H.B. No. 2941
AN ACT
relating to compensation of insurance agents.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subchapter A, Chapter 4005, Insurance Code, is
amended by adding Section 4005.004 to read as follows:
Sec. 4005.004. DISCLOSURE OF COMPENSATION. (a) In this
section:
(1) "Affiliate" has the meaning described by Section
823.003(a).
(2) "Agent" means a person licensed under Chapter
4051, 4053, 4054, or 4056.
(3) "Compensation from an insurer or other third
party" includes payments, commissions, fees, awards, overrides,
bonuses, contingent commissions, loans, stock options, gifts,
prizes, or any other form of valuable consideration, whether or not
payable under a written contract or agreement.
(4) "Compensation from a customer" does not include a
fee described by Section 4005.003, an application fee, or an
inspection fee.
(5) "Customer" means the person signing the
application for insurance or the authorized representative of the
insured actually negotiating the placement of an insurance product
with the agent. A person is not to be considered a "customer" of an
agent for purposes of this section solely because the person is a
participant or beneficiary:
(A) of an employee benefit plan; or
(B) of, or otherwise covered by, a group or
blanket insurance policy or group annuity contract sold, solicited,
or negotiated by an agent or the agent's affiliate.
(6) "Documented acknowledgment" means a customer's
dated acknowledgment, obtained before the customer's purchase of an
insurance product, as demonstrated by the customer's written or
electronic signature or recorded voice, or by other additional
methods that the commissioner may authorize by rule.
(b) If an agent, or any affiliate of an agent, receives
compensation from a customer for the placement or renewal of an
insurance product, other than a service fee described under Section
4005.003, an application fee, or an inspection fee, the agent or the
affiliate may not accept or receive any compensation from an
insurer or other third party for that placement or renewal unless
the agent has, before the customer's purchase of insurance:
(1) obtained the customer's documented acknowledgment
that the compensation will be received by the agent or affiliate;
and
(2) provided a description of the method and factors
used to compute the compensation to be received from the insurer or
other third party for that placement.
(c) This section does not apply to:
(1) a licensed agent who acts only as an intermediary
between an insurer and the customer's agent, including a managing
general agent;
(2) a reinsurance intermediary or surplus lines agent
placing reinsurance or surplus lines insurance; or
(3) an agent whose sole compensation for the placement
or servicing of an insurance product is derived from commissions,
salaries, and other remuneration paid by the insurer.
(d) An agent may satisfy any requirements imposed by this
section through an affiliate.
(e) The commissioner may adopt rules as necessary to
implement the disclosure and acknowledgment of disclosure
requirements under this section.
SECTION 2. Section 4005.054, Insurance Code, is amended to
read as follows:
Sec. 4005.054. RECEIVING ADDITIONAL FEE PROHIBITED. A
person who holds a license under this code and receives a commission
or other consideration for services as an agent may not receive an
additional fee for those services provided to the same client
except for a fee:
(1) described by Section 550.001 or 4005.003; and
(2) for which disclosure is made as required under
Section 4005.003 or Section 4005.004.
SECTION 3. (a) The Texas Department of Insurance shall
conduct a study regarding whether the commissions paid to insurance
agents for sales of insurance policies for coverage under the Texas
Health Insurance Risk Pool established under Chapter 1506,
Insurance Code, are sufficient to ensure that consumers who are
eligible for coverage under that pool are made aware of the
existence of the pool and the benefits of purchasing insurance
policies issued by the pool.
(b) The Texas Department of Insurance shall report the
results of the study to the legislature not later than December 1,
2006.
SECTION 4. This Act takes effect September 1, 2005.
______________________________ ______________________________
President of the Senate Speaker of the House
I certify that H.B. No. 2941 was passed by the House on May
12, 2005, by a non-record vote; and that the House concurred in
Senate amendments to H.B. No. 2941 on May 27, 2005, by a non-record
vote.
______________________________
Chief Clerk of the House
I certify that H.B. No. 2941 was passed by the Senate, with
amendments, on May 25, 2005, by the following vote: Yeas 31, Nays
0.
______________________________
Secretary of the Senate
APPROVED: __________________
Date
__________________
Governor