80R9603 PB-F
 
  By: Brimer S.B. No. 1263
 
 
 
   
 
 
A BILL TO BE ENTITLED
AN ACT
relating to regulation and licensing of certain insurance agents.
       BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
       ARTICLE 1. LICENSING OF CERTAIN INSURANCE AGENTS
       SECTION 1.01.  Chapter 4051, Insurance Code, is amended by
adding Subchapter I to read as follows:
SUBCHAPTER I. PERSONAL LINES PROPERTY AND CASUALTY AGENT
       Sec. 4051.401.  PERSONAL LINES PROPERTY AND CASUALTY
LICENSE; LICENSE REQUIRED.  A person is required to hold a personal
lines property and casualty license if the person acts as:
             (1)  an agent who writes property and casualty
insurance sold to individuals and families primarily for personal
or household use for an insurer authorized to engage in the business
of property and casualty insurance in this state; or
             (2)  a subagent of a person who holds a license as an
agent under this subchapter who solicits and binds insurance risks
for that agent.
       Sec. 4051.402.  AUTHORITY TO WRITE ADDITIONAL LINES.  (a)  A
person who holds a personal lines property and casualty license may
write the kind of insurance contracts described by:
             (1)  this subchapter;
             (2)  Subchapters C and E; and
             (3)  Chapter 4055.
       (b)  In addition to any of the insurance contracts described
by Subsection (a), a person who holds a personal lines property and
casualty license may write accident and health insurance contracts
for individuals and families for personal, family, or household
purposes for a property and casualty insurer authorized to sell  
those insurance products in this state.
       Sec. 4051.403.  PERSONAL LINES INCLUDED IN GENERAL PROPERTY
AND CASUALTY LICENSE.  Notwithstanding Section 4051.401, a person
who holds a general property and casualty license under Subchapter
B may write the kinds of insurance described by this subchapter.
       SECTION 1.02.  Chapter 4054, Insurance Code, is amended by
adding Subchapter G to read as follows:
SUBCHAPTER G.  LIFE AGENT
       Sec. 4054.301.  LICENSE REQUIRED.  (a)  Except as provided by
Subsection (b), a person is required to hold a life agent license if
the person does not hold a general life, accident, and health
license under Subchapter B and the person acts as:
             (1)  an agent who writes insurance coverage on human
lives, including endowment benefits and annuities, benefits in the
event of death or dismemberment by accident, and benefits for
disability income;
             (2)  an industrial life insurance agent for an insurer
that writes only weekly premium life insurance on a debit basis
under Chapter 1151;
             (3)  an agent who writes fixed or variable annuity
contracts or variable life contracts;
             (4)  an agent who writes for a stipulated premium
company only life insurance in excess of $15,000 on any one life; or
             (5)  an agent who writes any other kind of insurance as
required by the commissioner for the protection of the insurance
consumers of this state.
       (b)  A person who holds a limited license under Subchapter C
and who engages in the business of insurance only within the scope
of that license is not required to hold a life agent license.  A
person who holds a life agent license may write the insurance
described by that subchapter.
       (c)  A person who holds a funeral prearrangement life
insurance license under Subchapter D and who engages in the
business of insurance only within the scope of that license is not
required to hold a life agent license.  A person who holds a life
agent license may write the insurance described by that subchapter.
       (d)  A person who holds a license to write life insurance not
exceeding $15,000 under Subchapter E and who engages in the
business of insurance only within the scope of that license is not
required to hold a life agent license.  A person who holds a life
agent license may write the insurance described by that subchapter.
       (e)  This subchapter does not apply to a person who holds a
specialty license under Chapter 4055 and who engages in the
business of insurance only within the scope of the specialty
license.
       Sec. 4054.302.  AUTHORITY TO WRITE SPECIFIED COVERAGES.  A
person who holds a license under this subchapter may write only
insurance described by Sections 4054.301(a)-(d).
       Sec. 4054.303.  APPLICABILITY OF CERTAIN REQUIREMENTS.  
Except as otherwise provided by this code, the provisions of this
title that apply to the holder of a general life, accident, and
health license apply to the holder of a license issued under this
subchapter.
