessary to implement this subchapter and to meet the minimum
1-62 requirements of federal law and regulations.
1-63 SECTION 1.02. Article 21.01-1, Insurance Code, is amended to
1-64 read as follows:
2-1 Art. 21.01-1. AGENTS' QUALIFYING EXAMINATION; CONTINUING
2-2 EDUCATION REQUIREMENTS FOR AGENTS
2-3 Sec. 1. EXAMINATION ADMINISTRATION. (a) The commissioner
2-4 [State Board of Insurance] may[, at its discretion,] accept
2-5 examinations administered by a testing service as satisfying the
2-6 examination requirements of persons seeking license as agents,
2-7 [solicitors,] counselors, or adjusters under this code. The
2-8 commissioner [State Board of Insurance] may negotiate agreements
2-9 with such testing services to include performance of examination
2-10 development, test scheduling, examination site arrangements, and
2-11 test administration, grading, reporting and analysis. The
2-12 commissioner [State Board of Insurance] may require such testing
2-13 services to correspond directly with the applicants with regard to
2-14 the administration of such examinations and that such testing
2-15 services collect fees for administering such examinations directly
2-16 from the applicants. The commissioner [State Board of Insurance]
2-17 may stipulate that any agreements with such testing services
2-18 provide for the administration of examinations in specific locales
2-19 and at specified frequencies. The commissioner [State Board of
2-20 Insurance] shall retain the authority to establish the scope and
2-21 type of all examinations. Prior to negotiating and making any
2-22 agreement with any testing service as authorized hereby, the
2-23 commissioner [State Board of Insurance] shall hold a public hearing
2-24 [thereon] in accordance with Chapter 2001, Government Code [the
2-25 provisions of Section 5 of the Administrative Procedure and Texas
2-26 Register Act (Article 6252-13a, Vernon's Texas Civil Statutes)],
2-27 and shall adopt such rules[, regulations,] and standards as may be
2-28 deemed appropriate by the commissioner [Board] to implement the
2-29 authority granted in this article [Article].
2-30 (b) The commissioner may appoint advisory boards consisting
2-31 of any of the following persons: persons holding a license for
2-32 which the respective examinations are intended, persons who are
2-33 employed by insurance companies appointing such licensees, persons
2-34 acting as general agents or managers, persons teaching insurance at
2-35 an accredited college or university in Texas, persons who are
2-36 citizens of the State of Texas but who are not of any of the
2-37 preceding descriptions, or any combination of such persons. The
2-38 function of such advisory boards will be to make recommendations to
2-39 the commissioner [State Board of Insurance] or the testing service
2-40 with respect to the scope, type, and conduct of such examinations
2-41 and the times and places within the state where they shall be held.
2-42 The members of such advisory boards shall serve without pay but
2-43 shall be reimbursed for their reasonable expenses in attending
2-44 meetings of their respective advisory boards.
2-45 (c) In the absence of an agreement with a testing service,
2-46 the department [State Board of Insurance] shall administer any
2-47 required qualifying examination in accordance with this article
2-48 [the provisions of the respective statutes governing the issuance
2-49 of the license sought by the applicant]. The commissioner may
2-50 adopt rules relating to the scope, type, and conduct of the written
2-51 examinations and the times and places in this state at which the
2-52 examinations will be conducted. The commissioner's rules may
2-53 designate textbooks, manuals, and other materials to be studied by
2-54 applicants in preparation for examinations conducted under this
2-55 subsection. Those textbooks, manuals, or other materials may
2-56 consist of material available to an applicant by purchase from the
2-57 publisher or of material prepared at the direction of the
2-58 commissioner and distributed to an applicant on request and on
2-59 payment of the reasonable cost of the material. All examination
2-60 questions shall be prepared from the contents of the textbooks,
2-61 manuals, and other materials designated or prepared by the
2-62 commissioner under this subsection.
2-63 (d) Not later than the 30th day after the date on which a
2-64 licensing examination is administered under this code, the
2-65 department shall notify each examinee of the results of the
2-66 examination. However, if an examination is graded or reviewed by a
2-67 testing service, the department shall notify each examinee
2-68 [examinees] of the results of the examination not later than the
2-69 14th day after the date on which the department receives the
3-1 results from the testing service. If the notice of examination
3-2 results graded or reviewed by a testing service will be delayed for
3-3 longer than 90 days after the examination date, the department
3-4 shall notify the examinee of the reason for the delay before the
3-5 90th day. The department may require a testing service to notify
3-6 examinees of the results of an examination.
3-7 (e) If requested in writing by a person who fails a
3-8 licensing examination administered under this code, the department
3-9 shall furnish the person with an analysis of the person's
3-10 performance on the examination.
3-11 Sec. 2. EXAMINATION OF LICENSE APPLICANT. (a) Except as
3-12 otherwise provided by this code, each applicant for a license to
3-13 act as an insurance agent in this state must submit to a personal
3-14 written examination that is prescribed by the commissioner and must
3-15 pass the examination to the satisfaction of the department. The
3-16 examination shall determine the applicant's competence with respect
3-17 to:
3-18 (1) the type of insurance contracts for which the
3-19 applicant seeks a license;
3-20 (2) the laws of this state regulating the business of
3-21 insurance; and
3-22 (3) the ethical obligations and duties of an insurance
3-23 agent.
3-24 (b) The department shall charge each applicant an
3-25 examination fee in an amount determined by the department as
3-26 necessary for administration of the examination. The fee must
3-27 accompany each application to take the examination. The fee is
3-28 nonrefundable other than for failure of the applicant to appear and
3-29 take the examination after the applicant has given at least 24
3-30 hours' notice of an emergency situation to the department and
3-31 received the department's approval of refund of the fee.
3-32 (c) The commissioner shall prescribe a limited written
3-33 licensing examination for applicants for a limited license under
3-34 Article 21.07-1 or 21.14 of this code. A limited examination shall
3-35 be administered according to the provisions of this article and
3-36 shall determine the applicant's competence and understanding of:
3-37 (1) the basic principles of insurance contracts;
3-38 (2) the basic laws of this state regulating the
3-39 business of insurance; and
3-40 (3) the ethical obligations and duties of an insurance
3-41 agent.
3-42 (d) The department may not require a person to take an
3-43 examination under this article if the person is:
3-44 (1) an applicant for the renewal of an unexpired
3-45 license issued by the department;
3-46 (2) an applicant whose license issued by the
3-47 department expired less than one year before the date of the
3-48 application, if the previous license was not denied, revoked, or
3-49 suspended by the commissioner;
3-50 (3) a partnership, corporation, or depository
3-51 institution;
3-52 (4) an applicant for a life, accident, and health
3-53 license who has attained the designation of chartered life
3-54 underwriter (CLU);
3-55 (5) an applicant for a life and health insurance
3-56 counselor license who has attained the designation of chartered
3-57 life underwriter (CLU), chartered financial consultant (ChFC), or
3-58 certified financial planner (CFP);
3-59 (6) an applicant for a property and casualty license
3-60 who has attained the designation of chartered property and casualty
3-61 underwriter (CPCU);
3-62 (7) an applicant for a specialty license issued under
3-63 Article 21.09 of this code;
3-64 (8) a nonresident individual who is exempt from the
3-65 examination requirement under Article 21.11 of this code; or
3-66 (9) an applicant for a general life, accident, and
3-67 health license who was authorized to solicit or procure insurance
3-68 on behalf of a fraternal benefit society on September 1, 1999, if
3-69 the applicant:
4-1 (A) solicited or procured insurance on behalf of
4-2 the fraternal benefit society for at least 24 months preceding
4-3 September 1, 1999;
4-4 (B) does not solicit or procure insurance for
4-5 any other insurer or a different fraternal benefit society on or
4-6 after September 1, 1999;
4-7 (C) does not solicit or procure an insurance
4-8 contract on or after September 1, 1999, except from a person who is
4-9 eligible for membership in the fraternal benefit society; and
4-10 (D) does not solicit or procure an
4-11 interest-sensitive life insurance contract that exceeds $35,000 of
4-12 coverage on an individual life on or after September 1, 1999,
4-13 unless the applicant has obtained the designation of "Fraternal
4-14 Insurance Counselor" at the time the contract is solicited or
4-15 procured.
4-16 (e) A license to which the exemption authorized under
4-17 Subsection (d)(9) of this section applies must be held by the
4-18 applicant in an individual capacity and is not transferable.
4-19 (f) Each examination administered under this article shall
4-20 be offered in English and Spanish.
4-21 Sec. 3. CONTINUING EDUCATION REQUIREMENTS. (a) The
4-22 department has exclusive jurisdiction for all matters relating to
4-23 the continuing education of insurance agents who are licensed under
4-24 this code.
4-25 (b) Except as provided by Subsection (d) of this section,
4-26 each individual who holds a license issued by the department shall
4-27 complete continuing education. All required continuing education
4-28 hours must be completed before the expiration date of the
4-29 individual's license. An individual who holds a general life,
4-30 accident, and health license, a life and health insurance counselor
4-31 license, or a general property and casualty license shall complete
4-32 15 hours of continuing education annually. The agent may not be
4-33 required to complete more than 15 continuing education hours
4-34 annually as a result of holding more than one license for which
4-35 continuing education is required. An individual who holds a
4-36 limited life, accident, and health license or a limited property
4-37 and casualty license shall complete five hours of continuing
4-38 education annually. Each individual who holds a license issued by
4-39 the department shall complete four hours of continuing education in
4-40 ethics during each license renewal period. At least 50 percent of
4-41 all required continuing education hours must be completed in a
4-42 classroom setting or a classroom equivalent setting approved by the
4-43 department. The department may accept continuing education hours
4-44 completed in other professions or in association with professional
4-45 designations in an insurance-related field.
4-46 (c) On a timely written request of an agent, the department
4-47 may extend the time for the agent to comply with the continuing
4-48 education requirements of this section or may exempt the agent from
4-49 some or all of the requirements for a licensing period if the
4-50 department finds that the agent is unable to comply with the
4-51 requirements because of illness, medical disability, or another
4-52 extenuating circumstance beyond the control of the agent. The
4-53 commissioner by rule shall prescribe the criteria for an exemption
4-54 or extension under this subsection.
4-55 (d) An individual who has continuously held a license issued
4-56 under this code to operate as an insurance agent for at least 20
4-57 years is exempt from the continuing education requirements of this
4-58 section. The commissioner by rule may provide for other reasonable
4-59 exemptions.
4-60 (e) The department shall certify continuing education
4-61 programs for agents. Only a program that satisfies the criteria
4-62 established by rule by the commissioner may receive certification.
4-63 The certification criteria shall be designed to ensure that
4-64 continuing education programs enhance the knowledge, understanding,
4-65 and professional competence of the license holder. A nonrefundable
4-66 certification fee, in an amount set by the commissioner as
4-67 necessary for administering this section, must accompany each
4-68 application for certification of a continuing education program.
4-69 The fee shall be established by rule and based on a graduated scale
5-1 according to the number of hours required to complete the program.
5-2 (f) Each continuing education program provider shall
5-3 register with the department as a course provider. The department
5-4 shall assess a registration fee for each application for
5-5 registration as a provider, set by the commissioner in an amount
5-6 necessary for the proper administration of this section. The
5-7 commissioner may adopt rules establishing the requirements for
5-8 continuing education program providers. The department may enter
5-9 into agreements with independent contractors under which the
5-10 independent contractor certifies and registers continuing education
5-11 programs and providers. The department may require those
5-12 independent contractors to correspond directly with providers with
5-13 regard to the administration of continuing education programs, and
5-14 the contractors may collect fees from the providers for
5-15 administration of the courses. The department retains the
5-16 authority to establish the scope and type of continuing education
5-17 requirements for each type of license.
5-18 (g) The commissioner may appoint an advisory council to
5-19 provide the commissioner with information and assistance in the
5-20 conduct of the continuing education program for agents licensed
5-21 under this subchapter. If an advisory council is appointed, it
5-22 must be composed of nine members, four of whom must be public
5-23 members. A public member is entitled to reimbursement for the
5-24 member's travel expenses as provided by Chapter 660, Government
5-25 Code, and the General Appropriations Act. A public member may not:
5-26 (1) be an officer, director, or employee of an
5-27 insurance company, insurance agency, agent, broker, adjuster, or
5-28 any other business entity regulated by the department;
5-29 (2) be a person required to register with the Texas
5-30 Ethics Commission under Chapter 305, Government Code; or
5-31 (3) be related to a person described by Subdivision
5-32 (1) or (2) of this subsection within the second degree by affinity
5-33 or consanguinity, as determined under Chapter 573, Government Code.
5-34 SECTION 1.03. Section 2, Article 21.01-2, Insurance Code, is
5-35 redesignated as Section 1A, Article 21.01-2, Insurance Code, and
5-36 amended to read as follows:
5-37 Sec. 1A [2]. EXPIRATION AND RENEWAL OF LICENSES.
5-38 (a) Except as provided by a staggered renewal system adopted under
5-39 Subsection (j) of this section, each agent license issued by the
5-40 department expires on the second anniversary of the date of
5-41 issuance unless suspended or revoked by the commissioner. The
5-42 commissioner by rule may change the two-year expiration period if
5-43 the commissioner finds that the change is necessary to promote a
5-44 uniform license period among this state and the other states. A
5-45 person may renew a [an unexpired] license that has not expired or
5-46 has not been suspended or revoked by filing a properly completed
5-47 renewal application with the department in the form prescribed by
5-48 the department and paying to the department before the expiration
5-49 date of the license the required renewal fee. A renewal fee paid
5-50 under this section is nonrefundable.
5-51 (b) On the filing of a completed renewal application not
5-52 later than the expiration date of the license accompanied by the
5-53 renewal fee set by the commissioner, the original license continues
5-54 in force until:
5-55 (1) the department issues the renewal license; or
5-56 (2) the commissioner issues an order revoking the
5-57 license.
5-58 (c) If a person's license has been expired for 90 days or
5-59 less, the person may renew the license by filing a renewal
5-60 application with the department in the form prescribed by the
5-61 department and paying to the department the required renewal fee
5-62 and an additional [a] fee that is equal to one-half of the renewal
5-63 [license] fee[, if any,] for the license.
5-64 (d) If a person's license has been expired for more than 90
5-65 days but less than one year, the person may not renew the license,
5-66 but is entitled to a new license without taking the applicable
5-67 examination if the person submits to the department a new
5-68 application, the license fee, and an additional fee equal to
5-69 one-half of the license fee.
6-1 (e) [(c)] If a person's license has been expired for one
6-2 year or more [longer than 90 days], the person may not renew the
6-3 license. The person may obtain a new license by submitting to
6-4 reexamination, if examination is required for original issuance of
6-5 the license, and complying with the requirements and procedures for
6-6 obtaining an original license.
6-7 (f) The [However, the] department may renew without
6-8 reexamination an expired license of a person who was licensed in
6-9 this state, moved to another state, and is currently licensed and
6-10 has been in continual practice in the other state [for the two
6-11 years] preceding the date of the application. The person must pay
6-12 to the department a fee that is equal to the license fee.
6-13 (g) Not later than the 30th day after moving from one state
6-14 to another state, a nonresident or resident agent licensed in this
6-15 state shall file with the department:
6-16 (1) the agent's new address; and
6-17 (2) proof of authorization to engage in the business
6-18 of insurance in the new state of residence.
6-19 (h) The department may not charge a fee or require a license
6-20 application under Subsection (g) of this section.
6-21 (i) [(d)] At least 30 days before the expiration of a
6-22 person's license, the department shall send written notice of the
6-23 impending license expiration to the person at the person's last
6-24 known mailing address according to the records of the department.
6-25 (j) [(e)] The commissioner by rule may adopt a system under
6-26 which licenses expire on various dates during a licensing period.
6-27 For the licensing period in which the license expiration is
6-28 changed, license fees shall be prorated [on a monthly basis] so
6-29 that each license holder shall pay only that portion of the license
6-30 fee that is allocable to the period [number of months] during which
6-31 the license is valid. On renewal of the license on the new
6-32 expiration date, the total license renewal fee is payable. The
6-33 commissioner shall adopt a system under which a person who holds
6-34 more than one license may renew all the licenses held in a single
6-35 process.
6-36 (k) [(f)] This section is not applicable to a license issued
6-37 under Article 21.07-6 of this code.
6-38 SECTION 1.04. Article 21.01-2, Insurance Code, is amended by
6-39 adding Section 2A to read as follows:
6-40 Sec. 2A. PROHIBITED ACTIVITIES. (a) A person licensed
6-41 under this code who receives a commission or other consideration
6-42 for services as an insurance agent may not receive an additional
6-43 fee for those services provided to the same client except for a fee
6-44 described by Article 21.35A or 21.35B of this code.
6-45 (b) An insurer or licensed insurance agent engaged in the
6-46 business of insurance in this state may not pay, directly or
6-47 indirectly, and may not accept, any commission or other valuable
6-48 consideration to or from any person for services performed by that
6-49 person as an insurance agent in this state unless the person holds
6-50 a license to act as an insurance agent as required by the laws of
6-51 this state. This subsection does not prevent the payment or
6-52 receipt of renewal or other deferred commissions to or by any
6-53 person solely because the person has ceased to hold a license to
6-54 act as an insurance agent.
6-55 (c) An insurance agent licensed under this code may not pay,
6-56 allow, or give, or offer to pay, allow, or give, directly or
6-57 indirectly, to any person who is not a licensed insurance agent,
6-58 any rebate of premiums payable, commission, paid employment, or
6-59 contract for service, or any other valuable consideration or
6-60 inducement, that is not specified in the policy or contract of
6-61 insurance for or on account of the solicitation or negotiation of
6-62 contracts of insurance.
6-63 (d) In addition to any other penalty imposed under this
6-64 code, a person who is determined by the department to have
6-65 committed conduct described by this subsection is barred from
6-66 receiving a license as an insurance agent before the fifth
6-67 anniversary of the date of the determination. This subsection
6-68 applies to a person who:
6-69 (1) acts as an insurance agent without holding a
7-1 license under this code;
7-2 (2) solicits a contract of insurance or acts as an
7-3 insurance agent without having been appointed or designated by an
7-4 authorized insurance company, association, or organization to do so
7-5 as provided by this code;
7-6 (3) solicits any contract of insurance or acts as an
7-7 agent for a person, including an insurance company, association, or
7-8 organization, not authorized to engage in the business of insurance
7-9 in this state without holding a license issued under Article 1.14-2
7-10 of this code; or
7-11 (4) as an officer or representative of an insurance
7-12 company, knowingly contracts with or appoints as an agent a person
7-13 who does not hold a valid and outstanding license.
7-14 (e) A person who has had an insurance license revoked in
7-15 this state or any other state may not solicit or otherwise transact
7-16 business under Chapter 10 of this code unless it is determined by
7-17 the department to be in the public interest, for good cause shown,
7-18 to allow the person to act in that capacity.
7-19 (f) A person who has had an insurance license revoked in
7-20 this state or any other state may not act as an officer, director,
7-21 member, manager, or partner, or as a shareholder with a controlling
7-22 interest, of an entity licensed under this subchapter unless it is
7-23 determined by the department to be in the public interest, for good
7-24 cause shown, to allow the person to act in that capacity.
7-25 (g) A property and casualty agent may not knowingly grant,
7-26 write, or permit a greater amount of insurance against loss by fire
7-27 than the reasonable value of the subject of the insurance.
7-28 (h) An insurance agent licensed under this code may not pay,
7-29 allow, or give, or offer to pay, allow, or give, directly or
7-30 indirectly, to a person who is not a licensed insurance agent, a
7-31 fee or other valuable consideration for the referral of a customer
7-32 who seeks to purchase, or seeks an opinion on or advice regarding
7-33 an insurance product, based on the purchase of insurance by that
7-34 customer.
7-35 (i) This section does not apply to a person who is licensed
7-36 under or holds a certificate of authority issued under Chapter 9 of
7-37 this code.
7-38 SECTION 1.05. Section 5, Article 21.01-2, Insurance Code, is
7-39 redesignated as Section 3A, Article 21.01-2, Insurance Code, and
7-40 amended to read as follows:
7-41 Sec. 3A [5]. DENIAL OR REFUSAL OF LICENSE APPLICATION;
7-42 SUSPENSION OR REVOCATION OF LICENSES; DISCIPLINE OF LICENSE
7-43 HOLDERS. (a) In addition to any other remedy available under
7-44 Chapter 82 of this code, the [The] department may [shall] refuse to
7-45 issue an original license, revoke, suspend, or refuse to renew a
7-46 license, place on probation a person whose license has been
7-47 suspended, assess an administrative penalty, or reprimand a license
7-48 holder for a violation of this code, another insurance law of this
7-49 state, or a rule of the commissioner [or the board]. If a license
7-50 suspension is probated, the commissioner may require the person to:
7-51 (1) report regularly to the department on matters that
7-52 are the basis of the probation;
7-53 (2) limit the person's practice to the areas
7-54 prescribed by the department; or
7-55 (3) continue or review professional education until
7-56 the person attains a degree of skill satisfactory to the
7-57 commissioner in those areas that are the basis of the probation.
7-58 (b) If the department proposes to refuse to issue an
7-59 original license, or to suspend, revoke, or refuse to renew a
7-60 license, the person affected is entitled to a hearing conducted by
7-61 the State Office of Administrative Hearings in accordance with
7-62 Chapter 40 [Article 1.33B] of this code. Notice of the hearing
7-63 shall be provided to the person and to any insurance carrier
7-64 appearing on the application as desiring that the license be
7-65 issued.
7-66 (c) The department may discipline a license holder or deny a
7-67 license application under this article if the department determines
7-68 that the applicant or license holder, individually or through any
7-69 officer, director, or shareholder:
8-1 (1) has wilfully violated any provision of the
8-2 insurance laws of this state;
8-3 (2) has intentionally made a material misstatement in
8-4 the license application;
8-5 (3) has obtained, or attempted to obtain, a license by
8-6 fraud or misrepresentation;
8-7 (4) has misappropriated, converted to the applicant's
8-8 or license holder's own use, or illegally withheld money belonging
8-9 to:
8-10 (A) an insurer;
8-11 (B) a health maintenance organization; or
8-12 (C) an insured, enrollee, or beneficiary;
8-13 (5) has engaged in fraudulent or dishonest acts or
8-14 practices;
8-15 (6) has materially misrepresented the terms and
8-16 conditions of an insurance policy or contract, including a contract
8-17 relating to membership in a health maintenance organization;
8-18 (7) has made or issued, or caused to be made or
8-19 issued, any statement misrepresenting or making incomplete
8-20 comparisons regarding the terms or conditions of an insurance or
8-21 annuity contract legally issued by an insurer or a membership
8-22 issued by a health maintenance organization to induce the owner of
8-23 the contract or membership to forfeit or surrender the contract or
8-24 membership or allow it to lapse for the purpose of replacing the
8-25 contract or membership with another;
8-26 (8) is convicted of a felony;
8-27 (9) has offered or given a rebate of an insurance
8-28 premium or commission to an insured or enrollee;
8-29 (10) is not actively engaged in the soliciting or
8-30 writing of insurance for the public generally as required by
8-31 Section 2(c), Article 21.07, of this code; or
8-32 (11) has obtained or attempted to obtain a license,
8-33 not for the purpose of holding the license holder or applicant out
8-34 to the general public as an agent, but primarily for the purpose of
8-35 soliciting, negotiating, or procuring insurance or annuity
8-36 contracts or memberships covering:
8-37 (A) the applicant or license holder;
8-38 (B) a member of the applicant's or license
8-39 holder's family; or
8-40 (C) a business associate of the applicant or
8-41 license holder.
8-42 (d) An individual whose license application is denied or
8-43 whose license has been revoked under this article may not apply for
8-44 any license as an insurance agent before the fifth anniversary of:
8-45 (1) the effective date of the denial or revocation; or
8-46 (2) if the applicant or license holder seeks judicial
8-47 review of the department's action, the date of the final court
8-48 order or decree affirming that action.
8-49 (e) The commissioner may deny a timely application filed
8-50 under Subsection (d) of this section if the applicant does not show
8-51 good cause why the denial or revocation of the previous license
8-52 application or license should not be considered a bar to the
8-53 issuance of a new license. This subsection does not apply to an
8-54 applicant whose license application was denied for failure to:
8-55 (1) pass a required written examination; or
8-56 (2) submit a properly completed license application.
8-57 (f) Instead of or in addition to taking disciplinary action
8-58 under this section, the department may order that a license holder
8-59 who is currently afflicted with a disability be placed on
8-60 disability probation under the terms and conditions specified under
8-61 Article 21.15-6 of this code and department rules.
