84R967 PMO-F

By: Sheets H.B. No. 686

A BILL TO BE ENTITLED

AN ACT

relating to insurance agents' ownership and use of certain information related to general property and casualty insurance policies; authorizing administrative penalties.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Chapter 4051, Insurance Code, is amended by adding Subchapter J to read as follows:

SUBCHAPTER J. AGENTS' OWNERSHIP INTERESTS

Sec. 4051.451. DEFINITIONS. In this subchapter:

(1) "Expiration" means policy information and records related to a property and casualty insurance policy or an application for a property and casualty insurance policy, including:

(A) the name and address of the applicant or insured;

(B) the location and description of any property referenced in the application or covered by the policy;

(C) the value, inception date, renewal date, and expiration date of the policy;

(D) the premium, policy limits, and description of the terms and coverage of the policy; and

(E) information or records that may be:

(i) necessary for placing insurance coverage, insurance products, or insurance services; or

(ii) used to solicit, sell, or negotiate the renewal or sale of insurance coverage, insurance products, or insurance services.

(2) "Person" means an individual, partnership, corporation, limited liability company, association, trust, or other legal entity, or insurer, including a government or governmental subdivision or agency.

(3) "Record" has the meaning assigned by Section 322.002, Business & Commerce Code.

Sec. 4051.452. APPLICABILITY OF SUBCHAPTER. This subchapter applies with respect to expirations concerning coverage of a risk located in this state, or an application for such coverage, issued by or placed with an insurer engaged in the business of property and casualty insurance in this state, including:

(1) a stock fire or casualty company;

(2) a mutual fire or casualty company;

(3) a Mexican casualty company;

(4) a Lloyd's plan;

(5) a reciprocal or interinsurance exchange;

(6) a county mutual insurance company;

(7) a farm mutual insurance company;

(8) a risk retention group;

(9) the Medical Liability Insurance Joint Underwriting Association under Chapter 2203;

(10) the Texas Windstorm Insurance Association under Chapter 2210;

(11) the Texas Automobile Insurance Plan Association under Chapter 2151; and

(12) an eligible surplus lines insurer.

Sec. 4051.453. EXCLUSIVE OWNERSHIP AND USE. Except as provided by Section 4051.454, a general property and casualty agent or surplus lines agent exclusively owns and has exclusive use of an expiration directly related to an insurance application submitted by or an insurance policy written through the agent for the purpose of soliciting, selling, or negotiating the renewal or sale of property and casualty insurance coverage, a property and casualty insurance product, or a property and casualty insurance service.

Sec. 4051.454. EXCEPTIONS; INSURER OR MANAGING GENERAL AGENT. Notwithstanding Section 4051.453, an insurer or the insurer's managing general agent may use an expiration:

(1) to solicit, sell, or negotiate the sale or renewal of property and casualty insurance coverage, a property and casualty insurance product, or a property and casualty insurance service with the written consent of the agent who owns the expiration;

(2) in the normal course of business, including underwriting, handling claims, and negotiating reinsurance; or

(3) on the request of the applicant or insured, to deliver, issue for delivery, or renew a policy other than the policy to which the expiration relates.

Sec. 4051.455. EXCEPTIONS; CAPTIVE AGENT. (a) This subchapter does not apply to an expiration related to an insurance policy placed or an application for an insurance policy received by a captive agent.

(b) In this section, "captive agent" means an agent who has agreed by contract to act for only one insurer and the insurer's affiliated companies, if any.

Sec. 4051.456. EXCEPTIONS; CERTAIN AGENTS. This subchapter does not apply to an expiration related to an insurance policy placed or an application for an insurance policy received by an agent who:

(1) is in default for nonpayment of premium or other money due under the agent's contract or other agreement with the insurer or group of affiliated insurance companies unless a bona fide, good faith dispute exists concerning the money due;

(2) has a suspended, revoked, surrendered, or terminated license; or

(3) has misappropriated, converted to the agent's own use, or illegally withheld money belonging to an insurer, an insured, or an applicant for insurance.

Sec. 4051.457. PRIVACY RIGHT OF APPLICANT OR INSURED NOT IMPAIRED. An applicant's or insured's right to privacy related to an expiration is not impaired or affected by an agent's ownership of the expiration.

Sec. 4051.458. COMPLAINT RESOLUTION PROGRAM. The department shall establish a program to resolve complaints of violations of this subchapter.

Sec. 4051.459. ENFORCEMENT; SANCTIONS AND PENALTIES AUTHORIZED. (a) The commissioner may impose sanctions as provided by Chapter 82 against a person who the commissioner finds violated this subchapter.

(b) The commissioner may use the cease and desist procedures authorized by Chapter 83 against a person who the commissioner finds violated this subchapter.

(c) In addition to a sanction authorized by this subchapter, the commissioner may impose an administrative penalty in accordance with Chapter 84 against a person who the commissioner finds violated this subchapter.

SECTION 2. This Act applies only to an expiration related to an insurance policy placed or an application for an insurance policy received by an agent on or after September 1, 2015. A policy placed or an application received before September 1, 2015, is governed by the law as it existed immediately before the effective date of this Act, and that law is continued in effect for that purpose.

SECTION 3. This Act takes effect September 1, 2015.