       ARTICLE 2. CONFORMING AMENDMENTS
       SECTION 2.01.  Section 523.152(a), Insurance Code, is
amended to read as follows:
       (a)  An originating agent shall share commissions with an
issuing agent as required by the market assistance program plan of
operation if the originating agent holds a license as:
             (1)  a general property and casualty agent or a
personal lines property and casualty agent; or
             (2)  a salaried representative for one or more insurers
whose plan of operation does not contemplate the use of general
property and casualty agents or personal lines property and
casualty agents.
       SECTION 2.02.  Section 549.053(b), Insurance Code, is
amended to read as follows:
       (b)  Subsection (a) does not:
             (1)  apply if the borrower provides the lender with
specific written authority permitting or directing the particular
use or disclosure of information before the use or disclosure
occurs; or
             (2)  prevent a lender who is a licensed general
property and casualty agent or a personal lines property and
casualty agent from selling insurance to a borrower.
       SECTION 2.03.  Section 549.055, Insurance Code, is amended
to read as follows:
       Sec. 549.055.  INSURANCE BINDER AS EVIDENCE OF INSURANCE.
(a) A lender that requires a borrower to secure insurance coverage
before the lender will provide a residential mortgage or commercial
real estate loan must accept an insurance binder as evidence of the
required insurance and may not require the borrower to provide an
original insurance policy instead of a binder if:
             (1)  the binder is issued by a licensed general
property and casualty agent or a personal lines property and
casualty agent who is appointed to represent the insurer whose name
appears on the binder and who is authorized to issue binders;
             (2)  the binder is accompanied by evidence of payment
of the required premium; and
             (3)  the binder will be replaced by an original
insurance policy for the required coverage on or before the 30th day
after the date the binder is issued.
       (b)  A [general] property and casualty agent who issues an
insurance binder under Subsection (a) must, on request, provide the
lender with appropriate evidence for purposes of Subsection (a)(1).
       SECTION 2.04.  Section 549.056(e), Insurance Code, is
amended to read as follows:
       (e)  Except as provided by this subsection, this subchapter
does not prevent a lender from requiring, at or before the time of
delivery to the lender of an insurance policy by a general property
and casualty agent or a personal lines property and casualty agent
or by the insurer, [of an insurance policy to the lender] a written
statement from the borrower designating the agent or insurer as the
borrower's agent for the delivery of the policy. A lender may not
require a statement described by this subsection when an agent or
insurer is providing a renewal of an existing expiring insurance
policy provided by the agent or insurer.
       SECTION 2.05.  Section 559.001(2), Insurance Code, is
amended to read as follows:
             (2)  "Agent" means a person licensed or required to be
licensed as a general property and casualty insurance agent or a
personal lines property and casualty agent under Chapter 4051.
       SECTION 2.06.  The heading to Section 651.008, Insurance
Code, is amended to read as follows:
       Sec. 651.008.  AUTHORITY OF CERTAIN [GENERAL] PROPERTY AND
CASUALTY AGENTS TO CHARGE INTEREST TO CERTAIN PERSONS.
       SECTION 2.07.  Section 651.008(a), Insurance Code, is
amended to read as follows:
       (a)  Notwithstanding any other law, a general property and
casualty agent or a personal lines property and casualty agent who
holds a license under Chapter 4051 may enter into a written
agreement with a purchaser of insurance from the agent that
provides for the payment of interest to the agent on any amount due
to the agent for the insurance purchased. The interest is computed
at a rate not to exceed the greater of:
             (1)  a rate allowed by Chapter 303, Finance Code; or
             (2)  the rate of one percent a month.
       SECTION 2.08.  Section 885.351, Insurance Code, is amended
to read as follows:
       Sec. 885.351.  AGENTS. (a)  A fraternal benefit society may
appoint an agent licensed by the department under Chapter 4054
[Article 21.07-1] to sell benefits listed under Section 885.301(a)
to society members.
       (b)  Except as provided by Section 885.352, a person may not
solicit or procure benefit contracts for a fraternal benefit
society unless the person is licensed as a general life, accident,
and health agent or a life agent under Chapter 4054 [Article
21.07-1].
       (c)  The licensing and regulation of agents for fraternal
benefit societies is subject to Title 13 [Subchapter A, Chapter
21,] and other laws regulating those agents.
