78R1819 KCR-D
By: Seaman H.B. No. 392
A BILL TO BE ENTITLED
AN ACT
relating to the licensing of public insurance adjusters.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subchapter A, Chapter 21, Insurance Code, is
amended by adding Article 21.07-5 to read as follows:
Art. 21.07-5. LICENSING OF PUBLIC ADJUSTERS
PART I. GENERAL PROVISIONS
Sec. 1.01. DEFINITIONS. In this article, "public adjuster"
means an individual who:
(1) for compensation acts on behalf of an insured or
aids the insured in any manner in negotiating for or effecting the
settlement of a claim for loss or damage resulting from an accident
or other occurrence covered under an insurance policy that insures
against loss or damage to property; or
(2) advertises for or solicits employment as an
adjuster of a claim described by Subdivision (1) of this section.
Sec. 1.02. GENERAL EXEMPTIONS. (a) This article does not
apply to:
(1) an attorney who:
(A) adjusts insurance losses periodically and
incidentally to the practice of law; and
(B) does not represent that the attorney is an
adjuster;
(2) an adjuster licensed under Chapter 407, Acts of
the 63rd Legislature, Regular Session, 1973 (Article 21.07-4,
Vernon's Texas Insurance Code);
(3) a person employed only to furnish technical
assistance to a licensed public adjuster, including:
(A) an attorney;
(B) an engineer;
(C) an estimator;
(D) a handwriting expert;
(E) a photographer; and
(F) a private detective;
(4) an agent or general agent of an authorized insurer
who processes an undisputed or uncontested loss for the insurer
under a policy issued by the agent or general agent;
(5) a person who performs clerical duties and does not
negotiate with parties to disputed or contested claims;
(6) a person who handles claims arising under life,
accident, and health insurance policies;
(7) a person:
(A) who is employed principally as:
(i) a right-of-way agent; or
(ii) a right-of-way and claims agent;
(B) whose primary responsibility is the
acquisition of easements, leases, permits, or other real property
rights; and
(C) who handles only claims arising out of
operations under those easements, leases, permits, or other
contracts or contractual obligations; or
(8) an individual who is employed to investigate
suspected fraudulent insurance claims but who does not adjust
losses or determine claims payments.
(b) A nonresident public adjuster is not required to hold a
license under this chapter to:
(1) adjust a single loss in this state;
(2) adjust losses arising out of a catastrophe common
to all those losses; or
(3) act as a temporary substitute for a licensed
public adjuster.
Sec. 1.03. TEMPORARY EXEMPTION. An individual who is
undergoing training as a public adjuster under the supervision of a
licensed public adjuster may act as a public adjuster for a period
not to exceed 12 months without having a license issued under this
chapter if, at the beginning of the period, the individual has been
registered with the commissioner as a trainee.
Sec. 1.04. RECIPROCITY. The department may waive any
license requirement imposed under this article for an applicant who
holds a license from another state if the state has license
requirements substantially equivalent to the requirements for a
license issued under this article.
Sec. 1.05. RULES. The commissioner may adopt rules
necessary to implement this article and to meet the minimum
requirements of federal law, including regulations.
Sec. 1.06. ADVISORY BOARD. (a) An advisory board shall
make recommendations to the commissioner regarding:
(1) the scope, time, and conduct of written
examinations under Part II of this article;
(2) the times and locations in this state where the
examinations are held; and
(3) any other matter the commissioner submits to the
advisory board for a recommendation.
(b) The advisory board is composed of nine members appointed
by the commissioner as follows:
(1) the presiding officer of the unauthorized practice
of law committee of the State Bar of Texas;
(2) four members who represent the public; and
(3) four members with knowledge and experience in the
profession of public adjusting.
(c) A member who represents the public may not be:
(1) a public adjuster, adjuster, agent, or broker;
(2) an officer, director, or employee of:
(A) an adjuster;
(B) a public adjuster;
(C) an agent;
(D) a broker;
(E) an insurance agency;
(F) an insurer; or
(G) any other business entity regulated by the
department;
(3) a person required to register as a lobbyist under
Chapter 305, Government Code; or
(4) a person related to a person described by
Subdivision (1), (2), or (3) of this subsection within the second
degree by affinity or the second degree by consanguinity.