8-62 (g) The department may institute a disciplinary proceeding
8-63 against a license holder for conduct that the license holder
8-64 committed before the effective date of a voluntary surrender or
8-65 automatic forfeiture of the license. In the proceeding, the fact
8-66 that the license holder has surrendered or forfeited the license
8-67 does not affect the license holder's culpability for that conduct.
8-68 (h) Subsections (c)-(f) of this section do not apply to a
8-69 person who is licensed under or holds a certificate of authority
9-1 issued under Chapter 9 of this code. [The commissioner shall
9-2 prescribe procedures by which all decisions to deny, suspend, or
9-3 revoke a license, or to refuse to renew a license, are made by or
9-4 are appealable to the commissioner.]
9-5 SECTION 1.06. Article 21.01-2, Insurance Code, is amended by
9-6 adding Sections 4A, 5A, and 6A to read as follows:
9-7 Sec. 4A. JUDICIAL REVIEW. A license applicant or license
9-8 holder may appeal as provided by Chapter 36 of this code if:
9-9 (1) the commissioner:
9-10 (A) refuses an application for a license as
9-11 provided by this article; or
9-12 (B) suspends, revokes, or refuses to renew a
9-13 license at a hearing as provided by this article; and
9-14 (2) the applicant or license holder is dissatisfied
9-15 with the action of the commissioner.
9-16 Sec. 5A. AUTOMATIC FINES. (a) To expedite the department's
9-17 processing of certain violations of this code, the commissioner may
9-18 establish by rule monetary fines for certain violations.
9-19 Violations for which the fines may be assessed include a failure
9-20 to:
9-21 (1) obtain the total number of continuing education
9-22 hours before the renewal date of the license;
9-23 (2) timely report a change of address to the
9-24 department; or
9-25 (3) notify the department of an administrative action
9-26 taken against the agent by another state or federal financial or
9-27 insurance regulator.
9-28 (b) This section does not limit the department's authority
9-29 to take any other disciplinary action against a license holder as
9-30 provided under another provision of this code.
9-31 (c) If a person disputes the assessment of a fine under this
9-32 section, the matter is a contested case subject to Chapter 2001,
9-33 Government Code.
9-34 Sec. 6A. ENFORCEMENT OF SUBCHAPTER. The attorney general, a
9-35 district or county attorney, or the department acting through the
9-36 commissioner may institute an injunction proceeding or any other
9-37 proceeding to enforce this subchapter and to enjoin any person,
9-38 firm, corporation, or depository institution from engaging or
9-39 attempting to engage in the business of insurance in violation of
9-40 this code or any other insurance law of this state. The provisions
9-41 of this section are cumulative of the other penalties or remedies
9-42 provided by this article.
9-43 SECTION 1.07. Article 21.02, Insurance Code, is amended to
9-44 read as follows:
9-45 Art. 21.02. WHO ARE AGENTS. (a) Any person who solicits
9-46 insurance on behalf of any insurance company, whether incorporated
9-47 under the laws of this or any other state or foreign government, or
9-48 who takes or transmits other than for himself any application for
9-49 insurance or any policy of insurance to or from such company, or
9-50 who advertises or otherwise gives notice that he will receive or
9-51 transmit the same, or who shall receive or deliver a policy of
9-52 insurance of any such company, or who shall examine or inspect any
9-53 risk, or receive, or collect, or transmit any premium of insurance,
9-54 or make or forward any diagram of any building or buildings, or do
9-55 or perform any other act or thing in the making or consummating of
9-56 any contract of insurance for or with any such insurance company
9-57 other than for himself, or who shall examine into, or adjust, or
9-58 aid in adjusting, any loss for or on behalf of any such insurance
9-59 company, whether any of such acts shall be done at the instance or
9-60 request, or by the employment of such insurance company, or of, or
9-61 by, any broker or other person, shall be held to be the agent of
9-62 the company for which the act is done, or the risk is taken, as far
9-63 as relates to all the liabilities, duties, requirements and
9-64 penalties set forth in this chapter. This article does not
9-65 authorize an agent to orally, in writing, or otherwise alter,
9-66 amend, modify, waive, or change a term or condition of an insurance
9-67 policy or application for an insurance policy. The provisions of
9-68 this subchapter shall not apply to citizens of this State who
9-69 arbitrate in the adjustment of losses between the insurers and
10-1 insured, nor to the adjustment of particular or general average
10-2 losses of vessels or cargoes by marine adjusters who had paid an
10-3 occupation tax of $200 [Two Hundred ($200.00) Dollars] for the year
10-4 in which the adjustment is made, nor to practicing attorneys at law
10-5 in the State of Texas, acting in the regular transaction of their
10-6 business as such attorneys at law, and who are not local agents,
10-7 nor acting as adjusters for any insurance company. Any person who
10-8 shall do any of the acts mentioned in this article for or on behalf
10-9 of any insurance company without such company having first complied
10-10 with the requirements of the laws of this State, shall be
10-11 personally liable to the holder of any policy of insurance in
10-12 respect of which such act was done for any loss covered by the
10-13 same.
10-14 (b) The referral by an unlicensed person of a customer or
10-15 potential customer to a licensed insurance agent is not an act of
10-16 an agent under this article, unless the unlicensed person discusses
10-17 specific insurance policy terms or conditions with the customer or
10-18 potential customer.
10-19 SECTION 1.08. Article 21.04, Insurance Code, is amended to
10-20 read as follows:
10-21 Art. 21.04. LICENSE HOLDER [SOLICITOR] DEEMED COMPANY'S
10-22 AGENT. Any person who solicits an application for life, accident,
10-23 or health insurance, or property or casualty insurance, shall, in
10-24 any controversy between the insured or the insured's beneficiary
10-25 and the company issuing any policy upon such application or between
10-26 the insured or the insured's dependents and that company, be
10-27 regarded as the agent of the company, and not the agent of the
10-28 insured, but such agent shall not have the power to waive, change
10-29 or alter any of the terms or conditions of the application or
10-30 policy.
10-31 SECTION 1.09. Section 1, Article 21.07, Insurance Code, is
10-32 amended to read as follows:
10-33 Sec. 1. APPLICABILITY OF ARTICLE [ACT]. (a) No person[,
10-34 corporation, or bank] shall act as an agent of any insurance
10-35 company, health maintenance organization, or [(i) local mutual aid
10-36 association, (ii) local mutual burial association, (iii) statewide
10-37 mutual assessment corporation, (iv) stipulated premium company, (v)
10-38 county mutual insurance company, (vi) casualty company writing
10-39 accident and health insurance, or (vii) any] other type of
10-40 insurance carrier licensed to do business in the State of Texas and
10-41 which insurance carrier's agents are required to be licensed under
10-42 the provisions of this code [Article, on the date that this Act
10-43 shall become effective,] unless that person [individual or entity]
10-44 shall have first procured a license from the department as [in this
10-45 Article is] provided by this subchapter, and no such insurance
10-46 carrier shall appoint any person[, corporation, or bank] to act as
10-47 its agent unless such person[, corporation, or bank] shall have
10-48 obtained a license under the provisions of this subchapter
10-49 [Article], and no such person[, corporation, or bank] who obtains a
10-50 license shall engage in business as an agent until that person
10-51 [individual or entity] shall have been appointed to act as an agent
10-52 by some duly authorized insurance carrier designated by the
10-53 provisions of this code [Article] and authorized to do business in
10-54 the State of Texas. [Any person, corporation, or bank desiring to
10-55 act as an agent of any insurance carrier licensed to do business in
10-56 the State of Texas and writing health and accident insurance may
10-57 obtain a separate license as an agent to write health and accident
10-58 insurance provided such person, corporation, or bank complies with
10-59 the provisions of this Article and has been appointed to act as an
10-60 agent by some duly authorized insurance carrier authorized to do
10-61 health and accident insurance business in the State of Texas.]
10-62 (b) This subchapter does not apply to:
10-63 (1) an actual full-time home office salaried employee
10-64 of an insurance carrier licensed to do business in this state,
10-65 other than an employee who solicits or receives an application for
10-66 the sale of insurance through an oral, written, or electronic
10-67 communication in accordance with Article 21.14 of this code;
10-68 (2) an actual attorney in fact or the actual traveling
10-69 salaried representative of a reciprocal exchange or interinsurance
11-1 exchange admitted to do business in this state as to business
11-2 transacted through the attorney in fact or salaried representative;
11-3 (3) the actual attorney in fact for a Lloyd's plan
11-4 insurer;
11-5 (4) the group motor vehicle insurance business or the
11-6 group motor vehicle department of companies engaged in that
11-7 business; or
11-8 (5) a salaried employee who is not involved in the
11-9 solicitation or negotiation of insurance in the office of a
11-10 licensed agent who devotes the employee's full time to clerical and
11-11 administrative services, including the incidental taking of
11-12 information from customers and receipt of premiums in the office of
11-13 a licensed agent, if the employee does not receive any commissions
11-14 and the employee's compensation is not varied by the volume of
11-15 premiums taken and received. [No insurer or licensed insurance
11-16 agent doing business in this State shall pay directly or indirectly
11-17 any commission, or other valuable consideration, to any person,
11-18 corporation, or bank for services as an insurance agent within this
11-19 State, unless such person, corporation, or bank shall hold a
11-20 currently valid license to act as an insurance agent as required by
11-21 the laws of this State; nor shall any person, corporation, or bank
11-22 other than a duly licensed insurance agent, accept any such
11-23 commission or other valuable consideration; provided, however, that
11-24 the provisions of this Section shall not prevent the payment or
11-25 receipt of renewal or other deferred commissions to or by any
11-26 person solely because such person, corporation, or bank has ceased
11-27 to hold a license to act as an insurance agent.]
11-28 [(c) A person who has had a license revoked under Section 10
11-29 of this article may not solicit or otherwise transact business
11-30 under Chapter 10 of this code.]
11-31 SECTION 1.10. Section 1A, Article 21.07, Insurance Code, is
11-32 amended to read as follows:
11-33 Sec. 1A. DEFINITIONS. Unless the context clearly indicates
11-34 otherwise, in [In] this subchapter:
11-35 (1) "Agent" means a person who is an authorized agent
11-36 of an insurance company or health maintenance organization, any
11-37 person who is a subagent of an agent, and any other person who
11-38 performs the acts of an agent, whether through an oral, written, or
11-39 electronic communication or otherwise, in the solicitation of,
11-40 negotiation for, procurement of, or collection of premiums on an
11-41 insurance or annuity contract, or who represents or purports to
11-42 represent a health maintenance organization, including a health
11-43 maintenance organization offering only a single health care service
11-44 plan, in the solicitation of, negotiation for, procurement of, or
11-45 effectuation of membership in the health maintenance organization.
11-46 The term does not include:
11-47 (A) a regular salaried officer or employee of an
11-48 insurance company, health maintenance organization, or insurance
11-49 agent who:
11-50 (i) devotes substantially all of the
11-51 officer's or employee's time to activities other than the
11-52 solicitation of applications for insurance, annuity contracts, or
11-53 memberships;
11-54 (ii) does not receive a commission or
11-55 other compensation directly dependent on the business obtained; and
11-56 (iii) does not solicit or accept from the
11-57 public applications for insurance, annuity contracts, or
11-58 memberships;
11-59 (B) an employer or an employer's officers or
11-60 employees or the trustees of an employee benefit plan, to the
11-61 extent that those employers, officers, employees, or trustees are
11-62 engaged in the administration or operation of any program of
11-63 employee benefits involving the use of insurance or annuities
11-64 issued by an insurance company or memberships issued by a health
11-65 maintenance organization, if those employers, officers, employees,
11-66 or trustees are not compensated, directly or indirectly, by the
11-67 insurance company or health maintenance organization issuing the
11-68 insurance or annuity contracts or memberships;
11-69 (C) except as otherwise provided by this code, a
12-1 depository institution, or the officers and employees of a
12-2 depository institution, to the extent that the depository
12-3 institution or officers and employees collect and remit premiums or
12-4 charges by charging those premiums or charges against accounts of
12-5 depositors on the orders of those depositors; or
12-6 (D) a person or the employee of a person who has
12-7 contracted to provide administrative, management, or health care
12-8 services to a health maintenance organization and who is
12-9 compensated for those services by the payment of an amount computed
12-10 as a percentage of the revenues, net income, or profit of the
12-11 health maintenance organization, if that method of compensation is
12-12 the sole basis for subjecting that person or the employee of the
12-13 person to this article.
12-14 (2) "Control" means the power to direct or cause the
12-15 direction of the management and policies of a license holder,
12-16 whether directly or indirectly. For the purposes of this
12-17 subchapter, a person is considered to control:
12-18 (A) a corporate license holder if the person,
12-19 individually or acting with others, directly or indirectly, holds
12-20 with the power to vote, owns, or controls, or holds proxies
12-21 representing, at least 10 percent of the voting stock or voting
12-22 rights of the corporate license holder; or
12-23 (B) a partnership if the person through a right
12-24 to vote or through any other right or power exercises rights in the
12-25 management, direction, or conduct of the business of the
12-26 partnership.
12-27 (3) "Corporation" means a legal entity that is
12-28 organized under the business corporations laws or limited liability
12-29 company laws of this state, another state, or a territory of the
12-30 United States and that has as one of its purposes the authority to
12-31 act as an insurance agent. The licensing and regulation of a
12-32 limited liability company is subject to all provisions of this
12-33 subchapter that apply to a corporation licensed under this
12-34 subchapter.
12-35 (4) "Depository institution" means:
12-36 (A) a bank or savings association as defined by
12-37 12 U.S.C. Section 1813, as amended;
12-38 (B) a foreign bank that maintains a branch,
12-39 agency, or commercial lending company in the United States;
12-40 (C) a federal or state credit union as defined
12-41 by 12 U.S.C. Section 1752, as amended;
12-42 (D) a bank branch; or
12-43 (E) a bank subsidiary, as defined by state or
12-44 federal law.
12-45 (5) "Individual" means a natural person. The term
12-46 includes a resident or a nonresident of this state.
12-47 (6) "Insurance company," "insurance carrier," or
12-48 "insurer" means an insurance company regulated by the department.
12-49 The term includes:
12-50 (A) any domestic or foreign, stock and mutual,
12-51 life, health, or accident insurance company;
12-52 (B) any domestic or foreign, stock and mutual,
12-53 fire and casualty insurance company;
12-54 (C) a Mexican casualty company;
12-55 (D) a domestic or foreign Lloyd's plan insurer;
12-56 (E) a domestic or foreign reciprocal or
12-57 interinsurance exchange;
12-58 (F) a domestic or foreign fraternal benefit
12-59 society;
12-60 (G) a stipulated premium insurance company;
12-61 (H) a nonprofit or for-profit legal service
12-62 corporation;
12-63 (I) a statewide mutual assessment company;
12-64 (J) a local mutual aid association;
12-65 (K) a local mutual burial association;
12-66 (L) an exempt association under Article 14.17 of
12-67 this code;
12-68 (M) a nonprofit hospital, medical, or dental
12-69 service corporation, including a company subject to Chapter 20 of
13-1 this code;
13-2 (N) a health maintenance organization;
13-3 (O) a county mutual insurance company; or
13-4 (P) a farm mutual insurance company.
13-5 (7) "Partnership" means an association of two or more
13-6 persons organized under the partnership laws or limited liability
13-7 partnership laws of this state, another state, or a territory of
13-8 the United States. The term includes a general partnership,
13-9 limited partnership, limited liability partnership, and limited
13-10 liability limited partnership.
13-11 (8) "Person" means an individual, partnership,
13-12 corporation, or depository institution.
13-13 (9) "Subagent" means any person engaging in activities
13-14 described under Subdivision (1) of this section who acts for or on
13-15 behalf of an agent, whether through an oral, written, or electronic
13-16 communication or otherwise, in the solicitation of, negotiation
13-17 for, or procurement of an insurance or annuity contract or health
13-18 maintenance organization membership, or the collection of premiums
13-19 or charges on an insurance or annuity contract or health
13-20 maintenance organization membership, whether or not the subagent is
13-21 designated by the agent as a subagent or by any other title. A
13-22 subagent is an agent, for all purposes of this subchapter, and
13-23 wherever the term "agent" is used in this chapter, it includes
13-24 subagents whether or not a subagent is specifically mentioned
13-25 [Article, "person" means an individual or a general partnership
13-26 composed of two or more individuals or a limited liability
13-27 partnership registered with the Secretary of State under Section
13-28 3.08, Texas Revised Partnership Act (Article 6132b-3.08, Vernon's
13-29 Texas Civil Statutes). The term "partnership" or "agency
13-30 partnership" as used in this Article means a general partnership or
13-31 a registered limited liability partnership].
13-32 SECTION 1.11. Section 2, Article 21.07, Insurance Code, is
13-33 amended to read as follows:
13-34 Sec. 2. APPLICATION FOR LICENSE; TO WHOM LICENSE MAY BE
13-35 ISSUED. (a) Any person[, corporation, or bank] that desires to
13-36 become an agent for an [a local mutual aid association, a local
13-37 mutual burial association, a statewide mutual assessment
13-38 corporation, a stipulated premium company, a county mutual]
13-39 insurance company or health maintenance organization[, a casualty
13-40 company writing accident and health insurance, or any other type of
13-41 insurance carrier licensed to do business in the State of Texas],
13-42 the agents of which are required to be licensed under this
13-43 subchapter [Article], shall submit to the department an application
13-44 for a license in the form required by the department.
13-45 (b) Each applicant for a license to act as an insurance
13-46 agent in this state shall file with the department a completed
13-47 application in the format prescribed by the department. The
13-48 commissioner shall establish by rule the requirements for a
13-49 properly completed application.
13-50 (c) The department may not grant a license as an insurance
13-51 agent to write any form of insurance unless the department finds
13-52 that:
13-53 (1) the applicant is or intends to be actively engaged
13-54 in the soliciting or writing of insurance for the public generally
13-55 and is to be actively engaged in the business of insurance; and
13-56 (2) the application is not made to evade the laws
13-57 against rebating and discrimination, either for the applicant or
13-58 for some other person.
13-59 (d) This section does not prohibit an applicant from
13-60 insuring property that the applicant owns or in which the applicant
13-61 has an interest, but it is the intent of this section to prohibit
13-62 coercion of insurance and to preserve to each individual the right
13-63 to choose that individual's own agent or insurance company, and to
13-64 prohibit the licensing of a person to engage in the insurance
13-65 business principally to handle business that the applicant controls
13-66 only through ownership, mortgage or sale, family relationship, or
13-67 employment. An applicant for an original license must have a bona
13-68 fide intention to engage in business in which, in any calendar
13-69 year, at least 25 percent of the total volume of premiums is
14-1 derived from persons other than the applicant and from property
14-2 other than that on which the applicant controls the placing of
14-3 insurance through ownership, mortgage, sale, family relationship,
14-4 or employment.
14-5 (e) The department may not deny a license application solely
14-6 on the ground that the applicant will act only part-time as an
14-7 agent.
14-8 (f) [The application must bear a signed endorsement by an
14-9 officer or properly authorized representative of the insurance
14-10 carrier that the individual applicant or each member of the
14-11 partnership or each officer, director, and shareholder of the
14-12 corporation or the responsible officer and employee of the bank is
14-13 qualified to hold that individual or the partnership, the
14-14 corporation, or the bank out in good faith to the general public as
14-15 an insurance agent, and that the insurance carrier desires that the
14-16 applicant act as an insurance agent to represent it in this State.]
14-17 [(c)] The department shall issue a license to an individual
14-18 to engage [or to a general partnership engaging] in the business of
14-19 insurance if the department finds that the individual:
14-20 (1) is at least 18 years of age;
14-21 (2) has passed the licensing examination required
14-22 under this code within the past 12 months;
14-23 (3) has not committed an act for which a license may
14-24 be denied under Article 21.01-2 of this code; and
14-25 (4) has submitted the application, appropriate fees,
14-26 and any other information required by the department.
14-27 (g) An individual engaging in the business of insurance as a
14-28 sole proprietorship under the authority of a license issued under
14-29 this subchapter may incorporate, but the corporation does not have
14-30 greater license authority than that granted to the license holder
14-31 in the holder's individual capacity.
14-32 (h) Each individual license holder shall notify the
14-33 department on a monthly basis of:
14-34 (1) a change of the license holder's mailing address;
14-35 (2) a conviction of the license holder of a felony; or
14-36 (3) an administrative action taken against the license
14-37 holder by a financial or insurance regulator of this state, another
14-38 state, or the United States [partner in the partnership must be
14-39 licensed individually as an agent under this Article].
14-40 (i) [(d)] The department shall issue a license to a
14-41 corporation or partnership if the department finds that:
14-42 (1) [That] the corporation or partnership is:
14-43 (A) organized under the laws of this state or
14-44 any other state or territory of the United States;
14-45 (B) admitted to conduct business in this state
14-46 by the secretary of state, if so required; and
14-47 (C) authorized by its articles of incorporation
14-48 or its partnership agreement to act as an insurance agent [a Texas
14-49 corporation organized or existing under the Texas Business
14-50 Corporation Act or the Texas Professional Corporation Act (Article
14-51 1528e, Vernon's Texas Civil Statutes) having its principal place of
14-52 business in the State of Texas and having as one of its purposes
14-53 the authority to act as an agent covered by this Article];
14-54 (2) the corporation or partnership meets the
14-55 definition of that entity adopted under Section 1A of this article;
14-56 [That every officer, director, and shareholder of the corporation
14-57 is individually licensed under the provisions of this Article, or
14-58 that every officer and director of the corporation is individually
14-59 licensed under this Article, that the corporation is a wholly owned
14-60 subsidiary of a parent corporation that is licensed under this
14-61 Article, and that every shareholder of the parent corporation is
14-62 individually licensed under this Article; and]
14-63 (3) at least one officer of the corporation or one
14-64 active partner of the partnership and all other persons performing
14-65 any acts of an agent on behalf of the corporation or partnership in
14-66 this state are individually licensed by the department separately
14-67 from the corporation or partnership;
14-68 (4) the [That such] corporation or partnership will
14-69 have the ability to pay any sums up to $25,000 which it might
15-1 become legally obligated to pay on account of any claim made
15-2 against it by any customer and caused by any negligent act, error,
15-3 or omission of the corporation or partnership or any person for
15-4 whose acts the corporation or partnership is legally liable in the
15-5 conduct of its business under this code [Article]. The term
15-6 "customer" means any person, firm, or corporation to whom such
15-7 corporation or partnership sells or attempts to sell a policy of
15-8 insurance, or from whom such corporation or partnership accepts an
15-9 application for insurance. Such ability shall be maintained
15-10 [proven] in one of the following ways:
15-11 (A) an errors and omissions policy insuring such
15-12 corporation or partnership against errors and omissions in at least
15-13 the sum of $250,000 [$100,000] with [no more than] a [$10,000]
15-14 deductible of not more than 10 percent of the full amount of the
15-15 policy [feature] issued by an insurance company licensed to do
15-16 business in this state [the State of Texas] or, if a policy cannot
15-17 be obtained from a company licensed to do business in this state
15-18 [Texas], a surplus lines insurance policy issued under Article
15-19 1.14-2 of this code [by a company not licensed to do business in
15-20 Texas on filing an affidavit with the department stating the
15-21 inability to obtain coverage and receiving the commissioner's
15-22 approval]; or
15-23 (B) a bond executed by such corporation or
15-24 partnership as principal and a surety company authorized to do
15-25 business in this state [State], as surety, in the principal sum of
15-26 $25,000, payable to the department for the use and benefit of
15-27 customers of such corporation or partnership, conditioned that such
15-28 corporation or partnership shall pay any final judgment recovered
15-29 against it by any customer[; or]
15-30 [(C) a deposit of cash or securities of the
15-31 class authorized by Articles 2.08 and 2.10, Insurance Code, as
15-32 amended, having a fair market value of $25,000 with the
15-33 comptroller. The comptroller is directed to accept and receive
15-34 such deposit and hold it exclusively for the protection of any
15-35 customer of such corporation recovering a final judgment against
15-36 such corporation. Such deposit may be withdrawn only upon filing
15-37 with the department evidence satisfactory to it that the
15-38 corporation has withdrawn from business and has no unsecured
15-39 liabilities outstanding, or that such corporation has provided for
15-40 the protection of its customers by furnishing an errors and
15-41 omissions policy or a bond as provided. Securities so deposited
15-42 may be exchanged from time to time for other qualified securities].