       SECTION 2.09.  Section 981.203(a), Insurance Code, is
amended to read as follows:
       (a)  The department may issue a surplus lines license to an
applicant who the department determines complies with Subsection
(b) and is:
             (1)  an individual who:
                   (A)  has passed an examination under Chapter 4002
[Article 21.01-1] and department rules; and
                   (B)  holds a current license as:
                         (i)  a general property and casualty agent
or a personal lines property and casualty agent authorized under
Chapter 4051 [Article 21.14]; or
                         (ii)  a managing general agent; or
             (2)  a corporation, limited liability company, or
partnership that:
                   (A)  has at least one officer or director or at
least one active partner who has passed the required surplus lines
license examination;
                   (B)  holds a current license as:
                         (i)  a general property and casualty agent
or a personal lines property and casualty agent authorized under
Chapter 4051 [Article 21.14]; or
                         (ii)  a managing general agent; and
                   (C)  conducts insurance activities under this
chapter only through an individual licensed under this section.
       SECTION 2.10.  Section 981.220, Insurance Code, is amended
to read as follows:
       Sec. 981.220.  MANAGING GENERAL AGENTS; LIMITED AUTHORITY
OF CERTAIN AGENTS. [(a) A managing general agent is not required to
hold a local recording agent license to be eligible to receive a
surplus lines license.
       [(b)] A surplus lines license granted to a managing general
agent who is not also licensed under Chapter 4051 [Article 21.14] is
limited to the acceptance of business originating through a
licensed general property and casualty agent or a personal lines
property and casualty agent. The license does not authorize the
agent to engage in business directly with the insurance applicant.
       SECTION 2.11.  Section 1152.151, Insurance Code, is amended
to read as follows:
       Sec. 1152.151.  AGENT'S LICENSE REQUIRED. (a) A person may
not sell or offer for sale in this state a variable contract, or act
to negotiate, make, or consummate a variable contract for another,
unless the department has licensed the person under Chapter 4054
[Article 21.07-1] as a general life, accident, and health agent or a
life agent.
       (b)  The licensing and regulation of a person acting as a
variable contract agent is subject to the same provisions
applicable to the licensing and regulation of other agents under
Title 13 [Subchapter A, Chapter 21].
       SECTION 2.12.  Section 1505.005(b), Insurance Code, is
amended to read as follows:
       (b)  A person licensed as a general life, accident, and
health agent under Chapter 4054, [or] as a general property and
casualty agent under Chapter 4051 authorized to write health and
accident insurance under Section 4051.053, or as a personal lines
property and casualty agent authorized to write health and accident
insurance under Section 4051.402, [or 4054] may act in the licensed
capacity in connection with an insurance policy or a certificate of
insurance issued by an unincorporated association, trust, or other
organization formed under Subsection (a). The agent is not
required to notify the department that the person has been
appointed to act for that purpose.
       SECTION 2.13.  Section 2151.053, Insurance Code, is amended
to read as follows:
       Sec. 2151.053.  MEMBERSHIP OF GOVERNING COMMITTEE. The
governing committee is composed of 15 members selected as follows:
             (1)  eight members who represent the interests of
insurers, elected by the association members according to a method
the members determine;
             (2)  five public members, nominated by the office of
public insurance counsel and selected by the commissioner; and
             (3)  two members who are general or personal lines
property and casualty agents, as required by the plan of operation.
       SECTION 2.14.  Section 2210.102(a), Insurance Code, is
amended to read as follows:
       (a)  The board of directors is composed of the following nine
members:
             (1)  five representatives of different insurers who are
members of the association, elected by the members as provided by
the plan of operation;
             (2)  two public representatives who are nominated by
the office of public insurance counsel and who, as of the date of
the appointment:
                   (A)  reside in a catastrophe area; and
                   (B)  are policyholders of the association; and
             (3)  two [general] property and casualty agents, each
of whom must:
                   (A)  [who] have demonstrated experience in the
association; [and]
                   (B)  maintain the agent's [whose] principal
office [offices], as of the date of the appointment, [are located]
in a catastrophe area; and
                   (C)  hold a license under Chapter 4054 as a
general property and casualty agent or a personal lines property
and casualty agent.