(d) A member of the advisory board serves without
compensation. If authorized by the commissioner, an advisory board
member is entitled to reimbursement for reasonable expenses
incurred in attending meetings of the advisory board.
PART II. LICENSE REQUIREMENTS
Sec. 2.01. LICENSE REQUIRED. Except as otherwise provided
by this article, a person may not act as or represent that the
person is a public adjuster in this state unless the person holds a
license under this article.
Sec. 2.02. APPLICATION FOR LICENSE. (a) An applicant for a
license under this article must submit to the department an
application on a form prescribed and provided by the department and
include as part of or in connection with the application any
information that the department reasonably requires, including
information about the applicant's:
(1) identity;
(2) personal history;
(3) experience; and
(4) business record.
(b) The application must be accompanied by:
(1) the fee required by Section 2.07 of this article;
and
(2) the bond required by Section 2.12 of this article.
Sec. 2.03. QUALIFICATIONS; ISSUANCE. (a) To qualify for a
license under this article, an applicant must:
(1) comply with this article;
(2) present evidence satisfactory to the department
that the applicant:
(A) is at least 18 years of age;
(B) resides in this state or a state or country
that permits a resident of this state to act as a public adjuster in
that state or country;
(C) has complied with all federal laws relating
to employment or the transaction of business in the United States,
if the applicant does not reside in the United States;
(D) is trustworthy; and
(E) has had experience, special education, or
training of sufficient duration and extent regarding acting as a
public adjuster to make the applicant competent to fulfill the
responsibilities of a public adjuster; and
(3) pass an examination conducted under this part or
present evidence that the applicant has been exempted under Section
2.06 of this article.
(b) The commissioner shall issue a license to an applicant
who meets the qualifications prescribed by this section.
Sec. 2.04. EXAMINATION REQUIRED. (a) To be eligible for a
license under this article, an applicant must pass a written
examination of the applicant's qualifications and competency.
(b) The department may supplement a written examination
under Subsection (a) of this section with an oral examination.
(c) The commissioner shall prescribe each examination under
this section. An examination must be of sufficient scope to
reasonably test the applicant's knowledge relative to the kinds of
insurance that may be dealt with under the license and of:
(1) the duties of a licensed public adjuster; and
(2) the laws of this state that apply to a licensed
public adjuster.
(d) The commissioner may require a reasonable waiting
period before an applicant who fails to pass an examination is
eligible to be retested on a similar examination.
Sec. 2.05. EXAMINATION PROCEDURES. (a) The department
shall prepare and make available to applicants instructions
specifying in general terms the subjects that may be covered in an
examination required under Section 2.04 of this article.
(b) An examination under this part shall be given at times
and locations in this state necessary to reasonably serve the
convenience of the department and applicants.
Sec. 2.06. EXEMPTION FROM EXAMINATION REQUIREMENT. (a) An
applicant for a license under this article is not required to pass
an examination under Section 2.04 of this article to receive the
license if the applicant:
(1) had been principally engaged in the public
adjustment of losses on September 1, 2002, and can provide
documentation of public adjustment activities conducted since that
date;
(2) is applying for a renewal license under this
article;
(3) is licensed as a public adjuster in another state
with which a reciprocal agreement has been entered into by the
commissioner; or
(4) has completed a course in acting as a public
adjuster as prescribed and approved by the commissioner and it is
certified to the commissioner on completion of the course that the
applicant has:
(A) completed the course; and
(B) passed an examination testing the
applicant's knowledge and qualification, as prescribed by the
commissioner.
(b) An applicant seeking to claim an exemption under
Subsection (a)(4) of this section is responsible for the scheduling
and administration of the examination required under that
subsection.
Sec. 2.07. FEES. (a) Before issuing or renewing a license
under this article, the department shall set and collect a
nonrefundable license fee in an amount not to exceed $50.
(b) An applicant for a renewal license whose license is
unexpired must remit the fee required by Subsection (a) of this
section biennially after the issuance of the original license. If
the applicant's license has been expired for not more than 90 days,
an applicant for a renewal license must remit, in addition to the
fee assessed under Subsection (a) of this section, a fee equal to
one-half of the original license fee.
