79R13303 PB-F
By: Eiland H.B. No. 2941
Substitute the following for H.B. No. 2941:
By: Eiland C.S.H.B. No. 2941
A BILL TO BE ENTITLED
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, or any fee or amount collected by
or paid to the agent that has been established by the commissioner
and does not exceed the amount established by the commissioner.
(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 acknowledgement" means a customer's
dated acknowledgement, 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, including a fee described by Section 550.001, if
the fee exceeds an amount set by the commissioner, other than a
service fee described under Section 4005.003, 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
acknowledgement 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 this section, including rules authorizing additional
methods of demonstrating documented acknowledgement.
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. This Act takes effect September 1, 2005.