15-43 A binding commitment to issue such a policy or bond[, or the tender
15-44 of such securities,] shall be sufficient in connection with any
15-45 application for license;
15-46 (5) the corporation or partnership intends to be
15-47 actively engaged in the business of insurance as required under
15-48 Subsection (c) of this section;
15-49 (6) each location from which the corporation or
15-50 partnership will conduct its business in this state under authority
15-51 of an insurance license is separately registered with the
15-52 department;
15-53 (7) the corporation or partnership has submitted the
15-54 application, appropriate fees, and any other information required
15-55 by the department; and
15-56 (8) an officer, director, member, manager, partner, or
15-57 any other person who has the right or ability to control the
15-58 license holder has not:
15-59 (A) had a license suspended or revoked or been
15-60 the subject of any other disciplinary action by a financial or
15-61 insurance regulator of this state, another state, or the United
15-62 States; or
15-63 (B) committed an act for which a license may be
15-64 denied under Article 21.01-2 of this code.
15-65 (j) Nothing contained in this section [herein] shall be
15-66 construed to permit any unlicensed employee or agent of any
15-67 corporation or partnership to perform any act of an agent under
15-68 this subchapter [Article] without obtaining a license.
15-69 (k) [If at any time, any corporation holding an agent's
16-1 license does not maintain the qualifications necessary to obtain a
16-2 license, the license of such corporation to act as an agent shall
16-3 be cancelled or denied in accordance with the provisions of
16-4 Sections 10 and 11 of this Article; provided, however, that should
16-5 any person who is not a licensed agent under this Article acquire
16-6 shares in such a corporation by devise or descent, that person
16-7 shall have a period of 90 days from date of acquisition within
16-8 which to obtain a license or to dispose of the shares to a person
16-9 licensed under this Article.]
16-10 [Should such an unlicensed person acquire shares in a
16-11 corporation and not dispose of them within a period of 90 days to a
16-12 licensed agent, then they must be purchased by the corporation for
16-13 their book value, that is, the value of said shares of stock as
16-14 reflected by the regular books and records of said corporation, as
16-15 of the date of the acquisition of said shares by said unlicensed
16-16 person. Should the corporation fail or refuse to so purchase such
16-17 shares, its license shall be cancelled.]
16-18 [Any such corporation shall have the power to redeem
16-19 the shares of any shareholder, or the shares of a deceased
16-20 shareholder, upon such terms as may be agreed upon by the board of
16-21 directors and such shareholder or such shareholder's personal
16-22 representative, or at a price and upon such terms as may be
16-23 provided in the articles of incorporation, the bylaws, or an
16-24 existing contract entered into between the shareholders of the
16-25 corporation.]
16-26 Each corporation or partnership licensed as an agent
16-27 under this subchapter [Article] shall file, under oath, on a form
16-28 developed by the department, biographical information for each [a
16-29 list of the names and addresses of all] of its executive officers
16-30 and[,] directors or unlicensed partners who administer the entity's
16-31 operations in this state, and shareholders who are in control of
16-32 the corporation, or any other partners who have the right or
16-33 ability to control the partnership. If any corporation or
16-34 partnership is owned, in whole or in part, by another entity, a
16-35 biographical form is required for each individual who is in control
16-36 of the parent entity[, and shareholders with its application for
16-37 renewal license].
16-38 (l) Each corporation or partnership shall notify the
16-39 department not later than the 30th day after the date of:
16-40 (1) a felony conviction of a licensed agent of the
16-41 entity or any individual associated with the corporation or
16-42 partnership who is required to file biographical information with
16-43 the department;
16-44 (2) an event that would require notification under
16-45 Section 81.003 of this code; and
16-46 (3) the addition or removal of an officer, director,
16-47 partner, member, or manager.
16-48 (m) The department shall issue a license to a depository
16-49 institution in the manner provided for the licensing of a
16-50 corporation under this section.
16-51 (n) A person may not acquire in any manner any ownership
16-52 interest in an entity licensed as an agent under this subchapter if
16-53 the person is, or after the acquisition would be, directly or
16-54 indirectly, in control of the license holder, or otherwise acquire
16-55 control of or exercise any control over the license holder, unless
16-56 the person has filed the following information with the department
16-57 under oath:
16-58 (1) a biographical form for each person by whom or on
16-59 whose behalf the acquisition of control is to be effected;
16-60 (2) a statement certifying that no person who is
16-61 acquiring an ownership interest in or control of the license holder
16-62 has been the subject of a disciplinary action taken by a financial
16-63 or insurance regulator of this state, another state, or the United
16-64 States;
16-65 (3) a statement certifying that, immediately on the
16-66 change of control, the license holder will be able to satisfy the
16-67 requirements for the issuance of the license to solicit the line or
16-68 lines of insurance for which it is licensed; and
16-69 (4) any additional information that the commissioner
17-1 may by rule prescribe as necessary or appropriate to the protection
17-2 of the insurance consumers of this state or as in the public
17-3 interest.
17-4 (o) If a person required to file a statement under
17-5 Subsection (n) of this section is a partnership, limited
17-6 partnership, syndicate, or other group, the commissioner may
17-7 require that the information required by Subdivisions (1)-(4) of
17-8 that subsection for an individual be provided regarding each
17-9 partner of the partnership or limited partnership, each member of
17-10 the syndicate or group, and each person who controls the partner or
17-11 member. If the partner, member, or person is a corporation or the
17-12 person required to file the statement under Subsection (n) of this
17-13 section is a corporation, the commissioner may require that the
17-14 information required by Subdivisions (1)-(4) of that subsection be
17-15 provided regarding:
17-16 (1) the corporation;
17-17 (2) each individual who is an executive officer or
17-18 director of the corporation; and
17-19 (3) each person who is directly or indirectly the
17-20 beneficial owner of more than 10 percent of the outstanding voting
17-21 securities of the corporation.
17-22 (p) The department may disapprove an acquisition of control
17-23 if, after notice and opportunity for hearing, the commissioner
17-24 determines that:
17-25 (1) immediately on the change of control the license
17-26 holder would not be able to satisfy the requirements for the
17-27 issuance of the license to solicit the line or lines of insurance
17-28 for which it is presently licensed;
17-29 (2) the competence, trustworthiness, experience, and
17-30 integrity of the persons who would control the operation of the
17-31 license holder are such that it would not be in the interest of the
17-32 insurance consumers of this state to permit the acquisition of
17-33 control; or
17-34 (3) the acquisition of control would violate this code
17-35 or another law of this state, another state, or the United States.
17-36 (q) Notwithstanding Subsection (o) of this section, a change
17-37 in control is considered approved if the department has not
17-38 proposed to deny the requested change before the 61st day after the
17-39 date of receipt by the department of all information required by
17-40 this section.
17-41 (r) The commissioner is the corporation's or partnership's
17-42 agent for service of process in the manner provided by Section 3,
17-43 Article 1.36, of this code in a legal proceeding against the
17-44 corporation or partnership if:
17-45 (1) the corporation or partnership licensed to
17-46 transact business in this state fails to appoint or maintain an
17-47 agent for service in this state;
17-48 (2) an agent for service cannot with reasonable
17-49 diligence be found; or
17-50 (3) the license of a corporation or partnership is
17-51 revoked.
17-52 (s) If a license holder does not maintain the qualifications
17-53 necessary to obtain the license, the department shall revoke or
17-54 suspend the license or deny the renewal of the license under
17-55 Article 21.01-2 of this code.
17-56 (t) A person licensed under this subchapter shall maintain
17-57 all insurance records, including all records relating to customer
17-58 complaints, separate from the records of any other business in
17-59 which the person may be engaged.
17-60 (u) A subagent must be licensed to write each type of
17-61 insurance that the subagent is employed to write, but the subagent
17-62 is not required to hold each type of license issued to the agent
17-63 for whom the subagent acts.
17-64 [Each corporation shall notify the department upon any
17-65 change in its officers, directors, or shareholders not later than
17-66 the 30th day after the date on which the change becomes effective.]
17-67 [Except as provided by Subdivision (2) of this
17-68 subsection, a corporation may not own any interest in another
17-69 corporation licensed under this Article, and each owner of an
18-1 interest in a corporation licensed under this Article shall be a
18-2 natural person who holds a valid license issued under this Article.]
18-3 [(e) The department shall issue a license to a bank if the
18-4 department finds that:]
18-5 [(1) the bank satisfies the definition of Section 1C
18-6 of this Article;]
18-7 [(2) at least one officer of the bank and each
18-8 individual who will be performing any acts as an agent for the bank
18-9 are individually licensed under this Article; and]
18-10 [(3) the bank will have the ability to pay any sums up
18-11 to $25,000 that it might become legally obligated to pay on account
18-12 of any claim made against it by a customer and caused by a
18-13 negligent act, error, or omission of the bank or any person for
18-14 whose acts the bank is legally liable in the conduct of its
18-15 business under this Article. The term "customer" means any person,
18-16 firm, or corporation to whom the bank sells or attempts to sell a
18-17 policy of insurance or from whom the bank accepts an application
18-18 for insurance. That ability shall be proven through:]
18-19 [(A) an errors and omissions policy insuring the
18-20 bank against errors and omissions in at least the sum of $100,000
18-21 with not more than a $10,000 deductible feature, issued by an
18-22 insurance company licensed to do business in this state or, if a
18-23 policy cannot be obtained from a company licensed to do business in
18-24 this state, a policy issued by a company not licensed to do
18-25 business in this state on filing an affidavit with the department
18-26 stating the inability to obtain coverage and receiving the
18-27 department's approval;]
18-28 [(B) a bond executed by the bank as principal
18-29 and a surety company authorized to do business in this state, as
18-30 surety, in the principal sum of $25,000, payable to the department
18-31 for the use and benefit of customers of the bank, conditioned that
18-32 the bank shall pay any final judgment recovered against it by a
18-33 customer; or]
18-34 [(C) a deposit with the comptroller of cash or
18-35 securities of the class authorized by Articles 2.08 and 2.10 of
18-36 this code, with a fair market value of $25,000. The comptroller
18-37 shall accept and receive the deposit and hold it exclusively for
18-38 the protection of a customer of the bank who recovers a final
18-39 judgment against the bank. The deposit may be withdrawn only on
18-40 filing with the department satisfactory evidence that the bank has
18-41 withdrawn from the business of insurance and has no unsecured
18-42 liabilities outstanding or that the bank has provided for the
18-43 protection of its customers by furnishing an errors and omissions
18-44 policy or a bond as provided by this subdivision. Securities so
18-45 deposited may be exchanged from time to time for other qualified
18-46 securities.]
18-47 [A binding commitment to issue such a policy or bond,
18-48 or the tender of applicable securities, is sufficient in connection
18-49 with an application for license.]
18-50 [Nothing in this subsection permits an unlicensed
18-51 employee or agent of a bank to perform any act of an agent under
18-52 this Article without obtaining a license.]
18-53 [A bank licensed as an agent under this Article may
18-54 have additional offices from which the business of insurance is
18-55 conducted only in a place with a population of 5,000 or less and
18-56 must comply with the department's regulations regarding additional
18-57 offices.]
18-58 [A bank licensed as an agent under this Article must
18-59 maintain the insurance records of the bank, including all files
18-60 relating to customer complaints, separate from records relating to
18-61 the banking transactions of the bank.]
18-62 [If at any time, a bank that holds an agent's license
18-63 does not maintain the qualifications necessary to obtain a license,
18-64 the license of that bank to act as an agent shall be canceled or
18-65 denied in accordance with Sections 10 and 11 of this Article.]
18-66 [Each bank licensed as an agent under this Article
18-67 shall file under oath with its application for license renewal a
18-68 list of the name and address of each individual who will be acting
18-69 as an agent on behalf of the bank and of each officer and director
19-1 of the bank, as defined by Article 21.02 of this code, and other
19-2 biographical information as required by the department.]
19-3 [Each bank shall notify the department of any change in
19-4 its officers and directors, and any change in other persons who
19-5 will be acting as agents, as defined by Article 21.02 of this code,
19-6 and submit biographical information on those officers, directors,
19-7 and persons as required by the department not later than the 30th
19-8 day after the date on which the change takes effect.]
19-9 SECTION 1.12. Article 21.07, Insurance Code, is amended by
19-10 adding Section 3A to read as follows:
19-11 Sec. 3A. TEMPORARY LICENSE. (a) The department may issue a
19-12 temporary agent's license to an applicant for a license under
19-13 Section 2 of this article who is being considered for appointment
19-14 as an agent by another license holder, an insurer, or a health
19-15 maintenance organization. An applicant for a temporary license is
19-16 not required to pass a written examination. A temporary license is
19-17 valid for the 90 days after the date of issuance. The department
19-18 shall issue a temporary license immediately on receipt by the
19-19 department of a properly completed application executed by the
19-20 person in the form required by Section 2 of this article,
19-21 accompanied by the nonrefundable filing fee set by the department
19-22 and a certificate signed by an officer or properly authorized
19-23 representative of the agent, insurer, or health maintenance
19-24 organization stating that:
19-25 (1) the applicant is being considered for appointment
19-26 by the agent, insurer, or health maintenance organization as its
19-27 full-time agent;
19-28 (2) the agent, insurer, or health maintenance
19-29 organization desires that the applicant be issued a temporary
19-30 license; and
19-31 (3) the applicant will complete, under the agent's,
19-32 insurer's, or health maintenance organization's supervision, at
19-33 least 40 hours of training as prescribed by Subsection (h) of this
19-34 section not later than the 14th day after the date on which the
19-35 application, certificate, and nonrefundable fee are delivered or
19-36 mailed to the department.
19-37 (b) If the temporary license is not received from the
19-38 department before the eighth day after the date on which the
19-39 application, certificate, and nonrefundable fee are delivered or
19-40 mailed to the department and the agent, insurer, or health
19-41 maintenance organization has not been notified that the application
19-42 is denied, the agent, insurer, or health maintenance organization
19-43 may assume that the temporary license will be issued and the
19-44 applicant may proceed to act as an agent.
19-45 (c) A temporary license may not be renewed or issued more
19-46 than once in a consecutive six-month period to the same applicant.
19-47 (d) A temporary license may not be granted to a person who
19-48 does not intend to apply for a license to sell insurance or
19-49 memberships to the public generally.
19-50 (e) A temporary license may not be used to obtain
19-51 commissions from sales made to persons who have family, employment,
19-52 or business relationships with the temporary license holder. An
19-53 agent, insurer, or health maintenance organization may not
19-54 knowingly pay, directly or indirectly, to the holder of a temporary
19-55 license under this section, and a temporary license holder may not
19-56 receive or accept, a commission on the sale of a contract of
19-57 insurance or membership covering:
19-58 (1) the temporary license holder;
19-59 (2) a person related to the temporary license holder
19-60 by consanguinity or affinity;
19-61 (3) a person who is or has been during the past six
19-62 months the temporary license holder's employer, either as an
19-63 individual or as a member of a partnership, association, firm, or
19-64 corporation; or
19-65 (4) a person who is or who has been during the past
19-66 six months the employee of the temporary license holder.
19-67 (f) A person who has been issued a temporary license under
19-68 this section and is acting under the authority of the temporary
19-69 license may not engage in any insurance solicitation, sale, or
20-1 other agency transaction that results in or is intended to result
20-2 in the replacement of any existing individual life insurance policy
20-3 form or annuity contract that is in force, or receive, directly or
20-4 indirectly, any commission or other compensation that may or does
20-5 result from such a solicitation, sale, or other agency transaction.
20-6 A person who holds a permanent license may not circumvent or
20-7 attempt to circumvent the intent of this subsection by acting for
20-8 or with a person holding a temporary license. As used in this
20-9 subsection, "replacement" means a transaction in which a new life
20-10 insurance or annuity contract is to be purchased, and it is known
20-11 or should be known to the temporary agent that by reason of the
20-12 solicitation, sale, or other transaction the existing life
20-13 insurance or annuity contract has been or is to be:
20-14 (1) lapsed, forfeited, surrendered, or otherwise
20-15 terminated;
20-16 (2) converted to reduced paid-up insurance, continued
20-17 as extended term insurance, or otherwise reduced in value by the
20-18 use of nonforfeiture benefits or other policy values;
20-19 (3) amended so as to effect either a reduction in
20-20 benefits or in the term for which coverage would otherwise remain
20-21 in force or for which benefits would be paid;
20-22 (4) reissued with any reduction in cash value; or
20-23 (5) pledged as collateral or subjected to borrowing,
20-24 whether in a single loan or under a schedule of borrowing over a
20-25 period of time, for amounts in the aggregate exceeding 25 percent
20-26 of the loan value set forth in the policy.
20-27 (g) The department may cancel, suspend, or revoke the
20-28 temporary appointment powers of an agent, insurer, or health
20-29 maintenance organization if, after notice and opportunity for
20-30 hearing, the commissioner finds that that agent, insurer, or health
20-31 maintenance organization has abused the temporary appointment
20-32 powers. An appeal from the department's decision is subject to
20-33 Chapter 36 of this code. In considering whether abuse has
20-34 occurred, the department may consider:
20-35 (1) the number of temporary appointments made;
20-36 (2) the percentage of appointees sitting for
20-37 examination as agents under this article, as provided by Subsection
20-38 (j) of this section; and
20-39 (3) the number of appointees who pass the examination.
20-40 (h) The agent, insurer, or health maintenance organization
20-41 shall administer at least 40 hours of training to each applicant
20-42 for a temporary license not later than the 14th day after the date
20-43 on which the application, certificate, and nonrefundable fee are
20-44 delivered or mailed to the department. At least 10 hours must be
20-45 taught in a classroom setting, including an accredited college,
20-46 university, junior college, or community college, a business
20-47 school, or a private institute or classes sponsored by the agent,
20-48 insurer, or health maintenance organization and especially
20-49 established for this purpose. The training program must be
20-50 designed to provide an applicant with basic knowledge of:
20-51 (1) the broad principles of insurance, including the
20-52 licensing and regulatory laws of this state;
20-53 (2) the broad principles of health maintenance
20-54 organizations, including membership requirements and related
20-55 licensing and regulatory laws of this state; and
20-56 (3) the ethical obligations and duties of an agent.
20-57 (i) If the commissioner finds under Subsection (g) of this
20-58 section that an abuse of temporary appointment powers has occurred,
20-59 the commissioner may require the affected agent, insurer, or health
20-60 maintenance organization to file with the department a description
20-61 of the agent's, insurer's, or health maintenance organization's
20-62 training program and may require the agent, insurer, or health
20-63 maintenance organization to obtain the approval of the department
20-64 before continuing to use the training program.
20-65 (j) Each agent, insurer, or health maintenance organization
20-66 shall ensure that, during any two consecutive calendar quarters, at
20-67 least 70 percent of the agent's, insurer's, or health maintenance
20-68 organization's applicants for temporary licenses sit for the
20-69 required licensing examination. At least 50 percent of the
21-1 applicants taking the examination must pass during that period.
21-2 (k) An agent, insurer, or health maintenance organization
21-3 may not make more than 250 appointments of temporary license
21-4 holders during a calendar year.
21-5 SECTION 1.13. Section 6, Article 21.07, Insurance Code, is
21-6 amended to read as follows:
21-7 Sec. 6. FILING OF [AGENT MAY BE LICENSED TO REPRESENT]
21-8 ADDITIONAL APPOINTMENTS [INSURERS]. (a) Except as specifically
21-9 prohibited by another provision of this code, an [Any] agent
21-10 licensed under this subchapter [Article] may represent and act as
21-11 an agent for more than one insurance carrier at any time while the
21-12 agent's license is in force, if the agent so desires. Any such
21-13 agent and the insurance carrier involved shall notify the
21-14 department, in a form prescribed by the department, of [must give
21-15 notice to the State Board of Insurance of] any additional
21-16 appointment [or appointments] authorizing the agent to act as agent
21-17 for an additional insurance carrier or carriers not later than the
21-18 30th day after the effective date of the appointment. The filing
21-19 [Such notice] must include [be accompanied by a certificate from
21-20 each insurance carrier to be named in each additional appointment,
21-21 and must state that said insurance company desires to appoint the
21-22 applicant as its agent. This notice shall also contain such other
21-23 information as the State Board of Insurance may require. The agent
21-24 shall be required to pay] a nonrefundable fee in an amount [not to
21-25 exceed $16 as] determined by the commissioner [State Board of
21-26 Insurance] for each additional appointment for which the insurance
21-27 carrier applies [applied for, which fee shall accompany the notice.
21-28 If approval of the additional appointment is not received from the
21-29 State Board of Insurance before the eighth day after the date on
21-30 which the completed application and fee were received by the Board,
21-31 the agent and the insurance carrier, in the absence of notice of
21-32 disapproval, may assume that the Board approves the application,
21-33 and the agent may act for the insurance carrier].
21-34 (b) An appointment made under this Article to authorize an
21-35 agent to act as an agent for an insurance carrier continues in
21-36 effect without the necessity of renewal until it is terminated or
21-37 [and] withdrawn by the insurance carrier or agent. If the agent is
21-38 terminated for cause, the insurance carrier shall follow the
21-39 procedures established under Section 6B of [as provided by this
21-40 section or is otherwise terminated in accordance with] this
21-41 Article. Each renewal license issued to the agent authorizes the
21-42 agent to represent and act for the insurance carriers for which the
21-43 agent holds an appointment until the appointment is terminated or
21-44 withdrawn, and that agent is considered to be the agent of the
21-45 appointing insurance carriers for the purposes of this code
21-46 [Article].
21-47 (c) An agent appointed under this section may act on behalf
21-48 of the appointing carrier before the department receives the filing
21-49 made under this section.
21-50 (d) If a general life, accident, and health agent or general
21-51 property and casualty agent who has been appointed by an insurance
21-52 carrier authorized to engage in the business of insurance in this
21-53 state appoints a subagent, the general agent shall notify the
21-54 department about the appointment in writing on a form prescribed by
21-55 the department. The notice must be accompanied by a nonrefundable
21-56 fee in an amount determined by the commissioner.
21-57 (e) An insurance carrier is not required to separately
21-58 appoint a subagent who has been designated in writing to the
21-59 department as a subagent by an agent.
21-60 (f) If an agent terminates a subagent for any reason other
21-61 than for cause, the agent shall promptly report the termination to
21-62 the department. The termination ends the subagent's authority to
21-63 act for the licensed agent or the insurance carrier for whom the
21-64 agent is acting. If the subagent is terminated for cause, Section
21-65 6B of this article applies.
21-66 SECTION 1.14. Article 21.07, Insurance Code, is amended by
21-67 adding Sections 6B and 6C to read as follows:
21-68 Sec. 6B. INSURANCE CARRIER TO NOTIFY DEPARTMENT OF
21-69 TERMINATION OF CONTRACT FOR CAUSE; COMMUNICATION PRIVILEGED.
22-1 (a) Each insurance carrier or agent shall, on termination of the
22-2 appointment of an agent for cause, immediately file with the
22-3 department a statement of the facts relating to the termination of
22-4 the appointment and the date and cause of the termination. On
22-5 receipt of the statement the department shall record the
22-6 termination of the appointment of that agent to represent the
22-7 insurance carrier in this state.
22-8 (b) A document, record, statement, or other information
22-9 required to be made or disclosed to the department under this
22-10 section is a privileged and confidential communication and is not
22-11 admissible in evidence in any court action or proceeding except
22-12 under a subpoena issued by a court of record.
22-13 (c) An insurance agent, insurance carrier, an employee or
22-14 agent of the carrier, or any other person, acting without malice,
22-15 is not liable for providing the information required to be
22-16 disclosed under this section.
22-17 Sec. 6C. FEES; USE OF FUNDS. (a) The department shall
22-18 collect from each agent of an insurance carrier writing insurance
22-19 in this state under this code a nonrefundable license fee and a
22-20 nonrefundable appointment fee for each appointment by an insurance
22-21 carrier. These fees, together with examination fees, license fees,
22-22 and license renewal fees, shall be deposited to the credit of the
22-23 Texas Department of Insurance operating fund.
22-24 (b) The department may use any portion of the fees collected
22-25 to enforce this subchapter, may employ persons as it considers
22-26 necessary to investigate and make reports regarding alleged
22-27 violations of this code and misconduct on the part of agents, and
22-28 may pay the salaries and expenses of those persons and office
22-29 employees and other expenses necessary to enforce this subchapter
22-30 from the fees collected. A person employed by the department under
22-31 this section may administer the oath and examine under oath any
22-32 person considered necessary in gathering information and evidence
22-33 and may have that information and evidence reduced to writing if
22-34 considered necessary, and all related expenses shall be paid from
22-35 the fees.
22-36 (c) The department shall set the fees in amounts reasonable
22-37 and necessary to implement this subchapter.
