By:  Madla                                             S.B. No. 856
         2001S0577/1                            
                                A BILL TO BE ENTITLED
 1-1                                   AN ACT
 1-2     relating to imposing a requirement that certain insurance agents
 1-3     obtain limited personal lines license.
 1-4           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-5           SECTION 1.  Subchapter A, Chapter 21, Insurance Code, is
 1-6     amended by adding Article 21.07-5 to read as follows:
 1-7                Art. 21.07-5.  LIMITED PERSONAL LINES LICENSE
 1-8           Sec. 1.  DEFINITIONS.  (a)  In this article:
 1-9                 (1)  "Agent" means a home office salaried employee or a
1-10     customer service representative.
1-11                 (2)  "Customer service representative" means a person
1-12     who is employed on a salaried basis to perform assigned duties only
1-13     in the office of a licensed insurance carrier, including explaining
1-14     insurance coverage, describing an insurance product, quoting
1-15     insurance premium rates, and issuing insurance binders.
1-16                 (3)  "Home office salaried employee" means a home
1-17     office salaried employee of a licensed insurance carrier who
1-18     solicits or receives an application for the sale of insurance
1-19     through an oral, written, or electronic communication.
1-20           (b)  The term "agent," as defined in this section, does not
1-21     include a person licensed under another article of this code to
1-22     write insurance.
1-23           Sec. 2.  LICENSE REQUIRED.  A limited personal lines license
1-24     is required for an agent writing:
1-25                 (1)  personal automobile insurance;
 2-1                 (2)  residential property insurance, including farm,
 2-2     ranch, residential earthquake, and flood insurance;
 2-3                 (3)  personal watercraft insurance;
 2-4                 (4)  personal inland marine insurance;
 2-5                 (5)  personal liability insurance, including farm and
 2-6     ranch liability insurance; and
 2-7                 (6)  umbrella or excess liability insurance providing
 2-8     coverage when written over one or more underlying personal
 2-9     automobile or residential property insurance policies.
2-10           Sec. 3.  EXAMINATION.  (a)  Each applicant for a license
2-11     under this article must submit to a limited written licensing
2-12     examination and must pass the examination to the satisfaction of
2-13     the department.
2-14           (b)  The commissioner shall prescribe the limited written
2-15     licensing examination required under Subsection (a) of this
2-16     section.  The examination shall be administered according to rules
2-17     adopted by the commissioner and shall determine the applicant's
2-18     competence and understanding of:
2-19                 (1)  the basic principles of insurance contracts;
2-20                 (2)  the basic laws of this state regulating the
2-21     business of insurance; and
2-22                 (3)  the ethical obligations and duties of an agent.
2-23           Sec. 4.  DISCIPLINE OF LICENSE HOLDERS.  A limited personal
2-24     lines license shall be suspended and the license holder may be
2-25     disciplined for any act for which an agent may be disciplined under
2-26     Article 21.01-2 of this section.
 3-1           Sec. 5.  CONTINUING EDUCATION.  (a)  An individual who holds
 3-2     a limited personal lines license shall complete 10 hours of
 3-3     continuing education annually.  All required continuing education
 3-4     hours must be completed before the expiration date of the
 3-5     individual's license.
 3-6           (b)  An individual who has continuously held a license under
 3-7     this article for at least 20 years is exempt from the continuing
 3-8     education requirements of this section.  The commissioner by rule
 3-9     may provide for other reasonable exemptions.
3-10           (c)  On a timely written request of an agent, the department
3-11     may extend the time for the agent to comply with the continuing
3-12     education requirements of this section or may exempt the agent from
3-13     some or all of the requirements for a licensing period if the
3-14     department finds that the agent is unable to comply with the
3-15     requirements because of illness, medical disability, or another
3-16     extenuating circumstance beyond the control of the agent.  The
3-17     commissioner by rule shall prescribe the criteria for an exemption
3-18     or extension under this subsection.
3-19           (d)  The department shall certify continuing education
3-20     programs for agents.  Only a program that satisfies the criteria
3-21     established by rule by the commissioner may receive certification.
3-22           Sec. 6.  RULES.  The commissioner may adopt rules as
3-23     necessary to implement this article.
3-24           SECTION 2.  Section 20, Article 21.14, Insurance Code, is
3-25     amended to read as follows:
3-26           Sec. 20.  LIFE, HEALTH AND ACCIDENT INSURANCE, INAPPLICABLE
 4-1     TO; OTHER EXCEPTIONS.  The provisions of this article do not apply
 4-2     to the Life, Health and Accident Insurance business or the Life,
 4-3     Health and Accident Department of the companies engaged therein,
 4-4     nor shall it apply to any of the following, namely:
 4-5           (a)  Any actual full-time home office salaried employee of
 4-6     any insurance carrier licensed to do business in Texas[, other than
 4-7     an employee who solicits or receives an application for the sale of
 4-8     insurance through an oral, written, or electronic communication in
 4-9     accordance with Section 20A of this article].
4-10           (b)  Any actual attorney in fact and its actual traveling
4-11     salaried representative as to business transacted through such
4-12     attorney in fact or salaried representative of any reciprocal
4-13     exchange or interinsurance exchange admitted to do business in
4-14     Texas.
4-15           (c)  Any adjuster of losses, and/or inspector of risks, for
4-16     an insurance carrier licensed to do business in Texas.
4-17           (d)  Any General Agent or State Agent or Branch Manager
4-18     representing an admitted and licensed insurance company or carrier,
4-19     or insurance companies or carriers, in a supervisory capacity.
4-20           (e)  The actual attorney in fact for any Lloyds.
4-21           (f)  All incorporated or unincorporated mutual insurance
4-22     companies, their agents and representatives, organized and/or
4-23     operating under and by authority of Chapters 16 and 17 of this
4-24     code.
4-25           (g)  Nothing in this entire article shall ever be construed
4-26     to apply to any member, agent, employee, or representative of any
 5-1     county or farm mutual insurance company as exempted under Chapters
 5-2     16 and 17 of this code.
 5-3           (h)  Nothing in this article shall apply to the group motor
 5-4     vehicle insurance business or the group motor vehicle department of
 5-5     the companies engaged in that business.
 5-6           (i)  Salaried employees not involved in solicitation or
 5-7     negotiation of insurance in the office of a local recording agent
 5-8     who devote their full time to clerical and administrative services,
 5-9     including the incidental taking of information from customers and
5-10     receipt of premiums in the office of a local recording agent,
5-11     provided the employees do not receive any commissions and their
5-12     compensation is not varied by the volume of premiums taken and
5-13     received.
5-14           SECTION 3.  Section 20A, Article 21.14, Insurance Code, is
5-15     repealed.
5-16           SECTION 4.  (a)  A person who, immediately before the
5-17     effective date of this Act, was registered with the commissioner of
5-18     insurance as a full-time home office employee under Section 20A,
5-19     Article 21.14, Insurance Code, is entitled to a limited personal
5-20     lines license as provided by Article 21.07-5, Insurance Code, as
5-21     added by this Act.
5-22           (b)  A license issued under this section expires on the
5-23     second anniversary of the date of issuance and may not be renewed
5-24     unless the license holder passes the limited written licensing
5-25     examination required under Section 3, Article 21.07-5, Insurance
5-26     Code, as added by this Act, before the second anniversary of the
 6-1     date the license was issued.
 6-2           SECTION 5.  (a)  This Act takes effect September 1, 2001.
 6-3           (b)  Section 5, Article 21.07-5, Insurance Code, as added by
 6-4     this Act, applies to continuing education requirements for a
 6-5     renewal of a license that occurs on or after January 1, 2003.