       SECTION 2.15.  Section 2210.202(b), Insurance Code, is
amended to read as follows:
       (b)  A general property and casualty agent or a personal
lines property and casualty agent must submit an application for
the insurance coverage on behalf of the applicant on forms
prescribed by the association. The application must contain a
statement as to whether the applicant has submitted or will submit
the premium in full from personal funds or, if not, to whom a
balance is or will be due.
       SECTION 2.16.  Section 2210.204(d), Insurance Code, is
amended to read as follows:
       (d)  If an insured requests cancellation of the insurance
coverage, the association shall refund the unearned premium payable
to the insured and the holder of an unpaid balance. The [general]
property and casualty agent who submitted the application shall
refund the agent's commission on any unearned premium in the same
manner.
       SECTION 2.17.  Section 2211.154(b), Insurance Code, is
amended to read as follows:
       (b)  A general property and casualty agent or personal lines
property and casualty agent may make an application on behalf of the
applicant. The applicant or agent must submit the application on a
form prescribed by the association.
       SECTION 2.18.  Section 4001.205(a), Insurance Code, is
amended to read as follows:
       (a)  A general life, accident, and health agent, life
insurance agent, [or a] general property and casualty agent, or
personal lines property and casualty agent appointed by an insurer
authorized to engage in the business of insurance in this state
shall notify the department on a form prescribed by the department
if the agent appoints a subagent. The notice must be accompanied by
a nonrefundable fee in an amount set by the department.
       SECTION 2.19.  Section 4002.003(a), Insurance Code, is
amended to read as follows:
       (a)  The department may not require a person to take an
examination under this chapter if the person is:
             (1)  an applicant for the renewal of an unexpired
license issued by the department;
             (2)  an applicant whose license issued by the
department expired less than one year before the date of the
application, if the previous license was not denied, revoked, or
suspended by the commissioner;
             (3)  a partnership, corporation, or depository
institution;
             (4)  an applicant for a life, accident, and health
license who is designated as a chartered life underwriter (CLU);
             (5)  an applicant for a life and health insurance
counselor license who is designated as a chartered life underwriter
(CLU), chartered financial consultant (ChFC), or certified
financial planner (CFP);
             (6)  an applicant for a property and casualty license
who is designated as a chartered property casualty underwriter
(CPCU);
             (7)  an applicant for a specialty license issued under
Chapter 4055;
             (8)  a nonresident individual who is exempt from the
examination requirement under Chapter 4056; or
             (9)  an applicant for a general life, accident, and
health license or a life agent license who was authorized to solicit
or procure insurance on behalf of a fraternal benefit society on
September 1, 1999, if the applicant:
                   (A)  solicited or procured insurance on behalf of
the fraternal benefit society for at least 24 months preceding
September 1, 1999; and
                   (B)  does not, on or after September 1, 1999,
solicit or procure:
                         (i)  insurance for any other insurer or a
different fraternal benefit society;
                         (ii)  an insurance contract from anyone
other than a person who is eligible for membership in the fraternal
benefit society; or
                         (iii)  an interest-sensitive life insurance
contract that exceeds $35,000 of coverage on an individual life,
unless the applicant is designated as a "Fraternal Insurance
Counselor" at the time the contract is solicited or procured.
       SECTION 2.20.  Section 4004.053(a), Insurance Code, is
amended to read as follows:
       (a)  An individual who holds a general life, accident, and
health license, a life agent license, a life and health insurance
counselor license, [or] a general property and casualty license, or
a personal lines property and casualty license must complete 15
hours of continuing education annually. If the individual holds
more than one license for which continuing education is otherwise
required, the individual is not required to complete more than 15
continuing education hours annually.
       SECTION 2.21.  Section 4005.002(a), Insurance Code, is
amended to read as follows:
       (a)  In connection with a client's application for insurance
coverage or with [,] the issuance of an insurance policy to a
client, or on a client's request, a general property and casualty
agent or personal lines property and casualty agent may obtain:
             (1)  the motor vehicle record of a person insured under
or to be insured under an insurance policy; or
             (2)  a photograph of property insured under or to be
insured under an insurance policy.
       SECTION 2.22.  Section 4005.003, Insurance Code, is amended
to read as follows:
       Sec. 4005.003.  FEES. (a) A general property and casualty
agent or personal lines property and casualty agent may charge a
client a fee to reimburse the agent for costs the agent incurred in
obtaining a motor vehicle record or photograph of property
described under Section 4005.002. The fee may not exceed the actual
costs to the agent.