22-38 ARTICLE 2. LIFE, ACCIDENT, AND HEALTH LICENSES
22-39 SECTION 2.01. Subchapter A, Chapter 21, Insurance Code, is
22-40 amended by adding Article 21.07-1 to read as follows:
22-41 Art. 21.07-1. TEXAS LIFE, ACCIDENT, AND HEALTH AGENTS
22-42 LICENSE ACT
22-43 Sec. 1. SHORT TITLE; APPLICATION. (a) This article may be
22-44 cited as the Texas Life, Accident, and Health Agents License Act.
22-45 (b) Each agent of an insurance company authorized to provide
22-46 life, accident, and health insurance coverage in this state is
22-47 subject to this article. This article applies to each person who:
22-48 (1) performs the acts of an agent, as defined by
22-49 Article 21.02 of this code, whether through oral, written, or
22-50 electronic communications or otherwise, by the solicitation of,
22-51 negotiation for, procurement of, or collection of premiums on an
22-52 insurance or annuity contract offered by any type of insurance
22-53 carrier authorized to sell life, accident, and health insurance
22-54 products in this state; or
22-55 (2) represents or purports to represent a health
22-56 maintenance organization in the solicitation, negotiation,
22-57 procurement, or effectuation of membership in the health
22-58 maintenance organization.
22-59 Sec. 2. GENERAL LIFE, ACCIDENT, AND HEALTH LICENSE; LICENSE
22-60 REQUIRED. (a) A general life, accident, and health license is
22-61 required for each person who acts as:
22-62 (1) an agent writing life, accident, and health
22-63 insurance for a life insurance company;
22-64 (2) an agent writing only accident and health
22-65 insurance;
22-66 (3) an agent representing a health maintenance
22-67 organization;
22-68 (4) an agent writing fixed or variable annuity
22-69 contracts or variable life contracts;
23-1 (5) an industrial life insurance agent for an
23-2 industrial company that writes only weekly premium life insurance
23-3 on a debit basis under Article 3.52 of this code;
23-4 (6) an agent writing:
23-5 (A) only life insurance in excess of $15,000 on
23-6 any one life for a stipulated premium insurance company;
23-7 (B) only accident and health insurance for a
23-8 stipulated premium insurance company; or
23-9 (C) both types of insurance described by
23-10 Paragraphs (A) and (B) of this subdivision;
23-11 (7) an agent writing life, accident, and health
23-12 insurance for any type of authorized life insurance company,
23-13 including a legal reserve life insurance company, domiciled in this
23-14 state, representing the insurer in a foreign country or territory
23-15 and either on a United States military installation or with United
23-16 States military personnel;
23-17 (8) an agent writing life, accident, and health
23-18 insurance for a fraternal benefit society except as provided by
23-19 Article 10.37-3 of this code; or
23-20 (9) an agent writing any other type of insurance as
23-21 required by the commissioner for the protection of the insurance
23-22 consumers of this state.
23-23 (b) For the purposes of this subsection, a "combination
23-24 company" is an insurer that writes weekly premium life insurance or
23-25 monthly ordinary life insurance on a debit basis. A general life,
23-26 accident, and health license is required for each person who acts
23-27 as a combination life insurance agent for a combination company. A
23-28 combination company and a combination life insurance agent may also
23-29 write ordinary contracts of life insurance.
23-30 Sec. 3. AUTHORITY TO WRITE ADDITIONAL PRODUCT LINES. A
23-31 person who holds a general life, accident, and health license
23-32 issued under the requirements of this subchapter may, without
23-33 obtaining an additional license, write additional types of
23-34 insurance contracts as provided under:
23-35 (1) Sections 4, 5, and 6 of this article; or
23-36 (2) Article 21.09 of this code.
23-37 Sec. 4. LIMITED LIFE, ACCIDENT, AND HEALTH LICENSE. (a) An
23-38 agent must hold a limited life, accident, and health license if the
23-39 agent writes:
23-40 (1) a policy or rider to a policy that provides only:
23-41 (A) lump-sum cash benefits in the event of
23-42 accidental death, death by accidental means, or dismemberment; or
23-43 (B) ambulance expense benefits in the event of
23-44 accident or sickness;
23-45 (2) a prepaid legal services contract under Article
23-46 5.13-1 or Chapter 23 of this code;
23-47 (3) credit insurance except as otherwise provided
23-48 under Article 21.09 of this code; or
23-49 (4) any other type of insurance, if determined
23-50 necessary by the commissioner to protect insurance consumers in
23-51 this state.
23-52 (b) A person who holds a limited life, accident, and health
23-53 license issued under this section may write only the types of
23-54 insurance products designated on the license by the department.
23-55 (c) An applicant for a limited life, accident, and health
23-56 license is eligible for a temporary license under Section 3A,
23-57 Article 21.07, of this code.
23-58 Sec. 5. FUNERAL PREARRANGEMENT LIFE INSURANCE AGENT.
23-59 (a) In this section, "funeral prearrangement life insurance agent"
23-60 means a life insurance agent who, subject to the limitations of
23-61 this section, writes only life insurance policies and fixed annuity
23-62 contracts to secure the delivery of funeral services and
23-63 merchandise under prepaid funeral contracts regulated by the Texas
23-64 Department of Banking under Chapter 154, Finance Code.
23-65 (b) The department shall issue a license to act as a funeral
23-66 prearrangement life insurance agent to an individual after
23-67 receiving certification from an insurance company authorized to
23-68 write life insurance and annuities in this state that the applicant
23-69 has completed a course of study and instruction on life insurance
24-1 and fixed annuities for applicants offered by the insurance company
24-2 and passed without aid a written examination administered by the
24-3 insurance company. The course of study and instruction must be at
24-4 least a five-hour course and must include instruction on:
24-5 (1) the policies to be sold; and
24-6 (2) the laws relating to funeral prearrangement.
24-7 (c) The commissioner shall authorize an insurance company to
24-8 administer a funeral prearrangement life insurance agent
24-9 examination as provided by Subsection (b) of this section after
24-10 approval by the commissioner of a complete outline and explanation
24-11 of the course of study and instruction and the nature and manner of
24-12 conducting the examination for applicants. The commissioner shall
24-13 prescribe a uniform examination for applicants that fairly
24-14 addresses the information contained in the approved course of study
24-15 and instruction.
24-16 (d) The commissioner may investigate as necessary the manner
24-17 of instruction and the examination administered by an insurance
24-18 company under this section. The commissioner may withdraw from an
24-19 insurance company the authority under this section to offer
24-20 instruction and administer an examination.
24-21 (e) A funeral prearrangement life insurance agent licensed
24-22 under this section may not:
24-23 (1) write any coverage or combination of coverages
24-24 with an initial guaranteed death benefit that exceeds $15,000 on
24-25 any life; or
24-26 (2) act as an agent for more than one insurance
24-27 company.
24-28 (f) A license issued under this section to act as an agent
24-29 for an insurance company is canceled when the license holder ceases
24-30 to act as an agent for an insurance company. Not later than the
24-31 15th day after the date on which the license holder ceases to act
24-32 as an agent for an insurance company, the insurance company or
24-33 agent shall send written notification to the department.
24-34 (g) Except as specifically provided by this section, the
24-35 provisions of this subchapter that apply to a limited license apply
24-36 to a license issued under this section.
24-37 Sec. 6. LIFE INSURANCE NOT EXCEEDING $15,000. (a) The
24-38 department shall issue a license to act as an agent to an
24-39 individual who writes only life insurance not to exceed $15,000 on
24-40 any one life after receiving certification from a stipulated
24-41 premium insurance company, a statewide mutual assessment company, a
24-42 local mutual aid association, or a local mutual burial association,
24-43 that the applicant has completed a course of study and instruction
24-44 on life insurance and fixed annuities offered by the insurer and
24-45 passed without aid a written examination administered by the
24-46 insurer. The course of study and instruction must be at least a
24-47 five-hour course and must include instruction on:
24-48 (1) the policies to be sold; and
24-49 (2) the laws relating to the regulation of insurance
24-50 in this state.
24-51 (b) The commissioner shall authorize an insurer described by
24-52 Subsection (a) of this section to administer an agent examination
24-53 as provided by Subsection (a) of this section after approval by the
24-54 commissioner of a complete outline and explanation of the course of
24-55 study and instruction and the nature and manner of conducting the
24-56 examination for applicants. The commissioner shall prescribe a
24-57 uniform examination for applicants that fairly addresses the
24-58 information contained in the approved course of study and
24-59 instruction.
24-60 (c) The commissioner may investigate as necessary the manner
24-61 of instruction and the examination administered by an insurer under
24-62 this section. The commissioner may withdraw from an insurer the
24-63 authority under this section to offer instruction and administer an
24-64 examination.
24-65 (d) An insurance agent licensed under this section may not
24-66 write any coverage or combination of coverages with an initial
24-67 guaranteed death benefit that exceeds $15,000 on any life.
24-68 (e) A license is not required under this section for an
24-69 agent who, in the preceding calendar year, wrote policies that
25-1 generated, in the aggregate, less than $20,000 in direct premium.
25-2 (f) Except as specifically provided by this section, the
25-3 provisions of this subchapter that apply to a limited license apply
25-4 to a license issued under this section.
25-5 ARTICLE 3. PROPERTY AND CASUALTY LICENSES
25-6 SECTION 3.01. Article 21.14, Insurance Code, is amended to
25-7 read as follows:
25-8 Art. 21.14. TEXAS PROPERTY AND CASUALTY AGENTS LICENSE ACT
25-9 Sec. 1. SHORT TITLE; APPLICATION. (a) This article may be
25-10 cited as the Texas Property and Casualty Agents License Act.
25-11 (b) Each agent of an insurance company authorized to provide
25-12 property and casualty insurance coverage in this state is subject
25-13 to this article. This article applies to each person who performs
25-14 the acts of an agent, as defined by Article 21.02 of this code,
25-15 whether through oral, written, or electronic communications or
25-16 otherwise, by the solicitation of, negotiation for, procurement of,
25-17 or collection of premiums on an insurance contract offered by any
25-18 type of insurance carrier authorized to sell property and casualty
25-19 insurance products in this state, including:
25-20 (1) a fidelity or surety company;
25-21 (2) an inter-insurance exchange;
25-22 (3) a mutual company, including a farm mutual or a
25-23 county mutual;
25-24 (4) a reciprocal exchange; or
25-25 (5) a Lloyd's plan insurer.
25-26 Sec. 2. GENERAL PROPERTY AND CASUALTY LICENSE; LICENSE
25-27 REQUIRED. A general property and casualty license is required for
25-28 each person who acts as:
25-29 (1) an agent writing property and casualty insurance
25-30 for an insurance carrier authorized to provide property and
25-31 casualty insurance coverage in this state;
25-32 (2) a subagent of a person licensed as an agent under
25-33 this article who solicits and binds insurance risks on behalf of
25-34 that agent; or
25-35 (3) an agent writing any other type of insurance as
25-36 required by the commissioner for the protection of the insurance
25-37 consumers of this state.
25-38 Sec. 3. AUTHORITY TO WRITE ADDITIONAL PRODUCT LINES. A
25-39 person who holds a general property and casualty license issued
25-40 under this subchapter may write additional types of insurance
25-41 contracts as provided under:
25-42 (1) Sections 6 and 9 of this article; or
25-43 (2) Article 21.09 of this code.
25-44 Sec. 4. AUTHORITY TO WRITE ACCIDENT AND HEALTH INSURANCE. A
25-45 person who holds a general property and casualty license issued
25-46 under this subchapter may write health and accident insurance for a
25-47 property and casualty insurer authorized to sell those insurance
25-48 products in this state without holding a license issued under
25-49 Article 21.07-1 of this code.
25-50 Sec. 5. EMERGENCY LICENSE WITHOUT EXAMINATION. In the event
25-51 of the death or disability of a property and casualty agent or if a
25-52 property and casualty agent is found to be insolvent and unable to
25-53 pay for premiums as they become due to an insurer, the department
25-54 may issue to an applicant for a property and casualty license an
25-55 emergency property and casualty license without examination if it
25-56 is established to the satisfaction of the department that the
25-57 emergency license is necessary for the preservation of the agency
25-58 assets of a deceased, disabled, or insolvent property and casualty
25-59 agent. An emergency license is valid for 90 days in any 12
25-60 consecutive months and may be renewed by the department for an
25-61 additional 90 days during the 12-month period if the other
25-62 requirements of this subchapter are met.
25-63 Sec. 6. LIMITED PROPERTY AND CASUALTY LICENSE. (a) A
25-64 limited property and casualty license is required for each person
25-65 who desires to act as an agent writing:
25-66 (1) job protection insurance as defined by Article
25-67 25.01 of this code;
25-68 (2) insurance only on growing crops under Article
25-69 21.14-2 of this code;
26-1 (3) any form of insurance authorized under Chapter 16
26-2 of this code for a farm mutual insurance company;
26-3 (4) exclusively all forms of insurance authorized to
26-4 be solicited and written in this state that cover the ownership,
26-5 operation, maintenance, or use of a motor vehicle that is designed
26-6 for use on the public highways, including a trailer or semitrailer,
26-7 and the motor vehicle's accessories or equipment;
26-8 (5) exclusively all forms of insurance authorized to
26-9 be solicited and written in this state that relate to the
26-10 ownership, occupancy, maintenance, or use of a manufactured home
26-11 that is classified as personal property under Section 2.001,
26-12 Property Code;
26-13 (6) prepaid legal services contracts under Article
26-14 5.13-1 or Chapter 23 of this code;
26-15 (7) only industrial fire insurance policies covering
26-16 dwellings, household goods, and wearing apparel written on a
26-17 weekly, monthly, or quarterly basis on a continuous premium payment
26-18 plan and written for an insurance company whose business is devoted
26-19 exclusively to that business as described by Article 17.02 of this
26-20 code;
26-21 (8) credit insurance, except as otherwise provided by
26-22 Article 21.09 of this code; or
26-23 (9) any other type of insurance as required by the
26-24 commissioner for the protection of the insurance consumers of this
26-25 state.
26-26 (b) Subsection (a)(2) of this section applies to a
26-27 production credit association or bank for a cooperative, as
26-28 provided under the farm credit system under 12 U.S.C. 2001 et seq.,
26-29 as amended.
26-30 (c) A person who holds a limited property and casualty
26-31 license issued under this subchapter may write only the types of
26-32 insurance products designated on the license by the department.
26-33 (d) This section does not apply to a person who wrote:
26-34 (1) policies, authorized under Chapter 16 of this code
26-35 for a farm mutual insurance company, that generated, in the
26-36 aggregate, less than $50,000 in direct premium for the previous
26-37 calendar year; or
26-38 (2) industrial fire insurance policies that generated,
26-39 in the aggregate, less than $20,000 in direct premium for the
26-40 previous calendar year.
26-41 Sec. 7. FULL-TIME HOME OFFICE EMPLOYEES: MANDATORY
26-42 REGISTRATION, CONTINUING EDUCATION REQUIREMENTS, AND NOTIFICATION
26-43 TO CONSUMERS; DISCIPLINARY ACTIONS. (a) Each actual full-time
26-44 home office salaried employee of an insurance carrier licensed to
26-45 do business in this state who solicits or receives an application
26-46 for the sale of insurance through an oral, written, or electronic
26-47 communication shall register with the department.
26-48 (b) An insurance carrier licensed to do business in this
26-49 state whose general plan of operation includes the use of employees
26-50 described by Subsection (a) of this section shall certify to the
26-51 department that each of those employees receives at least 15 hours
26-52 of continuing education annually. Each continuing education course
26-53 provided by the insurance carrier shall be submitted to the
26-54 department for approval as provided by Section 3, Article 21.01-1,
26-55 of this code. A person registered under this section shall comply
26-56 with the continuing education requirements adopted under Section 3,
26-57 Article 21.01-1, of this code, as if the person were a licensed
26-58 agent. The continuing education must be designed to give the
26-59 employee:
26-60 (1) reasonable familiarity with:
26-61 (A) the broad principles of insurance;
26-62 (B) insurance licensing and regulatory laws; and
26-63 (C) the terms and conditions of the insurance
26-64 that the registrant transacts; and
26-65 (2) a fair and general understanding of the duties of
26-66 an insurer to an insured, including training in ethical
26-67 considerations.
26-68 (c) The registration of an actual full-time home office
26-69 salaried employee shall be suspended and the employer insurance
27-1 carrier may be disciplined for any act for which an agent may be
27-2 disciplined under Article 21.01-2 of this code.
27-3 (d) Each registrant under this section shall disclose the
27-4 fact of the registration when making an oral, written, or
27-5 electronic communication to solicit or receive an application for
27-6 the sale of insurance.
27-7 (e) Each person who registers under this section shall
27-8 submit a nonrefundable registration fee in an amount determined by
27-9 the department.
27-10 Sec. 8. INSURANCE SERVICE REPRESENTATIVE LICENSE. (a) An
27-11 insurance service representative license is required for each
27-12 person who is employed on a salaried basis to perform assigned
27-13 duties only in the office of a property and casualty agent,
27-14 including explaining insurance coverage, describing an insurance
27-15 product, quoting insurance premium rates, and issuing insurance
27-16 binders only with the express approval of the property and casualty
27-17 agent who supervises the insurance service representative.
27-18 (b) The provisions of this subchapter that apply to a
27-19 general license apply to a license issued under this section,
27-20 except that proof of financial responsibility is not required of a
27-21 person licensed only as an insurance service representative.
27-22 Sec. 9. COUNTY MUTUAL AGENT LICENSE. (a) The department
27-23 shall issue a license to act as an agent for a county mutual
27-24 insurance company under Chapter 17 of this code to an individual
27-25 applicant after receiving certification from the insurance company
27-26 that the applicant has:
27-27 (1) completed a course of study and instruction on
27-28 motor vehicle insurance and insurance covering dwellings offered by
27-29 the insurance company; and
27-30 (2) passed without aid a written examination
27-31 administered by the insurance company.
27-32 (b) The course completed under Subsection (a) of this
27-33 section must be at least a five-hour course and must include
27-34 instruction on:
27-35 (1) the policies to be sold; and
27-36 (2) the laws relating to the regulation of insurance
27-37 in this state.
27-38 (c) The commissioner shall authorize a county mutual
27-39 insurance company to administer an agent examination as provided by
27-40 Subsection (a) of this section after approval by the commissioner
27-41 of a complete outline and explanation of the course of study and
27-42 instruction and the nature and manner of conducting the examination
27-43 for applicants. The commissioner shall prescribe a uniform
27-44 examination for applicants that fairly addresses the information
27-45 contained in the approved course of study and instruction.
27-46 (d) The department may investigate as necessary the manner
27-47 of instruction and the examination administered by an insurance
27-48 company under this section. The department may withdraw from an
27-49 insurance company the authority under this section to offer
27-50 instruction and administer an examination.
27-51 (e) Except as specifically provided by this section, the
27-52 provisions of this subchapter that apply to a limited license apply
27-53 to a license issued under this section. [LICENSING OF LOCAL
27-54 RECORDING AGENTS AND SOLICITORS; LIFE, HEALTH AND ACCIDENT
27-55 INSURANCE EXCEPTED; OTHER EXCEPTIONS]
27-56 [Sec. 1. CLASSES OF AGENTS. Insurance agents, as that term
27-57 is defined in the laws of this State, shall for the purpose of this
27-58 article be divided into two classes: Local Recording Agents and
27-59 Solicitors.]
27-60 [Sec. 2. DEFINITIONS; CERTAIN ORDERS, SOCIETIES OR
27-61 ASSOCIATIONS NOT AFFECTED. (a) In this article:]
27-62 [(1) "Local Recording Agent" means a person or firm
27-63 engaged in soliciting and writing insurance, being authorized by an
27-64 insurance company or insurance carrier, including fidelity and
27-65 surety companies, to solicit business and to write, sign, execute,
27-66 and deliver policies of insurance, and to bind companies on
27-67 insurance risks, and who maintain an office and a record of such
27-68 business and the transactions which are involved, who collect
27-69 premiums on such business and otherwise perform the customary
28-1 duties of a local recording agent representing an insurance carrier
28-2 in its relation with the public; or a person or firm engaged in
28-3 soliciting and writing insurance, being authorized by an insurance
28-4 company or insurance carrier, including fidelity and surety
28-5 companies, to solicit business, and to forward applications for
28-6 insurance to the home office of the insurance companies and
28-7 insurance carriers, where the insurance company's and insurance
28-8 carrier's general plan of operation in this State provides for the
28-9 appointment and compensation of agents for insurance and for the
28-10 execution of policies of insurance by the home office of the
28-11 insurance company or insurance carrier, or by a supervisory office
28-12 of such insurance company or insurance carrier, and who maintain an
28-13 office and a record of such business and the transactions which are
28-14 involved, and who collect premiums on such business and otherwise
28-15 qualify and perform the customary duties of a local recording agent
28-16 representing an insurance carrier in its relation with the public.]
28-17 [(2) "Solicitor" means a person who is a bona fide
28-18 solicitor and engaged in the business of soliciting and binding
28-19 insurance risks on behalf of a local recording agent, and who
28-20 offices with such local recording agent, and who does not sign and
28-21 execute policies of insurance, and who does not maintain company
28-22 records of such transactions. This shall not be construed to make
28-23 a solicitor of a local recording agent, who places business of a
28-24 class which the rules of the company or carrier require to be
28-25 placed on application or to be written in a supervisory office. A
28-26 solicitor may bind insurance risks only with the express prior
28-27 approval of the local recording agent for whom the solicitor works.]
28-28 [(3) "Board" means the State Board of Insurance.]
28-29 [(4) "Company" or "Carrier" means any insurance
28-30 company, corporation, inter-insurance exchange, mutual, reciprocal,
28-31 association, Lloyds or other insurance carrier licensed to transact
28-32 business in the State of Texas other than as excepted herein.]
28-33 [(5) "Insurance service representative" means a
28-34 solicitor employed on a salaried basis who performs assigned duties
28-35 only within the office of a local recording agent, which may
28-36 include binding insurance risks, but only with the express prior
28-37 approval of the local recording agent for whom the representative
28-38 works.]
28-39 [(b) Nothing contained in this article shall be so construed
28-40 as to affect or apply to orders, societies, or associations which
28-41 admit to membership only persons engaged in one or more crafts or
28-42 hazardous occupations in the same or similar lines of business, and
28-43 the ladies' societies, or ladies' auxiliary to such orders,
28-44 societies or associations, or any secretary of a Labor Union or
28-45 organization, or any secretary or agent of any fraternal benefit
28-46 society, which does not operate at a profit, except that a person
28-47 who has had a license revoked under Section 16 of this article may
28-48 not solicit or otherwise transact business under Chapter 10 of this
28-49 code.]
28-50 [Sec. 3. APPLICATION FOR LICENSE; TO WHOM LICENSE MAY BE
28-51 ISSUED. (a) When any person, partnership, registered limited
28-52 liability partnership, limited liability company, corporation, or
28-53 bank shall desire to engage in business as a local recording agent
28-54 for an insurance company, or insurance carrier, that person or
28-55 entity shall make application for a license to the Texas Department
28-56 of Insurance, in such form as the Department may require. Such
28-57 application shall bear a signed endorsement by a general, state or
28-58 special agent of a qualified insurance company, or insurance
28-59 carrier that applicant or each member of the partnership or each
28-60 stockholder of the corporation or each member of the limited
28-61 liability company is a resident of this state.]
28-62 [(b) The Department shall issue a license to an individual
28-63 or a general partnership or a limited liability partnership
28-64 registered with the Secretary of State under Section 3.08, Texas
28-65 Revised Partnership Act (Article 6132b-3.08, Vernon's Texas Civil
28-66 Statutes), engaging in the business of insurance. The Department
28-67 may not issue a license to a partnership if an inactive partner who
28-68 is not subject to Section 3a of this article has an interest in the
28-69 partnership principally to have written and be compensated therefor
29-1 for insurance on property controlled through ownership, mortgage or
29-2 sale, family relationship, or employment; and provided further,
29-3 that all licensed agents must be residents of Texas. Provided,
29-4 that a person who resides in a town through which the state line
29-5 runs and whose residence is in the town in the adjoining state may
29-6 be licensed, if the person's business office is being maintained in
29-7 this state. All persons acting as agent or solicitor for health
29-8 and accident insurance within the provisions hereof, and who
29-9 represent only fire and casualty companies, and not life insurance
29-10 companies, shall be required to procure only one license, and such
29-11 license as is required under the provisions of this article.]
