84R5183 MEW-F
 
  By: Smithee, Frullo, Sheets H.B. No. 2145
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to provisional authority for certain individual insurance
  license applicants to act as insurance agents; authorizing a fee;
  requiring an occupational provisional permit.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Chapter 4001, Insurance Code, is amended by
  adding Subchapter H to read as follows:
  SUBCHAPTER H. PROVISIONAL PERMIT
         Sec. 4001.351.  APPLICABILITY. This subchapter applies only
  to an applicant for a license as an agent under:
               (1)  Subchapters B and E, Chapter 4051; and
               (2)  Subchapters B, D, and E, Chapter 4054.
         Sec. 4001.352.  AUTHORITY TO ISSUE PROVISIONAL PERMIT. The
  department may, in conjunction with a license application under
  Section 4001.102, issue a provisional permit to an applicant who is
  being considered for appointment as an agent by another agent, an
  insurer, or a health maintenance organization.
         Sec. 4001.353.  APPLICATION FOR AND ISSUANCE OF PROVISIONAL
  PERMIT. (a) The department may issue a provisional permit under
  this subchapter on receipt of:
               (1)  a written application for a provisional permit;
               (2)  a properly completed license application,
  nonrefundable fee, and each other item required for a license under
  this chapter and Subchapters B or E, Chapter 4051, or Subchapters B,
  D, or E, Chapter 4054, as applicable;
               (3)  the nonrefundable fee in an amount set by the
  department for the issuance of the provisional permit; and
               (4)  a certificate signed by the appointing agent,
  insurer, or health maintenance organization stating that:
                     (A)  the applicant completed the training, if any,
  and passed the examination required for the issuance of the license
  for which the application is submitted;
                     (B)  the appointing agent, insurer, or health
  maintenance organization completed a background check on the
  applicant that shows that the applicant has not been convicted of:
                           (i)  a felony; or 
                           (ii)  an act that requires the applicant to
  receive written consent under 18 U.S.C. Section 1033 to engage in
  the business of insurance;
                     (C)  the applicant has not responded
  affirmatively to any question on the license application that
  indicates the applicant has a criminal conviction or has been
  involved in an administrative action that may disqualify the
  applicant from receiving a license; and
                     (D)  the appointing agent, insurer, or health
  maintenance organization will supervise the work of the applicant.
         (b)  An applicant is not qualified to receive a provisional
  permit if the applicant has not taken the examination required for
  the issuance of the permanent license for which the applicant
  applied under Section 4001.102.
         Sec. 4001.354.  AUTHORITY TO ACT AS AGENT PENDING RECEIPT OF
  PROVISIONAL PERMIT. An applicant may proceed to act as an agent if:
               (1)  a provisional permit is not received from the
  department before the eighth day after the date the application,
  nonrefundable fee, and other items required under Section
  4001.353(a) are delivered or mailed to the department; and
               (2)  the applicant or appointing agent, insurer, or
  health maintenance organization has not been notified that the
  application for the permit is incomplete or is or may be denied.
         Sec. 4001.355.  TERM OF PROVISIONAL PERMIT. (a) Except as
  provided by Subsection (b), a provisional permit expires on the
  earlier of:
               (1)  the 90th day after the date the permit is issued;
  or
               (2)  the date a license is issued or the license
  application is denied.
         (b)  If the license, or a notice that the license is denied,
  is not received from the department on or before the 90th day after
  the date the application, nonrefundable fee, and other items
  required under Section 4001.353(a) are delivered or mailed to the
  department, the authority of the applicant to act as an agent under
  this subchapter automatically extends until the earlier of the date
  the license is issued or the license application is denied or the
  90th day after the expiration of the 90-day period under Subsection
  (a).
         Sec. 4001.356.  NOTIFICATION REGARDING LICENSE. (a) The
  department may notify the applicant or appointing agent, insurer,
  or health maintenance organization that the license application is
  incomplete or is or may be denied at any time before the issuance or
  denial of a license. 
         (b)  An applicant who receives a notice under Subsection (a)
  shall immediately cease acting as an agent under this subchapter.  
  An appointing agent, insurer, or health maintenance organization
  that receives notice under Subsection (a) shall immediately notify
  the applicant of the notice.
         (c)  Unless the applicant or appointing agent, insurer, or
  health  maintenance organization has been notified that the
  provisional permit is or may be denied, an applicant may resume
  working as an agent after receiving a notice that the application is
  incomplete under Subsection (a) after the applicant submits to the
  department the information required to complete the application or
  has the appointing agent, insurer, or health maintenance
  organization submit the information.
         (d)  An applicant acting as an agent under this subchapter
  before receiving a notice under Subsection (a), if applicable, is
  not engaged in the unauthorized business of insurance and any
  transaction entered into by the applicant before receiving the
  notice, if applicable, is presumed lawful.
         (e)  An applicant may act as an agent only for the appointing
  agent, insurer, or health maintenance organization except that an
  appointing insurer may include appointments for one or more
  affiliated insurers that are part of the same insurance holding
  company group.
         Sec. 4001.357.  DENIAL OR REVOCATION OF LICENSE. If the
  applicant's license application is denied or the applicant's
  license is revoked, an applicant is subject to Section 4005.105
  with respect to an application for a provisional permit under this
  subchapter.
         Sec. 4001.358.  REPLACEMENT OF EXISTING LIFE INSURANCE OR
  ANNUITY CONTRACT PROHIBITED. (a) A provisional permit holder who
  is acting under the authority of that permit may not:
               (1)  engage in an insurance solicitation, sale, or
  other agency transaction that the permit holder knows or should
  know will result or is intended to result in:
                     (A)  the purchase of a new life insurance or
  annuity contract; and
                     (B)  any of the following actions with regard to
  an existing individual life insurance or annuity contract as a
  result of that purchase:
                           (i)  termination of the contract by lapse,
  forfeiture, surrender, or other means;
                           (ii)  conversion of the contract to reduced
  paid-up insurance, continuation of the contract as extended term
  insurance, or reduction in value of the contract by the use of
  nonforfeiture benefits or other policy values;
                           (iii)  amendment of the contract to reduce:
                                 (a)  benefits; or
                                 (b)  the term for which coverage would
  otherwise remain in force or for which benefits would be paid;
                           (iv)  reissuance of the contract with a
  reduction in cash value; or
                           (v)  pledge of the contract as collateral or
  subjection of the contract to borrowing, whether in a single loan or
  under a schedule of borrowing, for amounts that in the aggregate
  exceed 25 percent of the loan value prescribed by the contract; or
               (2)  directly or indirectly receive a commission or
  other compensation that results or may result from a solicitation,
  sale, or other agency transaction described by Subdivision (1).
         (b)  A person who holds a permanent license may not
  circumvent or attempt to circumvent the intent of this section by
  acting for or with a provisional permit holder.
         Sec. 4001.359. SUPERVISORY RESPONSIBILITY. An appointing
  agent, insurer, or health maintenance organization that allows a
  permit holder to act as an agent under a provisional permit has
  supervisory responsibility over the permit holder.
         SECTION 2.  The change in law made by this Act applies only
  to an applicant who files a license application on or after the
  effective date of this Act.
         SECTION 3.  This Act takes effect September 1, 2015.