By:  Lucio                                                        S.B. No. 1291
	(In the Senate - Filed March 9, 2005; March 21, 2005, read 
first time and referred to Committee on Business and Commerce; 
May 2, 2005, reported adversely, with favorable Committee 
Substitute by the following vote:  Yeas 7, Nays 0; May 2, 2005, 
sent to printer.)


COMMITTEE SUBSTITUTE FOR S.B. No. 1291                                   By:  Lucio


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.  Chapter 4051, Insurance Code, is amended by 
adding Subchapter I to read as follows:

SUBCHAPTER I.  TERMINATION OF CERTAIN CAPTIVE AGENTS
	Sec. 4051.401.  DEFINITION.  In this subchapter, "agent" 
means a captive agent who:
		(1)  primarily represents one insurer or the 
subsidiaries and affiliates of that insurer; and
		(2)  holds a general property and casualty agent 
license under this chapter.
	Sec. 4051.402.  TERMINATION FOR CAUSE.  (a)  An insurer may 
terminate a contractual agreement with an agent if:
		(1)  the agent breaches a fiduciary duty or trust;                     
		(2)  the agent commits gross and wilful misconduct;                    
		(3)  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
		(4)  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) is not a 
breach of the contractual agreement for purposes of this 
subchapter.
	Sec. 4051.403.  PROHIBITED GROUNDS FOR TERMINATION OF 
CONTRACTUAL AGREEMENT.  (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 based on 
the loss experience for the agent's customers and former customers 
if:
		(1)  the agent followed underwriting guidelines 
current at the time coverage for the customers was written;
		(2)  the insurer required the agent to submit the 
application for insurance for underwriting approval by the insurer;
		(3)  all material information on the application was 
fully completed;
		(4)  the information provided by the applicant for 
insurance was not altered or omitted on the application by the 
agent; and
		(5)  the policy was subject to approval by the insurer.                
	(b)  The termination by an insurer of a contractual agreement 
with an agent in violation of Subsection (a) is a wrongful or 
unjustified termination and a breach of the contractual agreement.
	SECTION 2.  This Act takes effect September 1, 2005.                           



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