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.