By: Eiland H.B. No. 2941
A BILL TO BE ENTITLED
AN ACT
relating to the compensation of insurance agents.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Chapter 4005, Insurance Code, as effective April
1, 2005, is amended by adding Section 4005.004 to read as follows:
Section 4005.004. Compensation Disclosure.
(a) When an agent, or any affiliate of such agent, receives
any compensation from the customer for the placement or renewal of
insurance or services the agent agrees to perform in connection
with the placement, renewal or servicing of insurance, including a
fee described by Section 550.001, neither that agent nor the
affiliate shall accept or receive any compensation from an insurer
or other third party for that placement, renewal or servicing of
insurance unless the agent has, prior to the customer's purchase of
insurance:
(1) Obtained the customer's documented
acknowledgement that such compensation will be received by the
agent or affiliate; and
(2) Provided a description of the method and factors
utilized for calculating the compensation to be received from the
insurer or other third party for that placement.
(b) This section shall not apply to:
(1) The placement or servicing of reinsurance; or
(2) An agent whose sole compensation for the placement
or servicing of insurance is derived from commissions, salaries,
and other remuneration from the insurer.
(c) For purposes of this section:
(1) "Affiliate" means a person that controls, is
controlled by, or is under common control with the agent.
(2) "Agent" means a person licensed under Chapter 981,
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 pursuant to a written agreement.
(4) "Compensation from the customer" shall not include
any fee as provided under 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 insurance with the
agent. A person shall not be considered a "customer" for purposes
of this section if 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 the agent or affiliate.
(6) "Documented acknowledgement" means the customer's
dated acknowledgement obtained prior to the customer's purchase of
insurance as demonstrated by the customer's written or electronic
signature, recorded voice, or other additional methods that the
commissioner may authorize by rule.
(d) An agent may satisfy any requirements imposed by this
section through an affiliate.
(e) The commissioner may adopt rules to implement this
section, including authorizing additional methods of demonstrating
documented acknowledgement.
SECTION 2. Chapter 4005, Insurance Code, as effective April
1, 2005, is amended by amending Section 4005.054 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 described by Section 550.001 or 4005.003 and for
which disclosure is made as required under Section 4005.003 or
4005.004.
SECTION 3. This Act takes effect September 1, 2005.