29-12 [(c) The Department shall issue a license to a corporation
29-13 if the Department finds:]
29-14 [(1) That the corporation is a Texas corporation
29-15 organized or existing under the Texas Business Corporation Act or
29-16 the Texas Professional Corporation Act having its principal place
29-17 of business in the State of Texas and having as one of its purposes
29-18 the authority to act as a local recording agent; and]
29-19 [(2) That every officer, director and shareholder of
29-20 the corporation is individually licensed as a local recording agent
29-21 under the provisions of this Insurance Code, except as may be
29-22 otherwise permitted by this Section or Section 3a of this article,
29-23 or that every officer and director of the corporation is
29-24 individually licensed as a local recording agent under this
29-25 Insurance Code, that the corporation is a wholly owned subsidiary
29-26 of a parent corporation that is licensed as a local recording agent
29-27 under this Insurance Code, and that every shareholder of the parent
29-28 corporation is individually licensed as a local recording agent
29-29 under this Insurance Code, and except as specifically provided by
29-30 this article, that no shareholder of the corporation is a corporate
29-31 entity; and]
29-32 [(3) That such corporation will have the ability to
29-33 pay any sums up to $25,000 which it might become legally obligated
29-34 to pay on account of any claim made against it by any customer and
29-35 caused by any negligent act, error or omission of the corporation
29-36 or any person for whose acts the corporation is legally liable in
29-37 the conduct of its business as a local recording agent. The term
29-38 "customer" as used herein shall mean any person, firm or
29-39 corporation to whom such corporation sells or attempts to sell a
29-40 policy of insurance, or from whom such corporation accepts an
29-41 application for insurance. Such ability shall be proven in one of
29-42 the following ways:]
29-43 [(A) An errors and omissions policy insuring
29-44 such corporation against errors and omissions, in at least the sum
29-45 of $100,000 with no more than a $10,000 deductible feature or the
29-46 sum of at least $300,000 with no more than a $25,000 deductible
29-47 feature, issued by an insurance company licensed to do business in
29-48 the State of Texas or, if a policy cannot be obtained from a
29-49 company licensed to do business in Texas, a policy issued by a
29-50 company not licensed to do business in Texas, on filing an
29-51 affidavit with the Texas Department of Insurance stating the
29-52 inability to obtain coverage and receiving the Department's
29-53 approval; or]
29-54 [(B) A bond executed by such corporation as
29-55 principal and a surety company authorized to do business in this
29-56 state, as surety, in the principal sum of $25,000, payable to the
29-57 Texas Department of Insurance for the use and benefit of customers
29-58 of such corporation, conditioned that such corporation shall pay
29-59 any final judgment recovered against it by any customer; or]
29-60 [(C) A deposit of cash or securities of the
29-61 class authorized by Articles 2.08 and 2.10 of this Code, having a
29-62 fair market value of $25,000 with the comptroller. The comptroller
29-63 is hereby authorized and directed to accept and receive such
29-64 deposit and hold it exclusively for the protection of any customer
29-65 of such corporation recovering a final judgment against such
29-66 corporation. Such deposit may be withdrawn only upon filing with
29-67 the Department evidence satisfactory to it that the corporation has
29-68 withdrawn from business, and has no unsecured liabilities
29-69 outstanding, or that such corporation has provided for the
30-1 protection of its customers by furnishing an errors and omissions
30-2 policy or a bond as hereinbefore provided. Securities so deposited
30-3 may be exchanged from time to time for other qualified securities.]
30-4 [A binding commitment to issue such a policy or bond,
30-5 or the tender of such securities, shall be sufficient in connection
30-6 with any application for license.]
30-7 [Nothing contained herein shall be construed to permit
30-8 any unlicensed employee or agent of any corporation to perform any
30-9 act of a local recording agent without obtaining a local recording
30-10 agent's license. The Department shall not require a corporation to
30-11 take the examination provided in Section 6 of this Article 21.14.]
30-12 [If at any time, any corporation holding a local
30-13 recording agent's license does not maintain the qualifications
30-14 necessary to obtain a license, the license of such corporation to
30-15 act as a local recording agent shall be cancelled or denied in
30-16 accordance with the provisions of Sections 16, 17 and 18 of this
30-17 Article 21.14; provided, however, that should any person who is not
30-18 a licensed local recording agent acquire shares in such a
30-19 corporation by devise or descent, they shall have a period of 90
30-20 days from date of acquisition within which to obtain a license as a
30-21 local recording agent or to dispose of the shares to a licensed
30-22 local recording agent except as may be permitted by Section 3a of
30-23 this article.]
30-24 [Should such an unlicensed person, except as may be
30-25 permitted by Section 3a of this article, acquire shares in such a
30-26 corporation and not dispose of them within said period of 90 days
30-27 to a licensed local recording agent, then they must be purchased by
30-28 the corporation for their book value, that is, the value of said
30-29 shares of stock as reflected by the regular books and records of
30-30 said corporation, as of the date of the acquisition of said shares
30-31 by said unlicensed person. Should the corporation fail or refuse
30-32 to so purchase such shares, its license shall be cancelled.]
30-33 [Any such corporation shall have the power to redeem
30-34 the shares of any shareholder, or the shares of a deceased
30-35 shareholder, upon such terms as may be agreed upon by the Board of
30-36 Directors and such shareholder or his personal representative, or
30-37 at such price and upon such terms as may be provided in the
30-38 Articles of Incorporation, the Bylaws, or an existing contract
30-39 entered into between the shareholders of the corporation.]
30-40 [Each corporation licensed as a local recording agent
30-41 shall file, under oath, a list of the names and addresses of all of
30-42 its officers, directors and shareholders with its application for
30-43 renewal license.]
30-44 [Each corporation licensed as a local recording agent
30-45 shall notify the Texas Department of Insurance upon any change in
30-46 its officers, directors or shareholders not later than the 30th day
30-47 after the date on which the change became effective.]
30-48 [The term "firm" as it applies to local recording
30-49 agents in Sections 2, 12 and 16 of this Article 21.14 shall be
30-50 construed to include corporations.]
30-51 [(d) The department shall issue a license to a bank if the
30-52 department finds that:]
30-53 [(1) the bank is a national banking association
30-54 organized and existing under the National Bank Acts (12 U.S.C.
30-55 Section 21 et seq.), a state bank organized and existing under
30-56 Subtitle A, Title 3, Finance Code, a state savings bank organized
30-57 and existing under Subtitle C, Title 3, Finance Code, or a bank
30-58 operating subsidiary, as defined by state or federal law, that is
30-59 located and doing business in this state in a place with a
30-60 population of 5,000 or less;]
30-61 [(2) at least one officer of the bank and each
30-62 individual who will be performing any acts of an agent for the bank
30-63 are individually licensed under this Article; and]
30-64 [(3) the bank will have the ability to pay any sums up
30-65 to $25,000 that it might become legally obligated to pay on account
30-66 of any claim made against it by a customer and caused by a
30-67 negligent act, error, or omission of the bank or any person for
30-68 whose acts the bank is legally liable in the conduct of its
30-69 business as a local recording agent. The term "customer" means any
31-1 person, firm, or corporation to whom the bank sells or attempts to
31-2 sell a policy of insurance or from whom the bank accepts an
31-3 application for insurance. That ability shall be proven through:]
31-4 [(A) an errors and omissions policy insuring the
31-5 bank against errors and omissions, in at least the sum of $100,000
31-6 with not more than a $10,000 deductible feature, or the sum of at
31-7 least $300,000 with not more than a $25,000 deductible feature,
31-8 issued by an insurance company licensed to do business in this
31-9 state or, if a policy cannot be obtained from a company licensed to
31-10 do business in this state, a policy issued by a company not
31-11 licensed to do business in this state, on filing an affidavit with
31-12 the department stating the inability to obtain coverage and
31-13 receiving the department's approval;]
31-14 [(B) a bond executed by the bank as principal
31-15 and a surety company authorized to do business in this state, as
31-16 surety, in the principal sum of $25,000, payable to the department
31-17 for the use and benefit of customers of the bank, conditioned that
31-18 the bank shall pay any final judgment recovered against it by a
31-19 customer; or]
31-20 [(C) a deposit with the comptroller of cash or
31-21 securities of the class authorized by Articles 2.08 and 2.10 of
31-22 this code, with a fair market value of $25,000. The comptroller
31-23 shall accept and receive the deposit and hold it exclusively for
31-24 the protection of a customer of the bank who recovers a final
31-25 judgment against the bank. The deposit may be withdrawn only on
31-26 filing with the department satisfactory evidence that the bank has
31-27 withdrawn from the business of insurance and has no unsecured
31-28 liabilities outstanding or that the bank has provided for the
31-29 protection of its customers by furnishing an errors and omissions
31-30 policy or a bond as provided by this subsection. Securities so
31-31 deposited may be exchanged from time to time for other qualified
31-32 securities.]
31-33 [A binding commitment to issue such a policy or bond,
31-34 or the tender of applicable securities, is sufficient in connection
31-35 with an application for license.]
31-36 [Nothing in this subsection shall be construed to
31-37 permit an unlicensed employee or agent of a bank to perform any act
31-38 of a local recording agent without obtaining a local recording
31-39 agent's license. The department may not require a bank to take the
31-40 examination provided by Section 6 of this Article.]
31-41 [A bank licensed as an agent under this Article may
31-42 have additional offices from which the business of insurance is
31-43 conducted only in a place with a population of 5,000 or less and
31-44 must comply with the department's regulations regarding additional
31-45 offices.]
31-46 [A bank licensed as an agent under this article must
31-47 maintain its insurance records, including all files relating to and
31-48 reflecting customer complaints, separate from records relating to
31-49 banking transactions of the bank.]
31-50 [If a bank that holds a local recording agent's license
31-51 does not maintain the qualifications necessary to obtain a license,
31-52 the license of that bank to act as a local recording agent shall be
31-53 canceled or denied in accordance with Sections 16 and 18 of this
31-54 article.]
31-55 [Each bank licensed as a local recording agent shall
31-56 file under oath with its application for license renewal a list of
31-57 the name and address of each individual who will be acting as an
31-58 agent on behalf of the bank and of each officer and director of the
31-59 bank, as defined by Article 21.02 of this code, and other
31-60 biographical information as required by the department.]
31-61 [Each bank licensed as a local recording agent shall
31-62 notify the department of any change in its officers and directors
31-63 and any change in other persons who will be performing any acts of
31-64 an agent, as defined by Article 21.02 of this code, and submit
31-65 biographical information on those officers, directors, and persons
31-66 as required by the department not later than the 30th day after the
31-67 date on which the change takes effect.]
31-68 [The term "firm," as that term applies to local
31-69 recording agents in Sections 2, 12, and 16 of this article,
32-1 includes corporations and banks.]
32-2 [(e) The term "partnership" or "agency partnership" as used
32-3 in this Article means a general partnership or a registered limited
32-4 liability partnership domiciled in Texas.]
32-5 [(f) In this Article, the term "corporation" or
32-6 "corporations" shall mean a corporation organized under the Texas
32-7 Business Corporation Act, The Texas Professional Corporation Act
32-8 (Article 1528e, Vernon's Texas Civil Statutes), or a Texas
32-9 domiciled limited liability company organized or existing under the
32-10 Texas Limited Liability Company Act (Article 1528n, Vernon's Texas
32-11 Civil Statutes) having its principal place of business in this
32-12 state and having as one of its purposes the authority to act as an
32-13 insurance agent. Each officer, manager, and member of a limited
32-14 liability company must be licensed under this Article. The
32-15 licensing and regulation of a limited liability company shall be
32-16 subject to the same provisions and requirements of this Article
32-17 that are applicable to corporations licensed under this Article.]
32-18 [(g) In this article, the term "bank" means a national
32-19 banking association organized and existing under the National Bank
32-20 Acts (12 U.S.C. Section 21 et seq.), a state bank organized and
32-21 existing under Subtitle A, Title 3, Finance Code, a state savings
32-22 bank organized and existing under Subtitle C, Title 3, Finance
32-23 Code, a bank branch, or a bank operating subsidiary, as defined by
32-24 state or federal law, that is located and doing business in this
32-25 state in a place with a population of 5,000 or less. A bank
32-26 operating subsidiary, as defined by state or federal law, located
32-27 and doing business in a place in this state with a population of
32-28 5,000 or less may own a licensed corporate agent that is also
32-29 located and doing business in a place with a population of 5,000 or
32-30 less, and is subject to Section 3a(5) of this Article.]
32-31 [Sec. 3a. PERSONS OTHER THAN LICENSED LOCAL RECORDING AGENTS
32-32 WHO MAY SHARE IN PROFITS OF LOCAL RECORDING AGENT. (1) Upon the
32-33 death of a duly licensed local recording agent who is a member of
32-34 an agency partnership, the surviving spouse and children, if any,
32-35 of such deceased partner, or a trust for such surviving spouse and
32-36 children, may share in the profits of such agency partnership
32-37 during the lifetime of such surviving spouse or such children, as
32-38 the case may be, if and as provided by a written partnership
32-39 agreement, or in the absence of any written agreement, if and as
32-40 agreed by the surviving partner or partners and the surviving
32-41 spouse, the trustee, and the legal representative of the surviving
32-42 child or children. Such surviving spouse and any such surviving
32-43 children or trusts shall not be required to qualify as local
32-44 recording agents to participate in such profits, but shall not do
32-45 or perform any act of a local recording agent on behalf of such
32-46 partnership without having qualified as a local recording agent;
32-47 provided, however, that a duly licensed local recording agent who
32-48 is a member of an agency partnership may, with the approval of the
32-49 other members of the partnership, transfer an interest in the
32-50 agency partnership to his children or a trust for same, and may
32-51 operate such interest for their use and benefit; and such children
32-52 or trusts may share in the profits of such agency partnership.
32-53 Such child or children or trusts shall not be required to qualify
32-54 as a local recording agent to participate in such profits, but
32-55 shall not do or perform any act of a local recording agent on
32-56 behalf of such partnership without having qualified as a local
32-57 recording agent.]
32-58 [(2) Upon the death of a duly licensed local recording
32-59 agent, who is a sole proprietorship, unless otherwise provided by
32-60 the last will of such deceased agent, the surviving spouse and
32-61 children, if any, of such deceased agent, or a trust for such
32-62 spouse or children, may share in the profits of the continuance of
32-63 the agency business of said deceased agent, provided such agency
32-64 business is continued by a duly licensed local recording agent.
32-65 Said surviving spouse, trusts or children, may participate in such
32-66 profits during the lifetime of such surviving spouse and said
32-67 children. Said surviving spouse, trusts or children shall not be
32-68 required to qualify as local recording agents in order to
32-69 participate in the profits of such agency, but shall not do or
33-1 perform any act of a local recording agent in connection with the
33-2 continuance of such agency business without first having been duly
33-3 licensed as a local recording agent; provided, however, that a duly
33-4 licensed local recording agent who is a sole proprietorship may
33-5 transfer an interest in his agency to his children, or a trust for
33-6 same, and may operate such interest for their use and benefit; and
33-7 such children may share in the profits of such local recording
33-8 agency during their lifetime, and during such time shall not be
33-9 required to qualify as a local recording agent in order to
33-10 participate in such profits, but shall not do or perform any act of
33-11 a local recording agent in connection with such agency business
33-12 without first having been duly licensed as a local recording agent.]
33-13 [(3) Upon the death of a shareholder in a corporate licensed
33-14 local recording agency, the surviving spouse and children, if any,
33-15 of such deceased shareholder, or a trust for such surviving spouse
33-16 and children, may share in the profits of such corporate agency
33-17 during the lifetime of such surviving spouse or children, as the
33-18 case may be, if and as provided by a contract entered into by and
33-19 between all of the shareholders and the corporation. Any such
33-20 surviving spouse, surviving children, or trusts shall not be
33-21 required to individually qualify as a local recording agent in
33-22 order to participate in such profits, but shall not do or perform
33-23 any act of a local recording agency on behalf of such corporation
33-24 without having qualified as a local recording agent; provided,
33-25 however, that a shareholder in a corporate licensed local recording
33-26 agent, may, if provided by a contract entered into by and between
33-27 all of the shareholders and the corporation, transfer an interest
33-28 in the agency to his children or a trust for same, and such
33-29 children or trusts may share in the profits of such agency to the
33-30 extent of such interest during their lifetime. Such children or
33-31 trusts shall not be required to qualify as a local recording agent
33-32 to participate in such profits, but shall not do or perform any act
33-33 of a local recording agent on behalf of such corporation without
33-34 having qualified as a local recording agent.]
33-35 [(4) Except as provided in Subsections (1), (2), and (3)
33-36 above, and as may be provided in Section 6a, Article 21.14 of the
33-37 Insurance Code, no person shall be entitled to perform any act of a
33-38 local recording agent nor in any way participate as a partner or
33-39 corporate shareholder in the profits of any local recording agent,
33-40 without first having qualified as a duly licensed local recording
33-41 agent and having successfully passed the examination required by
33-42 the Insurance Code; provided, however, that all persons, or trusts
33-43 for any person, that received licenses before March 1, 1963, as
33-44 silent, inactive, or non-active partners, or who are silent,
33-45 inactive, or non-active partners in an agency which was so
33-46 qualified before such date, shall continue to receive licenses, or
33-47 renewals thereof, as partners in such agency or in any successor
33-48 agency, providing: (a) that such persons are members of an agency
33-49 in which there is at least one partner who has qualified as a duly
33-50 licensed local recording agent; (b) that such non-active partner or
33-51 partners do not actively solicit insurance; and (c) that such
33-52 agency is not a limited partnership.]
33-53 [(5) Notwithstanding any provision of this article or this
33-54 code to the contrary, a bank located and doing business in a place
33-55 with a population of 5,000 or less that owns a licensed bank
33-56 operating subsidiary, as defined by state or federal law, that is
33-57 also located and doing business in a place with a population of
33-58 5,000 or less may receive profits from the licensed bank operating
33-59 subsidiary. To advertise under the bank name or participate in the
33-60 insurance operation other than by receiving profits from the
33-61 insurance business, the bank must hold an agent license. Nothing
33-62 in this section permits a bank or any affiliate to pay commissions
33-63 or other valuable consideration to any nonlicensed employees, and a
33-64 bank may not pay, credit, or otherwise reward particular
33-65 nonlicensed units or geographic locations of the bank or any of its
33-66 affiliates with a portion of the commission.]
33-67 [Sec. 4. ACTING WITHOUT LICENSE FORBIDDEN. (a) It shall be
33-68 unlawful for any person, firm, partnership, corporation or bank, or
33-69 any partner, officer, director, employee, or shareholder of a
34-1 corporation, or any officer, director, or employee of a bank to act
34-2 as a local recording agent or solicitor in procuring business for
34-3 any insurance company, corporation, interinsurance exchange,
34-4 mutual, reciprocal, association, Lloyds or other insurance carrier,
34-5 until that person or entity shall have in force the license
34-6 provided for herein.]
34-7 [(b) No insurer doing business in this state shall pay
34-8 directly or indirectly any commission, or other valuable
34-9 consideration, to any person, firm, partnership, corporation, or
34-10 bank for services as a local recording agent within this state,
34-11 unless such person, firm, partnership, corporation, or bank shall
34-12 hold a currently valid license and appointment to act as a local
34-13 recording agent as required by the laws of this state; nor shall
34-14 any person, firm, partnership, corporation, or bank other than a
34-15 duly licensed and appointed local recording agent accept any such
34-16 commission or other valuable consideration; provided, however, that
34-17 nothing contained in this subsection shall prohibit an assigned
34-18 risk pool or assigned risk plan, duly authorized to operate by the
34-19 laws of this state, from paying commissions, or other valuable
34-20 consideration, to a duly licensed person, firm, partnership,
34-21 corporation, or bank for services as a local recording agent.]
34-22 [(c) No licensed local recording agent, managing general
34-23 agent, or surplus lines agent doing business in this state shall
34-24 pay directly or indirectly any commission, or other valuable
34-25 consideration, to any person, firm, partnership, corporation, or
34-26 bank for services as a local recording agent within this state,
34-27 unless such person, firm, partnership, corporation, or bank shall
34-28 hold a currently valid license to act as a local recording agent as
34-29 required by the laws of this state; nor shall any person, firm,
34-30 partnership, corporation, or bank other than a duly licensed local
34-31 recording agent accept any such commission or other valuable
34-32 consideration.]
34-33 [(d) No local recording agent doing business in this state
34-34 shall pay directly or indirectly any commission, or other valuable
34-35 consideration, to any person for services as a solicitor within
34-36 this state, unless such person shall hold a currently valid license
34-37 and appointment to act as a solicitor for such local recording
34-38 agent as required by the laws of this state; nor shall any person
34-39 other than a duly licensed and appointed solicitor accept any such
34-40 commission or other valuable consideration.]
34-41 [Sec. 5. ACTIVE AGENTS OR SOLICITORS ONLY TO BE LICENSED.
34-42 No license shall be granted to any person, firm, partnership,
34-43 corporation, or bank as a local recording agent or to a person as a
34-44 solicitor, for the purpose of writing any form of insurance, unless
34-45 it is found by the department that such person, firm, partnership,
34-46 corporation, or bank is or intends to be, actively engaged in the
34-47 soliciting or writing of insurance for the public generally; that
34-48 each person or individual of a firm is a resident of Texas and is
34-49 to be actively engaged in good faith in the business of insurance,
34-50 and that the application is not being made in order to evade the
34-51 laws against rebating and discrimination either for the applicant
34-52 or for some other person, firm, partnership, corporation, or bank.
34-53 Nothing herein contained shall prohibit an applicant insuring
34-54 property which the applicant owns or in which the applicant has an
34-55 interest; but it is the intent of this Section to prohibit coercion
34-56 of insurance and to preserve to each citizen the right to choose
34-57 that individual's own agent or insurance carrier, and to prohibit
34-58 the licensing of an individual, firm, partnership, corporation, or
34-59 bank to engage in the insurance business principally to handle
34-60 business which the applicant controls only through ownership,
34-61 mortgage or sale, family relationship or employment, which shall be
34-62 taken to mean that an applicant who is making an original
34-63 application for license shall show the department that the
34-64 applicant has a bona fide intention to engage in business in which,
34-65 in any calendar year, at least twenty-five per cent (25%) of the
34-66 total volume of premiums shall be derived from persons or
34-67 organizations other than applicant and from property other than
34-68 that on which the applicant shall control the placing of insurance
34-69 through ownership, mortgage, sale, family relationship or
35-1 employment. Nothing herein contained shall be construed to
35-2 authorize a partnership, corporation, or bank to receive a license
35-3 as a solicitor.]
35-4 [Sec. 5a. REQUIREMENTS AS TO KNOWLEDGE OR INSTRUCTION FOR
35-5 LOCAL RECORDING AGENT'S LICENSE. (a) Every applicant for local
35-6 recording agent's license from and after October 1, 1971, shall
35-7 upon the successful passage of the examination for local recording
35-8 agent's license as promulgated by the State Board of Insurance
35-9 pursuant to the provisions of this Article 21.14 be issued a
35-10 temporary local recording agent's license. The holder of a
35-11 temporary local recording agent's license shall have the same
35-12 authority and be subject to the same provisions of the law as local
35-13 recording agents until such temporary license shall expire. Each
35-14 such temporary license so issued shall expire upon the happening of
35-15 any one of the following, whichever shall first occur, to wit:]
35-16 [(i) The issuance of a local recording agent's license
35-17 to such person;]
35-18 [(ii) One year from date of issuance of the temporary
35-19 local recording agent's license.]
35-20 [Each such person receiving a temporary license as set out
35-21 above shall within one (1) year from the issue date of such
35-22 temporary license complete to the satisfaction of the State Board
35-23 of Insurance one of the following courses of study:]
35-24 [(i) Classroom courses in insurance satisfactory to
35-25 the State Board of Insurance at a school, college, junior college
35-26 or extension thereof; or]
35-27 [(ii) An insurance company or agents' association
35-28 school approved by the State Board of Insurance; or]
35-29 [(iii) A correspondence course in insurance approved
35-30 by the State Board of Insurance.]
35-31 [Upon the successful completion of any one of the above
35-32 courses of study within the one year period, the temporary agent
35-33 shall then be entitled to receive from the State Board of Insurance
35-34 his local recording agent's license.]
35-35 [(b) Provided, however, none of the provisions of this
35-36 section shall apply to the following:]
35-37 [(1) To any person holding a license as a local
35-38 recording agent upon the effective date of this Act.]
35-39 [(2) To any person applying for an emergency local
35-40 recording agent's license under the provisions of Section 6a of
35-41 Article 21.14 of the Insurance Code of Texas.]
