By:  Eiland                                                       H.B. No. 2947



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 initial 
placement 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 of insurance unless the agent has, prior to the 
customer's purchase of insurance:
			(1)  Obtained the customer's documented 
acknowledgment 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)  A person licensed as an agent who acts only as 
an intermediary between an insurer and the customer's agent, 
including a managing general agent;
			(2)  Reinsurance intermediaries or surplus lines 
agents placing reinsurance or surplus lines insurance; or
			(3)  An agent whose sole compensation for the 
placement 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)  "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.
			(3)  "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.
			(4)  "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.
			(5)  "Documented acknowledgement" means the 
customer's 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 directly or 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:
	§ 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.