78R3958 PB-D
By: Turner H.B. No. 2616
A BILL TO BE ENTITLED
AN ACT
relating to the termination of agreements with certain insurance
agents.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subchapter A, Chapter 21, Insurance Code, is
amended by adding Article 21.14A to read as follows:
Art. 21.14A. PROCEDURES ON TERMINATION OF PROPERTY AND
CASUALTY AGENT
Sec. 1. DEFINITION. In this article, "agent" means a
captive agent who holds a general property and casualty agent
license as that term is described by Section 2, Article 21.14, of
this code.
Sec. 2. TERMINATION FOR CAUSE. (a) An insurer may
terminate a contractual agreement with an agent if:
(1) the agent is insolvent;
(2) the agent breaches a fiduciary duty or trust;
(3) the agent fails to perform duties in accordance
with the contractual agreement;
(4) the agent commits gross and wilful misconduct;
(5) the agent fails to pay to the insurer money owed to
the insurer after receipt by the agent of a written demand for the
money from the insurer; or
(6) the department revokes the agent's license.
(b) The termination by an insurer of a contractual agreement
with an agent for a cause described by Subsection (a) of this
section is not a wrongful or unjustified termination for purposes
of this article.
Sec. 3. PROHIBITED GROUNDS FOR TERMINATION. (a) An insurer
may not cancel or terminate a contractual agreement with an agent or
reduce or restrict an agent's authority to conduct business under
the contract:
(1) based on the loss experience for the agent's
customers and former customers if:
(A) the agent followed underwriting guidelines
current at the time coverage for the customers was written;
(B) the insurer required the agent to submit the
application for insurance for underwriting approval by the insurer;
(C) all material information on the application
was fully completed;
(D) the information provided by the applicant for
insurance was not altered or omitted on the application by the
agent; and
(E) the policy was subject to approval by the
insurer; or
(2) because of the predominant geographic location of
the agent's customers.
(b) An insurer may not, in order to avoid the prohibition
provided by Subsection (a) of this section, commit any of the
following acts in a manner designed to impact a selected agent or
the business produced by that agent:
(1) condition the acceptance of any type of property
or casualty insurance on the sale of other types of insurance:
(A) to the same customers of the agent; or
(B) as a percentage of the agent's total sales;
(2) restrict or limit the number of policies an agent
may sell unless all agents of that insurer are subject to analogous
restrictions or limitations;
(3) restrict or limit the types of insurance coverage
or amounts of insurance an agent may sell unless all agents of that
insurer are subject to analogous restrictions or limitations; or
(4) reduce an agent's level of compensation or
commission unless all agents of that insurer are subject to similar
reductions.
(c) The termination by an insurer of a contractual agreement
with an agent in violation of Subsection (a) of this section may be
a wrongful or unjustified termination for purposes of this article.
SECTION 2. This Act takes effect September 1, 2003.