(c) Before administering an examination under this part,
the department shall set and collect a nonrefundable examination
fee in an amount not to exceed $50.
(d) Before issuing a duplicate license requested by a public
adjuster, the department shall set and collect a duplicate license
fee.
(e) The department shall deposit a fee collected under this
article to the credit of the Texas Department of Insurance
operating account.
Sec. 2.08. LICENSE FORM. (a) The commissioner shall
prescribe the form of a license issued under this article.
(b) A license must contain:
(1) the public adjuster's name;
(2) the address of the public adjuster's place of
business; and
(3) the date of issuance and the date of expiration of
the license.
Sec. 2.09. CONTINUING EDUCATION: GENERAL REQUIREMENTS. (a)
To renew a license under this article, a licensed public adjuster
must participate in a continuing education program relating to
consumer protection. The program must include education relating
to consumer protection laws, including:
(1) Article 21.21 of this code;
(2) Chapter 122, Acts of the 57th Legislature, Regular
Session, 1961 (Article 21.21-1, Vernon's Texas Insurance Code);
(3) Article 21.21-2 of this code;
(4) Subchapter E, Chapter 17, Business & Commerce
Code; and
(5) any other similar laws specified by the
department.
(b) The department may certify continuing education
programs.
Sec. 2.10. CONTINUING EDUCATION: EXEMPTIONS AND WAIVERS.
(a) On written request of a licensed public adjuster and if the
department determines that the public adjuster is unable to comply
with continuing education requirements under this part because of
illness, medical disability, or another extenuating circumstance
beyond the control of the public adjuster, the department may:
(1) extend the time for the public adjuster to comply
with the continuing education requirements; or
(2) exempt the public adjuster from any of the
requirements for a licensing period.
(b) The commissioner by rule shall establish the criteria
for an extension or exemption under Subsection (a) of this section.
(c) The department may waive any continuing education
requirement imposed under this article for a nonresident public
adjuster who holds a license from another state if the state has
continuing education requirements substantially equivalent to the
requirements for a license issued under this article.
Sec. 2.11. EXPIRATION OF LICENSE; RENEWAL. Expiration and
renewal of a license issued under this article are governed by
Article 21.01–2 of this code.
Sec. 2.12. BOND REQUIREMENT. (a) Each applicant for an
original or renewal license under this article shall file with the
department proof of a fidelity bond, in an amount and form to be set
by the commissioner, executed by the applicant and by approved
corporate sureties.
(b) The commissioner shall set the amount of the bond
required by this section at an amount, not to exceed $10,000, that
adequately protects the interests of the applicant's clients and
prospective clients.
(c) The bond required by this section may be used only for
the benefit of any person injured by a wilful, malicious, or
wrongful act by the applicant in connection with the transaction of
the applicant's business as a public adjuster.
PART III. SPECIAL LICENSES
Sec. 3.01. EMERGENCY LICENSE. (a) If a catastrophe or an
emergency arises out of a disaster, act of God, riot, civil
commotion, conflagration, or other similar occurrence, the
commissioner shall, on application, issue an emergency license to a
person if the application is certified to the commissioner not
later than the fifth day after the date on which the person begins
work as a public adjuster by a person who holds a license under this
chapter.
(b) The person who certifies an application under
Subsection (a) of this section is responsible for the practices of
the emergency license holder whom the person certifies.
(c) The commissioner may, after notice and hearing, revoke
an emergency license on grounds specified by Section 5.01 of this
article.
(d) An emergency license is effective for a period not to
exceed 90 days. The commissioner may extend the term of the
emergency license for an additional period of 90 days.
(e) The commissioner shall establish a fee for an emergency
license in an amount not to exceed $20. A person issued an
emergency license shall remit the fee to the department not later
than the 30th day after the date on which the department issues the
license.
(f) The commissioner may issue an emergency license to an
applicant who meets the requirements of Subsection (a) of this
section regardless of whether the applicant is:
(1) a resident of this state; or
(2) an otherwise licensed adjuster or public adjuster.