35-42 [(3) To any person who holds the designation Chartered
35-43 Property and Casualty Underwriter (C.P.C.U.) from the American
35-44 Institute for C.P.C.U., the designation Certified Insurance
35-45 Counselor (C.I.C.) from the national Society of Certified Insurance
35-46 Counselors, or the designation Accredited Adviser in Insurance
35-47 (A.A.I.) from the Insurance Institute of America.]
35-48 [(4) To any person who has a bachelor's degree from a
35-49 four-year accredited college or university with a major in
35-50 insurance.]
35-51 [(5) To any person who within two (2) years
35-52 immediately preceding the filing of an application was a licensed
35-53 agent in good standing in the state from which the person moved to
35-54 Texas, provided such state makes similar provision for those agents
35-55 who may move from Texas to such state.]
35-56 [(6) To any person desiring to apply for a license to
35-57 solicit and write exclusively all forms of insurance authorized to
35-58 be solicited and written in Texas covering the ownership,
35-59 operation, maintenance or use of any motor vehicle, its accessories
35-60 and equipment, designed for use upon the public highways, including
35-61 trailers and semitrailers. Such person shall continue to apply for
35-62 and qualify to be licensed under the other provisions of Article
35-63 21.14 of the Insurance Code of Texas. Provided, such applicant
35-64 shall be required to take and pass, to the satisfaction of the
35-65 Texas Department of Insurance, an examination, promulgated by said
35-66 department, covering only those forms of insurance referred to in
35-67 this paragraph. Provided, when such a person so applies and
35-68 qualifies, the person shall be issued a license which shall contain
35-69 on the face of said license the following language: "Motor vehicle
36-1 insurance only." An agent holding such a limited license hereby
36-2 created shall solicit only those forms of insurance hereinabove
36-3 provided, but shall be subject to all other laws relating to local
36-4 recording agents.]
36-5 [(c) There is hereby created an Agents' Education Advisory
36-6 Board whose duties shall be to advise with and make recommendations
36-7 to the State Board of Insurance concerning the curriculum, course
36-8 content and schools to be approved under Subsection (a) above. The
36-9 members of said Advisory Board shall be appointed by the chairman
36-10 of the State Board of Insurance and shall serve for one year, from
36-11 September 1 to August 31, or until their successors are appointed.
36-12 Said Advisory Board shall be composed of the following persons: Two
36-13 (2) members, each of whom shall be a resident of Texas and have a
36-14 minimum of ten (10) years' experience as an executive of a fire and
36-15 casualty company doing business in Texas and whose company operates
36-16 an agents' school; two (2) members, each of whom shall be a
36-17 licensed local recording agent in Texas with a minimum of ten (10)
36-18 years' experience as an agent; and one (1) member who shall be a
36-19 teacher of insurance at a four-year accredited college or
36-20 university in Texas. Said Advisory Board shall meet at the offices
36-21 of the State Board of Insurance upon call of the chairman of the
36-22 State Board of Insurance and the members of said Advisory Board
36-23 shall be paid out of the Recording Agents License Fund for their
36-24 actual and necessary expenses incurred in connection with their
36-25 attendance at said meetings.]
36-26 [Sec. 5b. CONTINUING EDUCATION. (a) The State Board of
36-27 Insurance shall adopt a procedure for certifying and shall certify
36-28 continuing education programs for agents. Participation in the
36-29 programs is mandatory for all agents licensed under this article.
36-30 The State Board of Insurance shall exempt agents who have been
36-31 licensed for 20 years or more on or after September 1, 1992, and
36-32 shall have the rulemaking authority to provide for other reasonable
36-33 exemptions. No agent shall be required to complete more than 15
36-34 hours of continuing education per year. An agent licensed under
36-35 both Articles 21.07-1 and 21.14 of this code and any subsequent
36-36 amendments may elect to satisfy the continuing education
36-37 requirements of either article and shall not be required to
36-38 complete a total of more than 15 hours of continuing education per
36-39 year.]
36-40 [(b) On written request of the agent, the State Board of
36-41 Insurance may extend the time for the agent to comply with the
36-42 continuing education requirements of this section or may exempt the
36-43 agent from some or all of the requirements for a licensing period
36-44 if the board finds that the agent is unable to comply with the
36-45 requirements because of illness, medical disability, or another
36-46 extenuating circumstance beyond the control of the agent. The
36-47 criteria for such exemptions and extensions shall be established by
36-48 rule.]
36-49 [Sec. 5c. ADVISORY COUNCIL. (a) An advisory council of
36-50 nine members shall be appointed by the State Board of Insurance to
36-51 furnish the Board with information and assistance in the conduct of
36-52 the continuing education program for agents licensed under Articles
36-53 21.07-1 and 21.14.]
36-54 [(b) Four of the members of the advisory council must be
36-55 representatives of the general public. A public representative may
36-56 not be:]
36-57 [(1) an officer, director, or employee of an insurance
36-58 company, insurance agency, agent, broker, solicitor, adjuster, or
36-59 any other business entity regulated by the State Board of
36-60 Insurance;]
36-61 [(2) a person required to register with the secretary
36-62 of state under Chapter 305, Government Code; or]
36-63 [(3) related to a person described by Subdivision (1)
36-64 or (2) of this subsection within the second degree of affinity or
36-65 consanguinity.]
36-66 [Sec. 5d. Notwithstanding the rules or regulations of any
36-67 other state agency, the board has sole jurisdiction for all matters
36-68 relating to the continuing education of insurance agents who are
36-69 licensed under this Article.]
37-1 [Sec. 6. EXAMINATION REQUIRED; EXCEPTIONS. (a) If
37-2 applicant for a local recording agent's license has not prior to
37-3 date of such application, been licensed as a local recording agent,
37-4 or if the applicant for a solicitor's license has not been licensed
37-5 as a local recording agent or as a solicitor prior to date of such
37-6 application, the Board shall require such applicant to submit to a
37-7 written examination covering all kinds of insurance or contracts,
37-8 which license if granted, will permit the applicant to solicit.]
37-9 [(b) Any applicant for local recording agent's license who
37-10 has prior to the date of such application been licensed as a local
37-11 recording agent, shall be entitled to a local recording agent's
37-12 license without examination, provided the other requirements of
37-13 this article are met. Any applicant for solicitor's license who
37-14 has been licensed as a local recording agent or as a solicitor
37-15 prior to date of such application, shall be entitled to a
37-16 solicitor's license without an examination, provided the other
37-17 requirements of this article are met.]
37-18 [(c) The Board by rule shall apply different examination
37-19 standards to a solicitor employed as an insurance service
37-20 representative than those applied to other solicitors.]
37-21 [Sec. 6a. DEATH, DISABILITY OR INSOLVENCY; EMERGENCY LICENSE
37-22 WITHOUT EXAMINATION. In event of death or disability of a local
37-23 recording agent or in event a local recording agent is found to be
37-24 insolvent and unable to pay for premiums coming to his hands as
37-25 such local recording agent, the Board may issue to an applicant for
37-26 local recording agent's license an emergency local recording
37-27 agent's license for a period of ninety (90) days in any twelve (12)
37-28 consecutive months and at the Board's option, an additional period
37-29 up to ninety (90) days without an examination provided the other
37-30 requirements of this article are met and if it is established to
37-31 the satisfaction of the Board that such emergency license is
37-32 necessary for the preservation of the agency assets of a deceased
37-33 or disabled local recording agent or of an insolvent local
37-34 recording agent.]
37-35 [Sec. 7. Unless the State Board of Insurance accepts a
37-36 qualifying examination administered by a testing service, as
37-37 provided under Article 21.01-1, Insurance Code, as amended, all
37-38 examinations provided by this article shall be conducted by the
37-39 State Board of Insurance, and shall be held not less frequently
37-40 than one each sixty (60) days every year at times and places
37-41 prescribed by the State Board of Insurance, of which applicants
37-42 shall be notified by the State Board of Insurance in writing ten
37-43 (10) days prior to the date of such examinations, and shall be
37-44 conducted in writing in either the English or Spanish language.
37-45 Provided, further, that printed copies of a manual of questions and
37-46 answers thereto pertaining to the examination published under the
37-47 direction of the State Board of Insurance shall be made available
37-48 to all companies, general agents, and managers for the use of their
37-49 prospective agents, to all agents for the use of their prospective
37-50 solicitors in preparing for such examination. The questions to be
37-51 asked on such examination shall be based upon the questions and
37-52 answers contained in the manual.]
37-53 [Sec. 8. EXPIRATION OF LICENSE; RENEWAL. Except as may be
37-54 provided by a staggered renewal system adopted under Article
37-55 21.01-2 of this code, every license issued to a local recording
37-56 agent or a solicitor shall expire two years from the date of its
37-57 issue, unless a completed application to qualify for the renewal of
37-58 any such license shall be filed with the State Board of Insurance
37-59 and a nonrefundable fee paid on or before such date, in which event
37-60 the license sought to be renewed shall continue in full force and
37-61 effect until renewed or renewal is denied.]
37-62 [Sec. 9. FEES PAYABLE BEFORE EXAMINATION. Unless the State
37-63 Board of Insurance accepts a qualifying examination administered by
37-64 a testing service, as provided under Article 21.01-1, Insurance
37-65 Code, as amended, applicants required to be examined shall, at time
37-66 and place of examination, pay prior to being examined the following
37-67 fees: For a local recording agent's license a fee in an amount not
37-68 to exceed $50 as determined by the State Board of Insurance and for
37-69 a solicitor's license a fee in an amount not to exceed $20 as
38-1 determined by the State Board of Insurance. The fees paid under
38-2 this section shall not be returned for any reason other than
38-3 failure to appear and take the examination after the applicant has
38-4 given at least 24 hours' notice of an emergency situation to the
38-5 State Board of Insurance and received board approval. A new fee
38-6 shall be paid before each and every examination.]
38-7 [Sec. 10. RENEWAL FEES. (a) An applicant for the renewal
38-8 of a local recording agent's license shall pay, at the time the
38-9 renewal application is filed, a fee in an amount not to exceed $50
38-10 as determined by the State Board of Insurance. An applicant for
38-11 the renewal of a solicitor's license shall pay, at the time the
38-12 renewal application is filed, a fee in an amount not to exceed $20
38-13 as determined by the State Board of Insurance.]
38-14 [Sec. 11. ISSUANCE OF LICENSE. (a) Whenever the provisions
38-15 of this article have been complied with, the Board shall issue to
38-16 any applicant the license applied for where such applicant shall
38-17 have satisfactorily passed the examination prescribed by the State
38-18 Board of Insurance, and who shall possess the other qualifications
38-19 required by this article.]
38-20 [(b) The Commissioner of Insurance shall collect in advance
38-21 from agents requesting duplicate licenses a fee not to exceed $20.
38-22 The State Board of Insurance shall determine the amount of the fee.]
38-23 [Sec. 12. (a) After a person or firm shall be granted a
38-24 license as a local recording agent in this state, that person or
38-25 firm shall be authorized to act as such local recording agent in
38-26 this state, only after and during the time such person or firm has
38-27 been authorized so to do, by an insurance company having a permit
38-28 to do business in this state; and when so authorized each company
38-29 or carrier or its general or state or special agent making the
38-30 appointment shall immediately notify the Commissioner of Insurance,
38-31 on such form as the Commissioner may require, of the appointment.
38-32 If approval of an additional appointment is not received from the
38-33 Commissioner before the eighth day after the date on which the
38-34 completed application and fee were received by the Commissioner,
38-35 the agent and the insurance company may assume that the
38-36 Commissioner approves the application, and the agent may act for
38-37 the insurance company. The agent shall be required to pay a
38-38 nonrefundable fee of $16.00 for each appointment applied for, which
38-39 fee shall accompany the notice, and such person or firm shall be
38-40 presumed to be the agent for such company in this state until such
38-41 company or its general or state or special agent shall have
38-42 delivered written notice to the Commissioner of Insurance that such
38-43 appointment has been withdrawn.]
38-44 [(b) Every insurance carrier shall, upon termination for
38-45 cause of the appointment of any agent, immediately file with the
38-46 State Board of Insurance a statement of the facts relative to the
38-47 termination of the appointment and the date and cause thereof. The
38-48 Board shall thereupon record the termination of the appointment of
38-49 such agent to represent such insurance carrier in this state. The
38-50 agent terminated for cause shall receive from the insurance carrier
38-51 a copy of the notice sent to the State Board of Insurance.]
38-52 [(c) Any information, document, record or statement required
38-53 to be made or disclosed to the Board pursuant to this Article shall
38-54 be deemed confidential and privileged unless or until introduced as
38-55 evidence in an administrative hearing.]
38-56 [(d) No liability may be imposed on any insurance carrier,
38-57 its employees or agents, or any other person, acting without
38-58 malice, providing the information required to be disclosed pursuant
38-59 to this section.]
38-60 [Sec. 13. APPLICATION FOR SOLICITOR'S LICENSE. When any
38-61 local recording agent who has been appointed by an insurance
38-62 carrier having a permit to do business in this State shall desire
38-63 to appoint a solicitor in the operation of his business, he and a
38-64 company jointly shall make application for a license for such
38-65 solicitor to the Board of Insurance Commissioners, in such form as
38-66 the Board may require.]
38-67 [Sec. 14. NOTICE TO INSURANCE COMMISSIONERS OF SOLICITOR'S
38-68 APPOINTMENT; AUTHORITY TO SOLICIT. (a) No solicitor shall be
38-69 authorized to solicit insurance until after the State Board of
39-1 Insurance shall have been notified by a local recording agent of
39-2 his appointment, and no local recording agent shall accept business
39-3 tendered by a solicitor until such local recording agent has given
39-4 notice to the State Board of Insurance of such solicitor's
39-5 appointment as such, and until such solicitor has been licensed by
39-6 the State Board of Insurance. No solicitor shall have outstanding
39-7 at any time a notification of appointment from more than one local
39-8 recording agent, and a solicitor shall solicit insurance only in
39-9 the name of and for the account of the local recording agent by
39-10 whom he has been appointed.]
39-11 [(b) If approval of an appointment of a currently licensed
39-12 solicitor is not received from the Commissioner before the eighth
39-13 day after the date on which the completed application and
39-14 nonrefundable fee were received by the Commissioner, the solicitor
39-15 and local recording agent may assume that the Commissioner approves
39-16 the application, and the solicitor may act for the local recording
39-17 agent.]
39-18 [(c) A licensed solicitor's appointment may be terminated
39-19 either by the local recording agent who appointed the solicitor or
39-20 by the solicitor on the filing of notice with the Board of the
39-21 termination.]
39-22 [(d) Upon termination for cause of the appointment of any
39-23 solicitor, the local recording agent shall immediately file with
39-24 the State Board of Insurance a statement of the facts relative to
39-25 the termination of the appointment and the date and cause thereof.
39-26 The Board shall thereupon record the termination of the appointment
39-27 of such solicitor to represent such local recording agent. The
39-28 solicitor terminated for cause shall receive from the local
39-29 recording agent a copy of the notice sent to the State Board of
39-30 Insurance.]
39-31 [(e) Any information, document, record or statement required
39-32 to be made or disclosed to the Board pursuant to this Article shall
39-33 be deemed privileged and confidential unless or until introduced
39-34 into evidence in an administrative hearing.]
39-35 [(f) No liability may be imposed on any insurance carrier,
39-36 its employees or agents, or any other person, acting without
39-37 malice, providing the information required to be disclosed pursuant
39-38 to this section.]
39-39 [Sec. 15. FIRE INSURANCE IN EXCESS OF VALUE, WRITING OF
39-40 FORBIDDEN. It shall be unlawful for any local recording agent or
39-41 solicitor for an insurance company or insurance carrier knowingly
39-42 to grant, write or permit a greater amount of insurance against
39-43 loss by fire than the reasonable value of the subject of insurance.]
39-44 [Sec. 16. SUSPENSION OR REVOCATION OF LICENSE. (a) The
39-45 license of any local recording agent shall be suspended during a
39-46 period in which the agent does not have outstanding a valid
39-47 appointment to act as an agent for an insurance company. The Board
39-48 shall end the suspension on receipt of evidence satisfactory to the
39-49 board that the agent has a valid appointment. The Board shall
39-50 cancel the license of a solicitor if the solicitor does not have
39-51 outstanding a valid appointment to act as a solicitor for a local
39-52 recording agent, and shall suspend the license during a period that
39-53 the solicitor's local recording agent does not have outstanding a
39-54 valid appointment to act as an agent under this Article.]
39-55 [(b) The department may discipline any local recording agent
39-56 or solicitor or deny an application under Section 5, Article
39-57 21.01-2, of this code if it finds that the applicant, individually
39-58 or through any officer, director, or shareholder, for or holder of
39-59 such license:]
39-60 [(1) Has wilfully violated any provision of the
39-61 insurance laws of this state;]
39-62 [(2) Has intentionally made a material misstatement in
39-63 the application for such license;]
39-64 [(3) Has obtained, or attempted to obtain, such
39-65 license by fraud or misrepresentation;]
39-66 [(4) Has misappropriated or converted to the
39-67 applicant's or licensee's own use or illegally withheld money
39-68 belonging to an insurer or an insured or beneficiary;]
39-69 [(5) Has been guilty of fraudulent or dishonest acts;]
40-1 [(6) Has materially misrepresented the terms and
40-2 conditions of any insurance policies or contracts;]
40-3 [(7) Has made or issued, or caused to be made or
40-4 issued, any statement misrepresenting or making incomplete
40-5 comparisons regarding the terms or conditions of any insurance
40-6 contract legally issued by an insurance carrier for the purpose of
40-7 inducing or attempting to induce the owner of such contract to
40-8 forfeit or surrender such contract or allow it to expire for the
40-9 purpose of replacing such contract with another;]
40-10 [(8) Is convicted of a felony;]
40-11 [(9) Is guilty of rebating any insurance premium or
40-12 discriminating as between insureds;]
40-13 [(10) Is not engaged in the soliciting or writing of
40-14 insurance for the public generally as required by Section 5 of this
40-15 Article; or]
40-16 [(11) Is afflicted with a disability as that term is
40-17 defined by Subsection (a) of Article 21.15-6 of this code.]
40-18 [(c) The State Board of Insurance may order that a local
40-19 recording agent or solicitor who is afflicted with a disability be
40-20 placed on disability probation under the terms and conditions
40-21 specified under Article 21.15-6 of this code instead of taking
40-22 disciplinary action under Subsection (b) of this section.]
40-23 [(d) A license applicant or licensee whose license
40-24 application or license has been denied, refused, or revoked under
40-25 this section may not apply for any license as an insurance agent
40-26 before the first anniversary of the effective date of the denial,
40-27 refusal, or revocation, or, if the applicant or licensee seeks
40-28 judicial review of the denial, refusal, or revocation before the
40-29 first anniversary of the date of the final court order or decree
40-30 affirming that action. The Commissioner may deny an application
40-31 timely filed if the applicant does not show good cause why the
40-32 denial, refusal, or revocation of the previous license application
40-33 or license should not be considered a bar to the issuance of a new
40-34 license. This subsection does not apply to an applicant whose
40-35 license application was denied for failure to pass a required
40-36 written examination.]
40-37 [Sec. 18. APPEAL. If the Commissioner refuses an
40-38 application for license as provided by this article, or suspends,
40-39 revokes, or refuses to renew any license at a hearing as provided
40-40 by this article, and if the applicant or accused is dissatisfied
40-41 with the action of the Commissioner, the applicant or accused may
40-42 appeal from the action in accordance with Article 1.04 of this
40-43 Code.]
40-44 [Sec. 19. NOTICE TO LAST ADDRESS. Where notice to the
40-45 applicant or accused is provided for in any part of this article,
40-46 notice by registered mail to his last known address shall be
40-47 sufficient.]
40-48 [Sec. 20. LIFE, HEALTH AND ACCIDENT INSURANCE, INAPPLICABLE
40-49 TO; OTHER EXCEPTIONS. The provisions of this article do not apply
40-50 to the Life, Health and Accident Insurance business or the Life,
40-51 Health and Accident Department of the companies engaged therein,
40-52 nor shall it apply to any of the following, namely:]
40-53 [(a) Any actual full-time home office salaried employee of
40-54 any insurance carrier licensed to do business in Texas, other than
40-55 an employee who solicits or receives an application for the sale of
40-56 insurance through an oral, written, or electronic communication in
40-57 accordance with Section 20A of this article.]
40-58 [(b) Any actual attorney in fact and its actual traveling
40-59 salaried representative as to business transacted through such
40-60 attorney in fact or salaried representative of any reciprocal
40-61 exchange or interinsurance exchange admitted to do business in
40-62 Texas.]
40-63 [(c) Any adjuster of losses, and/or inspector of risks, for
40-64 an insurance carrier licensed to do business in Texas.]
40-65 [(d) Any General Agent or State Agent or Branch Manager
40-66 representing an admitted and licensed insurance company or carrier,
40-67 or insurance companies or carriers, in a supervisory capacity.]
40-68 [(e) The actual attorney in fact for any Lloyds.]
40-69 [(f) All incorporated or unincorporated mutual insurance
41-1 companies, their agents and representatives, organized and/or
41-2 operating under and by authority of Chapters 16 and 17 of this
41-3 code.]
41-4 [(g) Nothing in this entire article shall ever be construed
41-5 to apply to any member, agent, employee, or representative of any
41-6 county or farm mutual insurance company as exempted under Chapters
41-7 16 and 17 of this code.]
41-8 [(h) Nothing in this article shall apply to the group motor
41-9 vehicle insurance business or the group motor vehicle department of
41-10 the companies engaged in that business.]
41-11 [(i) Salaried employees not involved in solicitation or
41-12 negotiation of insurance in the office of a local recording agent
41-13 who devote their full time to clerical and administrative services,
41-14 including the incidental taking of information from customers and
41-15 receipt of premiums in the office of a local recording agent,
41-16 provided the employees do not receive any commissions and their
41-17 compensation is not varied by the volume of premiums taken and
41-18 received.]
41-19 [Sec. 20A. FULL-TIME HOME OFFICE SOLICITORS: MANDATORY
41-20 REGISTRATION, CONTINUING EDUCATION, AND NOTIFICATION TO CONSUMERS;
41-21 DISCIPLINARY ACTIONS. (a) Any actual full-time home office
41-22 salaried employee of any insurance carrier licensed to do business
41-23 in Texas who solicits or receives an application for the sale of
41-24 insurance through an oral, written, or electronic communication
41-25 shall register with the commissioner.]
41-26 [(b) Any insurance carrier licensed to do business in Texas
41-27 whose general plan of operation includes the use of employees
41-28 described in Subsection (a) of this section shall certify to the
41-29 commissioner that such employees receive continuing education of
41-30 not less than 15 hours per year designed to give such employees:]
41-31 [(1) reasonable familiarity with the broad principles
41-32 of insurance, with licensing and regulatory laws, and with
41-33 provisions, terms, and conditions of the insurance which the
41-34 registrant transacts; and]
41-35 [(2) a fair and general understanding of the
41-36 obligations and duties of an insurer to an insured, including
41-37 training in ethical considerations.]
41-38 [(c) The registration of any actual full-time home office
41-39 salaried employee shall be suspended and the employer insurance
41-40 carrier may be disciplined in accordance with the insurance laws of
41-41 this state, if the commissioner finds that the registrant:]
41-42 [(1) has wilfully violated any provision of this code,
41-43 the laws of this state, or a rule of the commissioner;]
41-44 [(2) has been guilty of fraudulent or dishonest acts;]
41-45 [(3) has materially misrepresented the terms and
41-46 conditions of any insurance policies or contracts;]
41-47 [(4) has made or issued, or caused to be made or
41-48 issued, any statement misrepresenting or making incomplete
41-49 comparisons regarding the terms or conditions of any insurance
41-50 contract legally issued by an insurance carrier for the purpose of
41-51 inducing or attempting to induce the owner of such contract to
41-52 forfeit or surrender such contract or allow it to expire for the
41-53 purpose of replacing such contract with another;]
41-54 [(5) is guilty of rebating any insurance premium or
41-55 discriminating as between insureds; or]
41-56 [(6) has been convicted of a felony involving fraud or
41-57 breach of fiduciary duty.]
41-58 [(d) Registrants under this section shall disclose such
41-59 registration when making an oral, written, or electronic
41-60 communication to solicit or receive an application for the sale of
41-61 insurance.]
41-62 [(e) The commissioner shall adopt rules to implement the
41-63 provisions of this section.]