       (b)  For services provided to a client, a [general] property
and casualty agent described by Subsection (a) may charge a
reasonable fee, including a fee for:
             (1)  special delivery or postal charges;
             (2)  printing or reproduction costs;
             (3)  electronic mail costs;
             (4)  telephone transmission costs; and
             (5)  similar costs that the agent incurs on behalf of
the client.
       (c)  A [general] property and casualty agent described by
Subsection (a) may charge a client a fee under this section only if,
before the agent incurs an expense for the client, the agent:
             (1)  notifies the client of the agent's fee; and
             (2)  obtains the client's written consent for each fee
to be charged.
       SECTION 2.23.  Section 4051.001, Insurance Code, is amended
to read as follows:
       Sec. 4051.001.  APPLICABILITY OF CHAPTER. (a) This
subchapter and Subchapters B-E, [and] G, and I apply to each agent
of an insurer authorized to engage in the business of property and
casualty insurance in this state.
       (b)  This subchapter and Subchapters B-E, [and] G, and I
apply to each person who performs the acts of an agent, as described
by Section 4001.051, whether through an oral, written, electronic,
or other form of communication, by soliciting, negotiating,
procuring, or collecting a premium on an insurance contract offered
by any kind of insurer authorized to engage in the business of
property and casualty insurance in this state, including:
             (1)  a fidelity or surety company;
             (2)  a mutual insurance company, including a farm
mutual or a county mutual;
             (3)  a reciprocal or interinsurance exchange; and
             (4)  a Lloyd's plan.
       SECTION 2.24.  Section 4051.051, Insurance Code, is amended
to read as follows:
       Sec. 4051.051.  LICENSE REQUIRED. (a) A person is required
to hold a general property and casualty license if the person acts
as:
             (1)  an agent who writes property and casualty
insurance for an insurer authorized to engage in the business of
property and casualty insurance in this state;
             (2)  a subagent of a person who holds a license as an
agent under this chapter who solicits and binds insurance risks for
that agent; or
             (3)  an agent who writes any other kind of insurance as
required by the commissioner for the protection of the insurance
consumers of this state.
       (b)  Notwithstanding Subsection (a), a person is not
required to hold a general property and casualty license to engage
in an activity described by Subsection (a) if the person:
             (1)  holds a license under this chapter as a personal
lines property and casualty agent; and
             (2)  limits activities described by Subsection (a) to
those activities authorized under the scope of the person's
license.
       SECTION 2.25.  Section 4053.002, Insurance Code, is amended
to read as follows:
       Sec. 4053.002.  EXCEPTION. An agent licensed under
Subchapter E, [of] Chapter 981, Subchapters B-E or I, [of] Chapter
4051, or Chapter 4056 is not a managing general agent unless the
agent accepts 50 percent or more of the agent's total annual
business or does $500,000 or more of total annual business as
measured by premium volume, whichever amount is less, from
insurance policies produced and sold by other agents.
       SECTION 2.26.  Section 4053.101, Insurance Code, is amended
to read as follows:
       Sec. 4053.101.  GENERAL POWERS AND DUTIES. A managing
general agent acting for an insurer may:
             (1)  receive and pass on daily reports and monthly
accounts;
             (2)  receive and be responsible for agency balances;
             (3)  handle the adjustment of losses; or
             (4)  appoint or direct general property and casualty
agents and personal lines property and casualty agents in this
state.
       SECTION 2.27.  Section 4054.051, Insurance Code, is amended
to read as follows:
       Sec. 4054.051.  LICENSE REQUIRED. Except as provided by
Subchapter G, a [A] person is required to hold a general life,
accident, and health license if the person acts as:
             (1)  an agent who represents a health maintenance
organization;
             (2)  an industrial life insurance agent for an insurer
that writes only weekly premium life insurance on a debit basis
under Chapter 1151;
             (3)  an agent who writes life, accident, and health
insurance for a life insurance company;
             (4)  an agent who writes only accident and health
insurance;
             (5)  an agent who writes fixed or variable annuity
contracts or variable life contracts;
             (6)  an agent who writes for a stipulated premium
company:
                   (A)  only life insurance in excess of $15,000 on
any one life;
                   (B)  only accident and health insurance; or
                   (C)  both kinds of insurance described by
Paragraphs (A) and (B);
             (7)  an agent who writes life, accident, and health
insurance for any type of authorized life insurance company that is
domiciled in this state, including a legal reserve life insurance
company, and who represents the company:
                   (A)  in a foreign country or territory; and
                   (B)  on a United States military installation or
with United States military personnel;
             (8)  an agent who writes life, accident, and health
insurance for a fraternal benefit society except as provided by
Section 885.352; or
             (9)  an agent who writes any other kind of insurance as
required by the commissioner for the protection of the insurance
consumers of this state.