Sec. 3.02. LIMITED LICENSE. (a) If considered necessary by
the commissioner, the department may issue a limited license to an
applicant in the manner otherwise provided for the issuance of a
license under this article.
(b) The license shall specifically limit the kinds of
insurance claims that may be handled by the person.
(c) The person may not adjust claims of a different kind
than that for which the public adjuster is specifically licensed.
PART IV. POWERS AND DUTIES OF PUBLIC ADJUSTER
Sec. 4.01. PLACE OF BUSINESS. (a) A licensed public
adjuster shall maintain a place of business that is:
(1) located at the place at which the public adjuster
principally conducts transactions under the license; and
(2) accessible to the public.
(b) A licensed public adjuster shall promptly notify the
commissioner if the public adjuster changes the location of the
public adjuster's place of business.
PART V. ENFORCEMENT
Sec. 5.01. GROUNDS FOR DISCIPLINARY ACTION. (a) The
commissioner may discipline a public adjuster or deny an
application for a license under this article in accordance with
Article 21.01–2 of this code.
(b) Department rules may specify grounds for discipline
that are comparable to grounds for discipline of other license
holders under this chapter.
Sec. 5.02. REINSTATEMENT OR REISSUANCE OF LICENSE. The
commissioner may not reinstate or reissue the license of a license
holder or former license holder whose license has been suspended,
revoked, or refused renewal until the commissioner determines that
the cause for a suspension, revocation, or refusal of a license
issued under this article no longer exists.
Sec. 5.03. EFFECT OF VIOLATION. The department may impose
sanctions, issue emergency cease and desist orders, and impose
administrative penalties as authorized by Chapters 82, 83, and 84
of this code, as appropriate, for a violation of this article.
SECTION 2. Section 3, Article 21.01, Insurance Code, is
amended to read as follows:
Sec. 3. APPLICATION. Except as otherwise provided by this
code, this subchapter applies to each person licensed in accordance
with:
(1) Subchapter E, Chapter 981 [Section 4, Article
1.14–2], of this code;
(2) Subchapter D, Chapter 1152 [Section 7, Article
3.75], of this code;
(3) Subsection (c), Article 5.13-1, of this code;
(4) Subchapter H, Chapter 885, [Article 10.37-3] of
this code;
(5) Section 911.251 [Article 16.24A] of this code;
(6) Section 912.251 [9, Article 17.25,] of this code;
(7) Article 21.07 of this code;
(8) Article 21.07-1 of this code;
(9) Chapter 29, Acts of the 54th Legislature, Regular
Session, 1955 (Article 21.07-2, Vernon's Texas Insurance Code);
(10) the Managing General Agents' Licensing Act
(Article 21.07-3, Vernon's Texas Insurance Code);
(11) Chapter 407, Acts of the 63rd Legislature,
Regular Session, 1973 (Article 21.07-4, Vernon's Texas Insurance
Code);
(12) Article 21.07-6 of this code;
(13) Article 21.07-7 of this code;
(14) Article 21.09 of this code;
(15) Article 21.11 of this code;
(16) Article 21.14 of this code;
(17) Article 21.14-1 of this code;
(18) Article 21.14-2 of this code; [or]
(19) Article 23.23A of this code; or
(20) Article 21.07-5 of this code.
SECTION 3. (a) The commissioner of insurance shall appoint
the members of the advisory board created under Section 1.06,
Article 21.07-5, Insurance Code, as added by this Act, not later
than October 31, 2003.
(b) The commissioner of insurance shall adopt the
examination required by Section 2.04, Article 21.07-5, Insurance
Code, as added by this Act, not later than March 1, 2004. Pending
the adoption of the examination, the commissioner may issue a
temporary license to practice as a public adjuster to an individual
who satisfies all the requirements for issuance of the license
except the examination requirement. A temporary license issued
under this subsection expires June 1, 2004, and may not be renewed.
SECTION 4. (a) Except as provided by Subsection (b) of this
section, this Act takes effect September 1, 2003.
(b) Sections 2.01 and 5.03, Article 21.07-5, Insurance
Code, as added by this Act, take effect January 1, 2004.