41-64 [Sec. 21. FEES, DISPOSITION OF; APPROPRIATIONS. The fees
41-65 herein provided for, when collected, shall be deposited in the
41-66 State Treasury to the credit of the State Board of Insurance
41-67 operating fund; provided that no expenditures shall be made from
41-68 said fund except under authority of the Legislature as set forth in
41-69 the General Appropriation Bill; provided further that no
42-1 appropriation shall ever be made out of the General Revenue Fund
42-2 for the purpose of administering this article or any provision
42-3 thereof.]
42-4 [Sec. 22. REBATES OR INDUCEMENTS FORBIDDEN. It shall be
42-5 unlawful for any local recording agent to pay, allow, give or offer
42-6 to pay, allow or give, directly or indirectly, any rebate of
42-7 premiums payable, any commission, or any paid employment or
42-8 contract for service of any kind or anything of value whatsoever,
42-9 or any valuable consideration or inducement whatever, not specified
42-10 in the policy or contract of insurance for or on account of the
42-11 solicitation or negotiation of contracts of insurance on property
42-12 or risks in this State to any person, firm or corporation, other
42-13 than a duly licensed solicitor appointed by such local recording
42-14 agent, or to another local recording agent.]
42-15 [It shall be unlawful for any solicitor to pay, allow or give
42-16 or offer to pay, allow or give, directly or indirectly, any rebate
42-17 of premiums payable, any commission, or any paid employment or
42-18 contract for service of any kind, or anything of value whatsoever,
42-19 or any valuable consideration or inducement whatever, not specified
42-20 in the policy or contract of insurance, for or on account of the
42-21 solicitation or negotiation of contracts of insurance on property
42-22 or risks in this State to any person, firm or corporation.]
42-23 [Sec. 23. REPEAL; LAWS NOT IN CONFLICT NOT AFFECTED; ACT
42-24 CUMULATIVE. All laws or parts of laws pertaining to any phase of
42-25 the insurance business, which are in conflict with this article,
42-26 shall be and the same are hereby repealed; but all laws, Civil and
42-27 Criminal, affecting insurance agents, and/or insurance companies or
42-28 insurance carriers or the insurance business, which are not in
42-29 conflict herewith, shall not be affected by the provisions of this
42-30 article; but this article shall be deemed cumulative of such laws.]
42-31 [Sec. 24. VIOLATION OF ACT. Any person or any member of any
42-32 firm, or any corporation or bank, or any officer, director,
42-33 shareholder or employee of any corporation or bank who violates any
42-34 of the provisions of Sections 4, 15 and 22 of this Article shall be
42-35 guilty of a misdemeanor, and on conviction in a court of competent
42-36 jurisdiction, shall be punished by a fine of not less than One
42-37 Dollar ($1.00) nor more than One Hundred Dollars ($100.00).]
42-38 [Sec. 25. ENFORCEMENT OF ARTICLE. The Attorney General, or
42-39 any District or County Attorney, or the Board of Insurance
42-40 Commissioners, may institute any injunction proceeding or such
42-41 other proceeding to enforce the provisions of this article, and to
42-42 enjoin any person, firm or corporation from engaging or attempting
42-43 to engage in any of the business in violation of this article or
42-44 any of the provisions thereof. The provisions of this section are
42-45 cumulative of the other penalties or remedies provided for in this
42-46 article.]
42-47 [Sec. 26. ADMINISTRATION OF ARTICLE. The administration of
42-48 the provision of this article shall be vested in the Board of
42-49 Insurance Commissioners, and of the administrative officer of the
42-50 various counties in which the violation of any provision of this
42-51 article may occur; and the personnel charged with the direct
42-52 supervision of the article, except the regularly elected law
42-53 enforcement officers and their appointees, shall be responsible to
42-54 and serve at the will of the Board of Insurance Commissioners. It
42-55 shall be the duty of the Board of Insurance Commissioners and the
42-56 Attorney General, and of the District and County Attorneys in
42-57 counties where violations of this article may occur, to see that
42-58 its provisions are at all times obeyed, and to make such
42-59 investigations as will prevent or detect the violation of any
42-60 provision thereof. The Board of Insurance Commissioners shall at
42-61 once lay before the District or County Attorney of the proper
42-62 county, any evidence which shall come to its knowledge, of
42-63 criminality or threatened criminality under this article. In the
42-64 event of the neglect or refusal of such Attorney to institute and
42-65 prosecute such violation, or to enforce the other remedies provided
42-66 by this article, the Board shall submit such evidence to the
42-67 Attorney General, who is hereby authorized to proceed therein with
42-68 all the rights, privileges and powers conferred by law upon
42-69 District or County Attorneys. Provided, any person having
43-1 knowledge of the violation of the provisions of this article may
43-2 file a complaint for such violation with the proper officers as in
43-3 other misdemeanor cases. The Board of Insurance Commissioners is
43-4 given the power and authority, as a requisite for granting or
43-5 renewing a license to insurance companies or insurance carriers,
43-6 their local recording agents or solicitors, to require answers
43-7 under oath to any questions propounded by the said Board or under
43-8 its authority, and touching any phase of insurance business in the
43-9 State of Texas in which said insurance company or insurance
43-10 carrier, or such person or firm, shall be engaged, and to require
43-11 such person or firm seeking appointment as local recording agent to
43-12 submit his books, records, and accounts, insofar as they may be
43-13 material to any phase of insurance business, to examination and
43-14 inspection by the Board or any person acting under its authority.]
43-15 [Sec. 27. RULES. In addition to other rules required or
43-16 authorized by this article, the commissioner may adopt rules in
43-17 accordance with federal law applicable to the regulation of the
43-18 sale of insurance that are necessary and proper to carry out the
43-19 provisions of this article.]
43-20 ARTICLE 4. NONRESIDENT AGENT LICENSE
43-21 SECTION 4.01. Section 1, Article 21.11, Insurance Code, is
43-22 amended to read as follows:
43-23 Sec. 1. NONRESIDENT AGENT LICENSE. (a) The
43-24 [Notwithstanding Sections 3(a) and (b), Article 21.14, of this
43-25 code, the] department shall license a person who is not a resident
43-26 of this state to act as a nonresident agent if:
43-27 (1) the applicant for the nonresident license has
43-28 submitted to the department:
43-29 (A) an application on a form as prescribed by
43-30 the department; and
43-31 (B) the nonrefundable license application fee;
43-32 and
43-33 (2) the department finds that the applicant for the
43-34 nonresident license:
43-35 (A) holds a license in good standing as an agent
43-36 in the applicant's state of residence and that state will grant a
43-37 nonresident agent's license on a reciprocal basis to a resident
43-38 agent of this state;
43-39 (B) has:
43-40 (i) passed the examination for an agent's
43-41 license required under this code;
43-42 (ii) met the eligibility requirements
43-43 under Subsection (e) of this section; and
43-44 (iii) satisfied the requirements for a
43-45 license for an individual under this code, including Section 2,
43-46 Article 21.07; or
43-47 (C) has satisfied the requirements for a license
43-48 for a corporation or partnership under Section 2, Article 21.07, of
43-49 this code.
43-50 (b) The commissioner may enter into an agreement with the
43-51 appropriate official of another state as necessary to implement the
43-52 reciprocal licensing of nonresident agents [in accordance with
43-53 Article 21.14 of this code, subject to the limitations of this
43-54 article].
43-55 (c) The [(b) An applicant for issuance of a license under
43-56 this section must meet the requirements for issuance of a license
43-57 under Article 21.14 of this code, except that the] department may
43-58 [shall] waive any [of those] license requirements for an applicant
43-59 with a valid license from another state or jurisdiction if:
43-60 (1) that state or jurisdiction has license
43-61 requirements substantially equivalent to those of this state; or
43-62 (2) the waiver is necessary to promote reciprocal
43-63 licensing of nonresident agents among a majority of the states.
43-64 (d) The commissioner is the agent for service of process in
43-65 the manner provided by Section 3, Article 1.36, of this code in a
43-66 legal proceeding against a nonresident agent licensed to transact
43-67 business in this state if:
43-68 (1) the nonresident agent fails to appoint or maintain
43-69 an agent for service in this state;
44-1 (2) an agent for service is appointed but cannot with
44-2 reasonable diligence be found; or
44-3 (3) the license of the nonresident agent is revoked.
44-4 (e) An applicant for a nonresident agent's license from this
44-5 state who does not hold an insurance agent's license in the
44-6 applicant's state of residence shall, through the law enforcement
44-7 agency of the state of residence, submit a copy of the applicant's
44-8 criminal history records to the department. The department shall
44-9 use the criminal history records to determine eligibility for
44-10 issuance of a license in accordance with this subchapter and other
44-11 laws of this state.
44-12 SECTION 4.02. Subsections (a) and (b), Section 2, Article
44-13 21.11, Insurance Code, are amended to read as follows:
44-14 (a) Except as otherwise specifically provided by this code
44-15 [section], a license issued under this article to an individual who
44-16 is not a resident of this state grants the same rights and
44-17 privileges afforded to a resident license holder [under a license
44-18 issued under Article 21.14 of this code].
44-19 (b) A person who holds a license issued under this article
44-20 and who is in compliance with the continuing education requirements
44-21 of the person's state of residence is exempt from the continuing
44-22 education requirements imposed under Article 21.01-1 of this code
44-23 [may not:]
44-24 [(1) maintain an office in this state;]
44-25 [(2) solicit insurance business in this state by any
44-26 method, including an oral, written, or electronic communication; or]
44-27 [(3) employ solicitors or others to directly or
44-28 indirectly solicit insurance in this state].
44-29 SECTION 4.03. Subsection (c), Section 2, Article 21.11,
44-30 Insurance Code, is amended to read as follows:
44-31 (c) A person licensed as a nonresident agent in this state
44-32 who does not hold an insurance agent's license in the person's
44-33 state of residence shall comply with the continuing education
44-34 requirements imposed under Article 21.01-1 of this code [The
44-35 commissioner shall impose on a resident of another state or
44-36 jurisdiction of the United States who is an applicant for a license
44-37 or a holder of a license issued under this article any requirement
44-38 or restriction that:]
44-39 [(1) the other state or jurisdiction of the United
44-40 States imposes on a resident of this state who is a nonresident
44-41 applicant or license holder in that state or jurisdiction; and]
44-42 [(2) is in addition to or stricter than the
44-43 requirements or restrictions imposed under the insurance law of
44-44 this state on an applicant or license holder who is not a resident
44-45 of this state].
44-46 SECTION 4.04. Section 3, Article 21.11, Insurance Code, is
44-47 amended to read as follows:
44-48 Sec. 3. LIMITATIONS. (a) The department may issue a
44-49 reciprocal nonresident license to an applicant if the authority
44-50 granted by the license issued by the applicant's state of residence
44-51 is generally comparable to the authority granted by a license
44-52 issued by this state. [This article does not permit:]
44-53 [(1) any person or firm licensed solely as a broker in
44-54 the person's or firm's state of residence to be granted a license
44-55 under this article;]
44-56 [(2) a holder of a license issued under this article
44-57 to act as a surplus lines agent under Article 1.14-2 of this code
44-58 or to perform any of the acts permitted under Article 1.14-2 of
44-59 this code, except as provided under Section 10, Article 21.54, of
44-60 this code; or]
44-61 [(3) any person or firm who holds a license issued
44-62 under this article to engage in any form of direct solicitation of
44-63 insurance within this state.]
44-64 (b) A nonresident agent licensed under the reciprocal
44-65 licensing provisions of this code may not engage in a line of
44-66 insurance business in this state for which the agent is not
44-67 authorized in the agent's state of residence.
44-68 (c) This subchapter [The commissioner shall revoke a
44-69 nonresident agent's license issued under this article if the
45-1 commissioner finds that the license was obtained or is being used
45-2 for the purpose of transacting insurance through a local recording
45-3 agent in a manner that permits the individual licensed under this
45-4 article, by subterfuge, to transact insurance as a local recording
45-5 agent.]
45-6 [(c) In the circumstances described by Subsection (b) of
45-7 this section, the commissioner shall also revoke the license of the
45-8 affected local recording agent.]
45-9 [(d) A license revoked under Subsection (b) or (c) of this
45-10 section is not subject to reissuance before the fifth anniversary
45-11 of the date the revocation is effective.]
45-12 [(e) The commissioner shall order that any insurance
45-13 transacted under an arrangement described by Subsection (b) of this
45-14 section be cancelled.]
45-15 [(f) Article 21.01-2 of this code] applies to licensing of a
45-16 nonresident agent under this article.
45-17 SECTION 4.05. Sections 4 and 5, Article 21.11, Insurance
45-18 Code, are amended to read as follows:
45-19 Sec. 4. HOME OFFICE EMPLOYEE. This article does not affect
45-20 the authority established under Section 7 [20], Article 21.14, of
45-21 this code of an actual full-time home office salaried employee of
45-22 an insurance carrier licensed to do business in this state.
45-23 Sec. 5. RULES. The commissioner may adopt rules as
45-24 necessary to implement this article and to meet the minimum
45-25 requirements of federal law and regulations.
45-26 ARTICLE 5. ADJUSTER LICENSE
45-27 SECTION 5.01. Subsections (a) and (b), Section 1, Chapter
45-28 407, Acts of the 63rd Legislature, Regular Session, 1973 (Article
45-29 21.07-4, Vernon's Texas Insurance Code), are amended to read as
45-30 follows:
45-31 (a) "Adjuster" means an individual [any person] who, as an
45-32 independent contractor, or as an employee of an independent
45-33 contractor, adjustment bureau, association, insurance company or
45-34 corporation, general property and casualty [local recording] agent,
45-35 managing general agent, or self-insured, investigates or adjusts
45-36 losses on behalf of either an insurer or a self-insured, or any
45-37 person who supervises the handling of claims.
45-38 (b) "Adjuster" shall not include:
45-39 (1) an attorney at law who adjusts insurance losses
45-40 from time to time and incidental to the practice of law, and who
45-41 does not advertise or represent that he is an adjuster;
45-42 (2) a salaried employee of an insurer who is not
45-43 regularly engaged in the adjustment, investigation, or supervision
45-44 of insurance claims;
45-45 (3) persons employed only for the purpose of
45-46 furnishing technical assistance to a licensed adjuster, including,
45-47 but not limited to, photographers, estimators, private detectives,
45-48 engineers, handwriting experts, and attorneys at law;
45-49 (4) a licensed agent or general agent of an authorized
45-50 insurer who processes undisputed and/or uncontested losses for such
45-51 insurer under policies issued by said agent or general agent;
45-52 (5) a person who performs clerical duties with no
45-53 negotiations with the parties on disputed and/or contested claims;
45-54 (6) any person who handles claims arising under life,
45-55 accident and health insurance policies; [or]
45-56 (7) a person who is employed principally as a
45-57 right-of-way agent or right-of-way and claims agent and whose
45-58 primary responsibility is the acquisition of easements, leases,
45-59 permits, or other real property rights and whose claims handling
45-60 arises out of operations under those easements, leases, permits, or
45-61 other contracts or contractual obligations; or
45-62 (8) an individual who is employed to investigate
45-63 suspected fraudulent insurance claims but who does not adjust
45-64 losses or determine claims payments.
45-65 ARTICLE 6. SURPLUS LINES
45-66 SECTION 6.01. Subdivision (1), Subsection (a), Section 2,
45-67 Article 1.14-2, Insurance Code, is amended to read as follows:
45-68 (1) "Surplus lines agent" means:
45-69 (A) a general property and casualty [(i) is an]
46-1 agent authorized under Article 21.14 who is granted a surplus lines
46-2 license in accordance with this Article; or
46-3 (B) [, (ii) is] a managing general agent
46-4 [(authorized to be licensed and] licensed under the Managing
46-5 General Agents' Licensing Act ([, Acts, 1967, 60th Legislature,
46-6 Chapter 727, codified by Vernon as] Article 21.07-3, Vernon's Texas
46-7 Insurance Code) who is granted a surplus lines license in
46-8 accordance with this Article and who complies with the provisions
46-9 of this Article, except it is not necessary that the managing
46-10 general agent be licensed as a general property and casualty
46-11 [recording] agent[, or (iii) is a nonresident insurance agent
46-12 authorized under Article 21.11 and who is granted a surplus lines
46-13 license for the limited purpose of acting on behalf of a purchasing
46-14 group operating in this state in the placement of liability
46-15 insurance for risks located in this state].
46-16 SECTION 6.02. Subdivision (2), Subsection (a), Section 2,
46-17 Article 1.14-2, Insurance Code, is amended to read as follows:
46-18 (2) A [Each "]surplus lines agent,["] as a condition
46-19 of being licensed as a surplus lines agent and as a condition of
46-20 continuing to be licensed as a surplus lines agent, shall offer the
46-21 proof of financial responsibility [solvency and demonstrate
46-22 capacity in respect of responsibility to insureds under policies of
46-23 surplus lines insurance, or in the alternative show proof of
46-24 adequate bond and surety] in respect of [his] transactions with
46-25 insureds under policies of surplus lines insurance [and] as
46-26 required by [the] reasonable rules [and regulations] of the
46-27 commissioner [State Board of Insurance shall provide].
46-28 SECTION 6.03. Subdivision (3), Subsection (a), Section 2,
46-29 Article 1.14-2, Insurance Code, is amended to read as follows:
46-30 (3) Any surplus lines license granted to an agency
46-31 authorized under the Managing General Agents' Licensing Act
46-32 (Article 21.07-3, Vernon's Texas Insurance Code), but[, Acts, 1967,
46-33 60th Legislature, Chapter 727, that is] not [also] licensed under
46-34 Article 21.14 of this code, [the Insurance Code] shall be limited
46-35 to the acceptance of business originating through a regularly
46-36 licensed general property and casualty [recording] agent and does
46-37 [shall] not authorize the [such] surplus lines agency to transact
46-38 business directly with the applicant for insurance.
46-39 SECTION 6.04. Subsection (a), Section 3, Article 1.14-2,
46-40 Insurance Code, is amended to read as follows:
46-41 (a) If insurance coverages of subjects resident, located or
46-42 to be performed in this state cannot be procured from licensed
46-43 insurers after diligent effort, such coverages, hereinafter
46-44 designated as surplus line insurance, may be procured from eligible
46-45 surplus lines insurers subject to the following conditions:
46-46 1. The insurance must be eligible for surplus lines
46-47 under Section 5.
46-48 2. The insurer must be an eligible surplus lines
46-49 insurer under Section 8.
46-50 3. The insurance must be placed through a licensed
46-51 Texas surplus lines agent [resident in this state].
46-52 4. The other applicable provisions of this section
46-53 must be complied with.
46-54 SECTION 6.05. Section 3A, Article 1.14-2, Insurance Code, is
46-55 amended to read as follows:
46-56 Sec. 3A. AUTHORITY OF COMMISSIONER [STATE BOARD OF
46-57 INSURANCE]. (a) The commissioner [State Board of Insurance] may
46-58 adopt [promulgate] rules necessary to:
46-59 (1) implement [enforce] this article; or
46-60 (2) satisfy requirements under federal law or
46-61 regulations.
46-62 (b) The commissioner [board] shall monitor the activities of
46-63 surplus lines agents to the extent necessary to protect the public
46-64 interest.
46-65 SECTION 6.06. Subsection (b), Section 4, Article 1.14-2,
46-66 Insurance Code, is amended to read as follows:
46-67 (b) The department [Texas Department of Insurance] may issue
46-68 a surplus lines license to an applicant if the applicant submits a
46-69 properly completed license application and an application fee as
47-1 determined by the department and the department determines that the
47-2 applicant [an agent as defined by Subdivision (1) of Subsection (a)
47-3 of Section 2 of this article after the agent has]:
47-4 (1) is an individual who:
47-5 (A) is currently licensed as a general property
47-6 and casualty agent under Article 21.14 of this code or as a
47-7 managing general agent under the Managing General Agents' Licensing
47-8 Act (Article 21.07-3, Vernon's Texas Insurance Code);
47-9 (B) has passed the surplus lines license
47-10 examination administered under Article 21.01-1 of this code and
47-11 department rules; and
47-12 (C) provides proof of financial responsibility
47-13 as required under Section 2 of this article [remitted the
47-14 application fee set by the Texas Department of Insurance in an
47-15 amount not to exceed $50]; or
47-16 (2) is a corporation, limited liability company, or
47-17 partnership that:
47-18 (A) has at least one officer or director or at
47-19 least one active partner who has passed the surplus lines license
47-20 examination required under this article;
47-21 (B) is currently licensed as a general property
47-22 and casualty agent under Article 21.14 of this code or as a
47-23 managing general agent under the Managing General Agents' Licensing
47-24 Act (Article 21.07-3, Vernon's Texas Insurance Code);
47-25 (C) provides proof of financial responsibility
47-26 as required under Section 2 of this article; and
47-27 (D) conducts insurance activities under this
47-28 article only through an individual licensed under this subsection
47-29 [submitted a completed license application on a form approved by
47-30 the Texas Department of Insurance; and]
47-31 [(3) passed a qualifying examination approved by the
47-32 Texas Department of Insurance. If the agent is a general
47-33 partnership or a registered limited liability partnership, this
47-34 examination must be met by each natural person acting as a partner
47-35 in that partnership. If the agent is a corporation, this
47-36 examination requirement must be met by each natural person acting
47-37 as an officer, director, or shareholder of that corporation. If
47-38 the agent is a limited liability company, this examination
47-39 requirement must be met by each natural person acting as an
47-40 officer, manager, and member of that limited liability company].
47-41 SECTION 6.07. Subsection (c), Section 4, Article 1.14-2,
47-42 Insurance Code, is amended to read as follows:
47-43 (c) In addition to the requirements of this article, the
47-44 administration and regulation of a surplus lines agent's license is
47-45 governed by Subchapter A, Chapter 21, of this code, except that
47-46 Article 21.07 of this code does not apply to a license issued under
47-47 this article. [Unless the State Board of Insurance adopts a system
47-48 for staggered renewal of licenses, as provided by Article 21.01-2
47-49 of this code, each license issued under this section is for a
47-50 two-year term that expires on December 31; however, the term of the
47-51 initial licensing period shall expire on December 31 of the year
47-52 following the year in which the license is issued. A license may
47-53 be renewed for periods of two years.]
47-54 SECTION 6.08. Subsection (d), Section 4, Article 1.14-2,
47-55 Insurance Code, is amended to read as follows:
47-56 (d) If a license holder does not maintain the qualifications
47-57 necessary to obtain the license, the department may revoke or
47-58 suspend the license or deny the renewal of that license in
47-59 accordance with Article 21.01-2 of this code. [By filing a
47-60 completed written application in the form prescribed by the State
47-61 Board of Insurance and paying the nonrefundable renewal fee set by
47-62 the board in an amount not to exceed $50, an unexpired license may
47-63 be renewed on or before the expiration date of the license.]
47-64 SECTION 6.09. Subsection (a), Section 15, Article 1.14-2,
47-65 Insurance Code, is amended to read as follows:
47-66 (a) Each surplus lines agent shall maintain [keep in his
47-67 office in this state] a full and true record of each surplus lines
47-68 contract procured by the agent [him], including a copy of the daily
47-69 report, if any, and showing such of the following items as may be
48-1 applicable:
48-2 1. Amount of the insurance and perils insured against;
48-3 2. Brief general description of property insured and
48-4 where located;
48-5 3. Gross premium charged;
48-6 4. Return premium paid, if any;
48-7 5. Rate of premium charged upon the several items of
48-8 property;
48-9 6. Effective date of the contract, and the terms
48-10 thereof;
48-11 7. Name and post office address of the insured;
48-12 8. Name and home office address of the insurer;
48-13 9. Amount collected from the insured; and
48-14 10. Other information as may be required by the
48-15 department [State Board of Insurance].