       SECTION 2.28.  Section 4054.052(b), Insurance Code, is
amended to read as follows:
       (b)  A person may not act as a combination life insurance
agent for a combination company unless the person holds a general
life, accident, and health license or a life agent license.
       SECTION 2.29.  Section 4055.013, Insurance Code, is amended
to read as follows:
       Sec. 4055.013.  ASSIGNMENT AND TRANSFER OF COMPENSATION BY
CERTAIN AGENTS. A person who is licensed as a general life,
accident, and health agent, life insurance agent, [or as a] general
property and casualty agent, or personal lines property and
casualty agent or who holds a substantially equivalent license
under this code, as determined by the commissioner, and who enters
into a contract with an insurer to act as the insurer's agent in
soliciting or writing policies or certificates of insurance that
are subject to this chapter may assign and transfer to the agent's
employer any commission, fee, or other compensation to be paid to
the agent under the agent's contract with the insurer only if the
sale of the insurance product occurs within the scope of the agent's
employment.
       SECTION 2.30.  Section 4101.001(a), Insurance Code, is
amended to read as follows:
       (a)  In this chapter, "adjuster" means an individual who:
             (1)  investigates or adjusts losses on behalf of an
insurer as an independent contractor or as an employee of:
                   (A)  an adjustment bureau;
                   (B)  an association;
                   (C)  a general property and casualty agent or
personal lines property and casualty agent;
                   (D)  an independent contractor;
                   (E)  an insurer; or
                   (F)  a managing general agent; or
             (2)  supervises the handling of claims.
       SECTION 2.31.  Section 4102.051(b), Insurance Code, is
amended to read as follows:
       (b)  A license is not required for:
             (1)  an attorney licensed to practice law in this state
who has complied with Section 4102.053(a)(6); or
             (2)  a person licensed as a general property and
casualty agent or personal lines property and casualty agent under
Chapter 4051 while acting for an insured concerning a loss under a
policy issued by that agent.
       ARTICLE 3. TRANSITION; EFFECTIVE DATE
       SECTION 3.01.  Not later than December 1, 2007, the
commissioner of insurance shall adopt rules as necessary to
implement:
             (1)  Subchapter I, Chapter 4051, Insurance Code, as
added by this Act; and
             (2)  Subchapter G, Chapter 4054, Insurance Code, as
added by this Act.
       SECTION 3.02.  Effective January 1, 2008, a person who holds
a license as a general property and casualty agent issued by the
Texas Department of Insurance that is in good standing is:
             (1)  entitled to receive from the department on request
a license to act as a personal lines property and casualty agent
under the new license type, without reexamination; and
             (2)  subject to the provisions of the Insurance Code as
amended by this Act.
       SECTION 3.03.  Effective January 1, 2008, a person who holds
a license as a general life, accident, and health agent issued by
the Texas Department of Insurance that is in good standing is:
             (1)  entitled to receive from the department on request
a license to act as a life agent under the new license type, without
reexamination; and
             (2)  subject to the provisions of the Insurance Code as
amended by this Act.
       SECTION 3.04.  Chapter 4004, Insurance Code, as amended by
this Act, applies to continuing education requirements for
insurance agents for a renewal of a license that occurs on or after
January 1, 2008.
       SECTION 3.05.  To the extent of any conflict, this Act
prevails over the Act of the 80th Legislature, Regular Session,
2007, relating to nonsubstantive additions to and corrections in
enacted codes (the general code update bill), and over the Act of
the 80th Legislature, Regular Session, 2007, relating to
nonsubstantive additions to and corrections in the Insurance Code
(update of the Insurance Code).
       SECTION 3.06.  This Act takes effect September 1, 2007.