48-16 ARTICLE 7. CONFORMING AMENDMENTS
48-17 SECTION 7.01. Section 1, Article 3.71, Insurance Code, is
48-18 amended to read as follows:
48-19 Sec. 1. Notwithstanding any contrary or inconsistent
48-20 provision of any law, two or more insurance companies authorized to
48-21 separately do such an insurance business in this state, including
48-22 stock companies, reciprocals, or inter-insurance exchanges, Lloyds'
48-23 associations, fraternal benefit societies and mutual companies of
48-24 all kinds, including state-wide mutual assessment corporations and
48-25 local mutual aid associations, and stipulated premium companies,
48-26 may join together to offer, sell and administer hospital, surgical
48-27 and medical expense insurance plans under a group policy covering
48-28 residents of this state who are sixty-five (65) years of age and
48-29 older and their spouses on which policy each insurance carrier
48-30 shall be severally liable, and such companies may agree with
48-31 respect to premium rates, policy provisions, sales, administrative,
48-32 technical and accounting procedures and other matters within the
48-33 scope of this Article. Such companies may issue such insurance
48-34 policies in their own names or in the name of an unincorporated
48-35 association, trust, or other organization formed for the sole
48-36 purposes of this Article and evidenced by a contract in writing
48-37 executed by the participating insurance companies, and any
48-38 unincorporated associations, trusts, or other organizations
48-39 heretofore formed for the sole purpose of this Article and
48-40 evidenced by a contract in writing executed by the participating
48-41 insurance companies is hereby ratified, confirmed and approved and
48-42 validated from the date of its formation. Any such policy may be
48-43 executed on behalf of the insurance companies by a duly authorized
48-44 person and need not be countersigned on behalf of any such company
48-45 by a resident agent. Any person who is licensed as a general life,
48-46 accident, and health [insurance] agent or as a general property and
48-47 casualty [local recording] agent [or as a solicitor] under Article
48-48 [the provisions of Articles 21.07,] 21.07-1[,] or [Article] 21.14
48-49 of this code [the Insurance Code of the State of Texas,] may act as
48-50 such agent in connection with policies of insurance or certificates
48-51 of insurance issued by any unincorporated association, trust or
48-52 other organization formed for the sole purposes of this Article
48-53 without the necessity of notifying the department [State Board of
48-54 Insurance] that such person is appointed to so act.
48-55 SECTION 7.02. Section 7, Article 3.75, Insurance Code, is
48-56 amended to read as follows:
48-57 Sec. 7. VARIABLE CONTRACT AGENTS LICENSE.
48-58 (a) Notwithstanding any other law of this state, no person shall
48-59 sell or offer for sale within this state a variable contract or do
48-60 or perform any act or thing in the sale, negotiation, making, or
48-61 consummating of any variable contract other than for himself,
48-62 unless such person shall have a valid and current license issued
48-63 under Article 21.07-1 of this code [certificate from the State
48-64 Board of Insurance] authorizing such person to act within this
48-65 state as a general life, accident, and health [variable] agent.
48-66 [No such certificate shall be issued unless and until said board is
48-67 satisfied, after examination, that such person is by training,
48-68 knowledge, ability, and character qualified to act as such agent.
48-69 Any such certificate may be withdrawn and cancelled by said board,
49-1 after notice and hearing, if it shall find that the holder thereof
49-2 does not then have the qualifications required for issue of such
49-3 certificate.]
49-4 (b) The licensing and regulation of a person acting as a
49-5 variable agent is subject to the same provisions applicable to the
49-6 licensing and regulation of other agents under Subchapter A,
49-7 Chapter 21, of this code. [The Commissioner of Insurance shall
49-8 collect in advance from variable agent applicants a nonrefundable
49-9 license fee in an amount not to exceed $50. Unless the State Board
49-10 of Insurance accepts a qualifying examination administered by a
49-11 testing service, as provided under Article 21.01-1, Insurance Code,
49-12 as amended, the Commissioner of Insurance shall collect in advance
49-13 from variable agent applicants an examination fee in an amount not
49-14 to exceed $20. The State Board of Insurance shall determine the
49-15 amount of the fees. A new examination fee shall be paid for each
49-16 and every examination. The examination fee shall not be returned
49-17 under any circumstance other than for failure to appear and take
49-18 the examination after the applicant has given at least 24 hours
49-19 notice of an emergency situation to the Commissioner of Insurance
49-20 and received the Commissioner's approval. All fees collected
49-21 pursuant to this section shall be deposited in the State Treasury
49-22 to the credit of the State Board of Insurance operating fund to be
49-23 used to administer the provisions of this section and Article
49-24 21.07-1, Insurance Code, as amended.]
49-25 [(c) Each license issued to a variable contract agent shall
49-26 expire two years following the date of issue, unless prior thereto
49-27 it is suspended or revoked by the Commissioner of Insurance.]
49-28 [(d) The Commissioner of Insurance shall suspend the license
49-29 of a variable agent during any period in which the agent does not
49-30 have an outstanding valid appointment. The Commissioner of
49-31 Insurance shall lift the suspension on receipt by the State Board
49-32 of Insurance of acceptable notice of a valid appointment.]
49-33 [(e) A license applicant or licensee whose license
49-34 application or license has been denied, refused, or revoked under
49-35 this section may not apply for any license as an insurance agent
49-36 before the first anniversary of the effective date of the denial,
49-37 refusal, or revocation, or, if the applicant or licensee seeks
49-38 judicial review of the denial, refusal, or revocation, before the
49-39 first anniversary of the date of the final court order or decree
49-40 affirming that action. The Commissioner of Insurance may deny an
49-41 application timely filed if the applicant does not show good cause
49-42 why the denial, refusal, or revocation of the previous license
49-43 application or license should not be considered a bar to the
49-44 issuance of a new license.]
49-45 [(f) Licenses which have not expired or which have not been
49-46 suspended or revoked may be renewed by filing with the State Board
49-47 of Insurance a completed renewal application and paying the
49-48 nonrefundable renewal fee set by the board in an amount not to
49-49 exceed $50 on or before the expiration date of the license in
49-50 accordance with Article 21.01-2 of this code.]
49-51 [(g) Any agent licensed under this article may represent and
49-52 act as an agent for more than one insurance carrier any time while
49-53 the license is in force, if the agent so desires. Any such agent
49-54 and the insurance carrier involved must give notice to the State
49-55 Board of Insurance of any additional appointment or appointments
49-56 authorizing the agent to act as agent for an additional insurance
49-57 carrier or carriers. Such notice shall be accompanied by a
49-58 certificate from each insurance carrier to be named in each
49-59 additional appointment that said insurance carrier desires to
49-60 appoint the applicant as its agent. This notice shall also contain
49-61 such other information as the State Board of Insurance may require.
49-62 The agent or company shall be required to pay a nonrefundable fee
49-63 in an amount not to exceed $16 as determined by the State Board of
49-64 Insurance for each additional appointment applied for, which fee
49-65 shall accompany the notice. If approval of the additional
49-66 appointment is not received from the board before the eighth day
49-67 after the date on which the completed application and fee were
49-68 received by the board, the agent and the insurance carrier, in the
49-69 absence of notice of disapproval, may assume that the board
50-1 approves the application, and the agent may act for the insurance
50-2 carrier. All fees collected pursuant to this section shall be
50-3 deposited in the State Treasury to the credit of the State Board of
50-4 Insurance operating fund to be used to administer the provisions of
50-5 this article and Article 21.07-1, Insurance Code, as amended.]
50-6 [(h) Duplicate License; Fee. The Commissioner of Insurance
50-7 shall collect in advance from agents requesting duplicate licenses
50-8 a fee not to exceed $20. The State Board of Insurance shall
50-9 determine the amount of the fee.]
50-10 SECTION 7.03. Subsection (c), Article 5.13-1, Insurance
50-11 Code, is amended to read as follows:
50-12 (c) The right of such insurers to issue prepaid legal
50-13 services contracts on individual, group, or franchise bases is
50-14 hereby recognized, and qualified agents of such insurers who are
50-15 licensed under Article 21.07-1 or [Articles 21.07 and] 21.14 of
50-16 this code [the Insurance Code, as amended, and Chapter 213, Acts of
50-17 the 54th Legislature, 1955, as amended (Article 21.07-1, Vernon's
50-18 Texas Insurance Code),] shall be authorized to write such coverages
50-19 under such rules [and regulations] as the commissioner [State Board
50-20 of Insurance] may prescribe.
50-21 SECTION 7.04. Article 10.37-3, Insurance Code, is amended to
50-22 read as follows:
50-23 Art. 10.37-3. LICENSING OF AGENTS. (a) Except as provided
50-24 by Subsection (b) of this article, a [A] person may not solicit or
50-25 procure insurance contracts for a society unless the person is
50-26 licensed as a general life, accident, and health agent under
50-27 Article 21.07-1 of this code [an agent under Chapter 213, Acts of
50-28 the 54th Legislature, Regular Session, 1955 (Article 21.07-1,
50-29 Vernon's Texas Insurance Code)].
50-30 (b) An agent, representative, or member of a fraternal
50-31 benefit society who devotes less than 50 percent of the person's
50-32 time to the solicitation and procurement of insurance contracts for
50-33 that society is exempt from the requirements of Subsection (a) of
50-34 this article.
50-35 (c) For the purposes of Subsection (b) of this article, a
50-36 person is presumed for a calendar year to have devoted at least 50
50-37 percent of the person's time to the solicitation or procurement of
50-38 insurance contracts if, in the preceding calendar year, the person
50-39 solicited or procured on behalf of a society:
50-40 (1) life insurance contracts that have generated, in
50-41 the aggregate, more than $20,000 of direct premiums for all lives
50-42 insured, provided that an interest-sensitive life insurance
50-43 contract has not been solicited or procured by a person that
50-44 exceeds $35,000 of coverage on an individual life unless that
50-45 person holds the designation of "Fraternal Insurance [Benefit]
50-46 Counselor";
50-47 (2) insurance contracts, other than life insurance
50-48 contracts, that have insured the individual lives of more than 25
50-49 persons; or
50-50 (3) variable life insurance or variable annuity
50-51 contracts.
50-52 (d) The licensing and regulation of agents for fraternal
50-53 benefit societies is subject to Subchapter A, Chapter 21, of this
50-54 code and other laws regulating those agents.
50-55 SECTION 7.05. Article 16.24A, Insurance Code, is amended to
50-56 read as follows:
50-57 Art. 16.24A. LICENSING OF AGENTS [FOR CROP INSURANCE].
50-58 (a) No person or firm shall solicit, write, sign, execute or
50-59 deliver insurance policies, bind insurance risks, collect premiums,
50-60 or otherwise act in the capacity of an insurance agent [a local
50-61 recording agent] in the solicitation or sale of [crop] insurance
50-62 for a farm mutual insurance company unless the person or firm holds
50-63 a license issued [is licensed] under Subchapter A, Chapter 21,
50-64 [Article 21.14] of this code.
50-65 (b) A farm mutual insurance company may not appoint and act
50-66 through an agent [who qualifies for a license as an agricultural
50-67 insurance agent] under Article 21.14-2 of this code.
50-68 SECTION 7.06. Section 9, Article 17.25, Insurance Code, is
50-69 amended to read as follows:
51-1 Sec. 9. AGENTS' LICENSE. Agents [or solicitors] for such
51-2 companies shall be licensed and appointed as provided by Subchapter
51-3 A, Chapter 21, [in Article 21.07 or 21.14] of this Code.
51-4 SECTION 7.07. Sections 4, 19, and 21, Managing General
51-5 Agents' Licensing Act (Article 21.07-3, Vernon's Texas Insurance
51-6 Code), are amended to read as follows:
51-7 Sec. 4. REDEMPTION OF SHARES [APPLICATION FOR LICENSE; TO
51-8 WHOM LICENSE MAY BE ISSUED]. [(a) Each applicant for license
51-9 shall be a resident of Texas and file a written sworn application
51-10 on forms furnished by the Commissioner. The applicant shall
51-11 include in the application the names and addresses of the
51-12 applicant's officers, directors, shareholders, or partners, if
51-13 applicable, and affiliates.]
51-14 [(b) The Commissioner shall issue a license to an individual
51-15 applicant upon successful completion of the examination and
51-16 compliance with the other requirements of this Act.]
51-17 [(c) The Commissioner shall issue a license to a general
51-18 partnership, or to a limited liability partnership registered with
51-19 the Secretary of State under Section 3.08, Texas Revised
51-20 Partnership Act (Article 6132b-3.08, Vernon's Texas Civil
51-21 Statutes), engaging in the business of insurance if each of the
51-22 partners is licensed as an agent under this Act. The term
51-23 "partnership" or "agency partnership" as used in this Act means a
51-24 general partnership or a registered limited liability partnership.]
51-25 [(d) The Commissioner shall issue a license to a corporation
51-26 on finding:]
51-27 [(1) that the corporation is a Texas corporation
51-28 having its principal place of business in the State of Texas and
51-29 having as one of its purposes the authority to act as a managing
51-30 general agent; and]
51-31 [(2) that every officer, director, and shareholder of
51-32 the corporation is individually licensed as a managing general
51-33 agent under the provisions of this Insurance Code; provided,
51-34 however, that in the event ownership of the shares of such
51-35 corporation is acquired through devise or descent by an unlicensed
51-36 shareholder, the corporation shall still be entitled to a license
51-37 if such unlicensed shareholder qualifies as a licensed managing
51-38 general agent or disposes of the shares to a licensed managing
51-39 general agent within 90 days after the date of such stock
51-40 acquisition. If an unlicensed person acquires shares in such a
51-41 corporation and does not qualify to be licensed as a managing
51-42 general agent and the person does not dispose of the shares within
51-43 the 90-day period to a licensed managing general agent, the shares
51-44 must be purchased by the corporation for the value of the shares of
51-45 stock as reflected by the regular books and records of the
51-46 corporation on the date of the acquisition of the shares by the
51-47 unlicensed person. If the corporation fails or refuses to purchase
51-48 the shares, the corporation's license shall be cancelled.]
51-49 [(e)] A corporation may redeem the shares of any shareholder
51-50 or the shares of a deceased shareholder, on terms agreed on by the
51-51 board of directors and the shareholder or the shareholder's
51-52 personal representative or at a price and on terms provided in the
51-53 articles of incorporation, the bylaws, or an existing contract
51-54 entered into between the shareholders of the corporation.
51-55 [(f) Nothing contained herein shall be construed to permit
51-56 any unlicensed shareholder or any employee or agent of any
51-57 corporation licensed as a managing general agent to perform any act
51-58 of a managing general agent without obtaining a managing general
51-59 agent's license.]
51-60 [(g) If at any time, any person holding a managing general
51-61 agent's license does not maintain the qualifications necessary to
51-62 obtain a license, the license of such person to act as a managing
51-63 general agent shall be cancelled or denied in accordance with the
51-64 other provisions of this Act.]
51-65 [(h) Nothing in this section shall prevent any shareholder
51-66 from selling or otherwise transferring stock in any corporation to
51-67 a company or managing general agent licensed to do business in
51-68 Texas, nor prevent any such company or managing general agent from
51-69 owning all or any portion of the stock of such corporation.]
52-1 [(i) Each corporation licensed as a managing general agent
52-2 shall notify the Commissioner of any change in its officers,
52-3 directors, or shareholders not later than the 30th day after the
52-4 date on which the change takes effect.]
52-5 [(j) In this Act the term "corporation" shall mean a
52-6 corporation organized under the Texas Business Corporation Act or a
52-7 Texas domiciled limited liability company organized or existing
52-8 under the Texas Limited Liability Company Act (Article 1528n,
52-9 Vernon's Texas Civil Statutes) having its principal place of
52-10 business in this state and having as one of its purposes the
52-11 authority to act as a managing general insurance agent. Each
52-12 officer, manager, and member of a limited liability company must be
52-13 licensed under this Act. The licensing and regulation of a limited
52-14 liability company shall be subject to the same provisions and
52-15 requirements of this Act that are applicable to corporations
52-16 licensed under this Act.]
52-17 Sec. 19. ADMINISTRATION AND REGULATION OF MANAGING GENERAL
52-18 AGENTS; VIOLATIONS OF ACT. (a) Subchapter A, Chapter 21,
52-19 Insurance Code, applies to the licensing and regulation of a person
52-20 acting as a managing general agent.
52-21 (b) Any person, firm, or corporation who violates any of the
52-22 provisions of this Act or any rule[, regulation,] or order adopted
52-23 under this Act or Subchapter A, Chapter 21, Insurance Code, is
52-24 [shall be] subject to:
52-25 (1) Sections 2A, 3A, 4A, 5A, and 6A, Article 21.01-2,
52-26 Insurance Code; and
52-27 (2) Chapter 82 [sanctions under Section 7, Article
52-28 1.10], Insurance Code.
52-29 Sec. 21. ADMINISTRATION OF ACT. The administration of this
52-30 Act shall be vested in the commissioner, [State Board of Insurance]
52-31 who may establish, and from time to time amend, reasonable rules
52-32 [and regulations] for the administration of this Act.
52-33 SECTION 7.08. Subsection (c), Section 3, Article 21.07-6,
52-34 Insurance Code, is amended to read as follows:
52-35 (c) The certificate of authority issued under this article
52-36 shall continue in effect until suspended, canceled, or revoked [in
52-37 accordance with Section 7, Article 1.10, of this code]. The
52-38 issuance, denial, suspension, cancellation, or revocation of a
52-39 certificate of authority to act as an administrator is subject to:
52-40 (1) Sections 2A, 3A, 4A, 5A, and 6A, Article 21.01-2,
52-41 of this code; and
52-42 (2) Chapter 82 of this code.
52-43 SECTION 7.09. Subdivision (2), Section 1, Article 21.21-9,
52-44 Insurance Code, as added by Chapter 596, Acts of the 75th
52-45 Legislature, Regular Session, 1997, is amended to read as follows:
52-46 (2) "Bank" means a depository institution as defined
52-47 by Article 21.07 of this code [national banking association
52-48 organized and existing under the National Bank Acts (12 U.S.C.
52-49 Section 21 et seq.), a state bank organized and existing under the
52-50 Texas Banking Act (Article 342-1.001 et seq., Vernon's Texas Civil
52-51 Statutes), a state savings bank organized and existing under the
52-52 Texas Savings Bank Act (Article 489e, Vernon's Texas Civil
52-53 Statutes), a bank branch, or a bank operating subsidiary, as
52-54 defined by state or federal law, that is located and doing business
52-55 in this state in a place with a population of 5,000 or less].
52-56 SECTION 7.10. Article 22.14, Insurance Code, is amended to
52-57 read as follows:
52-58 Art. 22.14. LICENSING OF AGENTS. All agents of stipulated
52-59 premium companies shall be licensed in accordance with the
52-60 provisions of Subchapter A [Art. 21.07] of Chapter 21 of this Code.
52-61 SECTION 7.11. Chapter 23, Insurance Code, is amended by
52-62 adding Article 23.23A to read as follows:
52-63 Art. 23.23A. REGULATION OF AGENTS. The licensing and
52-64 regulation of an agent authorized to solicit prepaid legal services
52-65 contracts for corporations complying with this chapter is subject
52-66 to Subchapter A, Chapter 21, of this code.
52-67 SECTION 7.12. Article 25.06, Insurance Code, is amended to
52-68 read as follows:
52-69 Art. 25.06. AGENTS' LICENSES. Subchapter A, Chapter 21, of
53-1 this code applies to the licensing and regulation of an agent
53-2 authorized to solicit job protection insurance for an insurance
53-3 carrier under this chapter [Any individual who solicits insurance,
53-4 as defined in Article 21.02 of this code, on behalf of an insurance
53-5 carrier operating exclusively under this chapter, must comply with
53-6 the requirements of Article 21.07 of this code, except that no
53-7 written examination is required for issuance of the license].
53-8 ARTICLE 8. REPEALER
53-9 SECTION 8.01. The following laws are repealed:
53-10 (1) Subsections (f), (g), and (h), Section 4, Article
53-11 1.14-2, Insurance Code;
53-12 (2) Section 15, Article 17.25, Insurance Code;
53-13 (3) Sections 1, 3, 4, and 6, Article 21.01-2,
53-14 Insurance Code;
53-15 (4) Article 21.02-1, Insurance Code;
53-16 (5) Article 21.05, Insurance Code;
53-17 (6) Article 21.06, Insurance Code;
53-18 (7) the following sections of Article 21.07, Insurance
53-19 Code:
53-20 (A) Sections 1B and 1C; and
53-21 (B) Sections 3, 3B, 4, 4A, 5, 6A, 7, 8, 9, 10,
53-22 10A, 11, 12, 13, 14, 15, 15A, 16, 17, 18, 19, and 20;
53-23 (8) Article 21.07A, Insurance Code;
53-24 (9) Chapter 213, Acts of the 54th Legislature, Regular
53-25 Session, 1955 (Article 21.07-1, Vernon's Texas Insurance Code);
53-26 (10) the following sections of the Managing General
53-27 Agents' Licensing Act (Article 21.07-3, Vernon's Texas Insurance
53-28 Code):
53-29 (A) Sections 4A, 4B, and 4C;
53-30 (B) Subsection (h), Section 5;
53-31 (C) Sections 6 and 6A;
53-32 (D) Sections 8, 9, and 10;
53-33 (E) Sections 12, 13, 14, and 15;
53-34 (F) Section 17; and
53-35 (G) Section 20;
53-36 (11) Subsection (d), Section 2, Article 21.11,
53-37 Insurance Code;
53-38 (12) Section 14, Article 21.14-1, Insurance Code;
53-39 (13) Article 21.15, Insurance Code;
53-40 (14) Article 21.15-2, Insurance Code;
53-41 (15) Article 21.15-3, Insurance Code;
53-42 (16) Article 21.15-4, Insurance Code;
53-43 (17) Article 21.15-7, Insurance Code;
53-44 (18) Section 10, Article 21.58A, Insurance Code; and
53-45 (19) Article 23.23, Insurance Code.
53-46 ARTICLE 9. GRANDFATHER CLAUSE; TRANSITION
53-47 SECTION 9.01. On the effective date of this Act, a person
53-48 who holds a license issued by the Texas Department of Insurance
53-49 that is in good standing is:
53-50 (1) considered licensed under the applicable licensing
53-51 law as amended by this Act;
53-52 (2) entitled to act as an agent under the new license
53-53 type, subject to this article; and
53-54 (3) subject to the provisions of the Insurance Code as
53-55 amended by this Act.
53-56 SECTION 9.02. (a) A person who, immediately before the
53-57 effective date of this Act, holds an agent license issued by the
53-58 Texas Department of Insurance and who obtained that license by
53-59 passing a written examination administered by any entity allowed by
53-60 state law, including an insurance carrier, company, or state
53-61 testing contractor, is entitled to the appropriate license as
53-62 provided by Subchapter A, Chapter 21, Insurance Code, as amended by
53-63 this Act, without further examination.
53-64 (b) A person who, immediately before the effective date of
53-65 this Act, holds an agent license issued by the Texas Department of
53-66 Insurance before January 1, 2001, and who obtained that license
53-67 without taking a written examination or who solicited insurance on
53-68 behalf of a stipulated premium company, farm mutual company, or
53-69 county mutual insurance company before January 1, 2001, is entitled
54-1 to the appropriate license as provided by Subchapter A, Chapter 21,
54-2 Insurance Code, as amended by this Act, but must pass the
54-3 appropriate license examination not later than the second
54-4 anniversary of the date of issuance to retain the license. The
54-5 license of a person who does not pass the license examination as
54-6 required by this subsection expires on the second anniversary of
54-7 the date of issuance and may not be renewed.
54-8 (c) A person who, immediately before the effective date of
54-9 this Act, holds an agent license issued by the Texas Department of
54-10 Insurance on or after January 1, 2001, and who obtained that
54-11 license without taking a written examination or who solicited
54-12 insurance on behalf of a stipulated premium company, farm mutual
54-13 company, or county mutual insurance company on or after January 1,
54-14 2001, but before the effective date of this Act, is entitled to the
54-15 appropriate license as provided by Subchapter A, Chapter 21,
54-16 Insurance Code, as amended by this Act, but must pass the
54-17 appropriate license examination not later than May 31, 2002, to
54-18 retain the license. The license of a person who does not pass the
54-19 license examination as required by this subsection expires on May
54-20 31, 2002.
54-21 (d) A person who has solicited insurance on behalf of a
54-22 stipulated premium company, farm mutual company, or county mutual
54-23 insurance company for at least 24 months before the effective date
54-24 of this Act is entitled to the appropriate license and any renewal
54-25 license as provided by Subchapter A, Chapter 21, Insurance Code, as
54-26 amended by this Act, without further examination.
54-27 (e) The continuing education requirements of Subchapter A,
54-28 Chapter 21, Insurance Code, as amended by this Act, do not apply to
54-29 a person who, immediately before the effective date of this Act,
54-30 has been licensed by the Texas Department of Insurance as a
54-31 resident insurance agent under Article 21.07-1, Insurance Code, the
54-32 Managing General Agents' Licensing Act (Article 21.07-3, Vernon's
54-33 Texas Insurance Code), or Article 21.14, Insurance Code, for at
54-34 least 20 years.
54-35 ARTICLE 10. EFFECTIVE DATE; TRANSITION
54-36 SECTION 10.01. (a) This Act takes effect September 1, 2001.
54-37 (b) Section 3, Article 21.01-1, Insurance Code, as amended
54-38 by this Act, applies to continuing education requirements for
54-39 insurance agents for a renewal of a license that occurs on or after
54-40 January 1, 2003.
54-41 * * * * *