76R15172 PB-F
By Madla S.B. No. 956
Substitute the following for S.B. No. 956:
By Eiland C.S.S.B. No. 956
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the regulation of certain insurance agents and to the
1-3 consolidation of insurance agent licenses; providing penalties.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 ARTICLE 1. GENERAL PROVISIONS APPLICABLE TO
1-6 ALL INSURANCE AGENTS
1-7 SECTION 1.01. Article 21.01, Insurance Code, is amended to
1-8 read as follows:
1-9 Art. 21.01. PURPOSE; CONSOLIDATION OF LICENSES; APPLICATION;
1-10 CERTIFICATE OF AUTHORITY OR LICENSE REQUIRED; RULEMAKING AUTHORITY
1-11 Sec. 1. PURPOSE. It is the intent of the legislature to
1-12 simplify and reform the regulation of insurance agents in this
1-13 state by consolidating the types of licenses issued to insurance
1-14 agents under this subchapter. This subchapter is also intended to
1-15 promote uniformity in the licensing, examination, continuing
1-16 education, and disciplinary requirements for agents.
1-17 Sec. 2. CERTIFICATE OF AUTHORITY OR LICENSE REQUIRED. It
1-18 shall not be lawful for any person to act [within this State], as
1-19 an agent or otherwise, in soliciting or receiving applications for
1-20 insurance of any kind whatever in this state, or in any manner to
1-21 aid in the transaction of the business of any insurance company
1-22 incorporated in this state [State], or out of it, without first
1-23 procuring a license or certificate of authority from the department
2-1 [Board].
2-2 Sec. 3. APPLICATION. (a) Except as otherwise provided by
2-3 this code, this subchapter applies to each person licensed in
2-4 accordance with:
2-5 (1) Section 4, Article 1.14-2, of this code;
2-6 (2) Section 7, Article 3.75, of this code;
2-7 (3) Subsection (c), Article 5.13-1, of this code;
2-8 (4) Article 10.37-3 of this code;
2-9 (5) Article 16.24A of this code;
2-10 (6) Section 9, Article 17.25, of this code;
2-11 (7) Article 21.07 of this code;
2-12 (8) Article 21.07-1 of this code;
2-13 (9) Chapter 29, Acts of the 54th Legislature, Regular
2-14 Session, 1955 (Article 21.07-2, Vernon's Texas Insurance Code);
2-15 (10) the Managing General Agents' Licensing Act
2-16 (Article 21.07-3, Vernon's Texas Insurance Code);
2-17 (11) Chapter 407, Acts of the 63rd Legislature,
2-18 Regular Session, 1973 (Article 21.07-4, Vernon's Texas Insurance
2-19 Code);
2-20 (12) Article 21.07-6 of this code;
2-21 (13) Article 21.07-7 of this code;
2-22 (14) Article 21.11 of this code;
2-23 (15) Article 21.14 of this code;
2-24 (16) Article 21.14-1 of this code;
2-25 (17) Article 21.14-2 of this code;
2-26 (18) Article 23.23A of this code; or
2-27 (19) a specialty license program established by the
3-1 department.
3-2 (b) Except as otherwise provided by law, each reference in
3-3 this code and other laws of this state to a particular type of
3-4 license authorizing an agent to engage in the business of insurance
3-5 in this state means a license designation as made by amendment,
3-6 enactment, or reenactment of or to Subchapter A, Chapter 21, of
3-7 this code by the 76th Legislature, Regular Session, 1999, or
3-8 subsequent amendments to that subchapter. A reference in this
3-9 subchapter to a statutory provision applies to all reenactments,
3-10 revisions, or amendments of that provision.
3-11 Sec. 4. RULES. The commissioner may adopt rules as
3-12 necessary to implement this subchapter and to meet the minimum
3-13 requirements of federal law and regulations.
3-14 SECTION 1.02. Article 21.01-1, Insurance Code, is amended to
3-15 read as follows:
3-16 Art. 21.01-1. AGENTS' QUALIFYING EXAMINATION; CONTINUING
3-17 EDUCATION REQUIREMENTS FOR AGENTS
3-18 Sec. 1. EXAMINATION ADMINISTRATION. (a) The commissioner
3-19 [State Board of Insurance] may[, at its discretion,] accept
3-20 examinations administered by a testing service as satisfying the
3-21 examination requirements of persons seeking license as agents,
3-22 [solicitors,] counselors, or adjusters under this code. The
3-23 commissioner [State Board of Insurance] may negotiate agreements
3-24 with such testing services to include performance of examination
3-25 development, test scheduling, examination site arrangements, and
3-26 test administration, grading, reporting and analysis. The
3-27 commissioner [State Board of Insurance] may require such testing
4-1 services to correspond directly with the applicants with regard to
4-2 the administration of such examinations and that such testing
4-3 services collect fees for administering such examinations directly
4-4 from the applicants. The commissioner [State Board of Insurance]
4-5 may stipulate that any agreements with such testing services
4-6 provide for the administration of examinations in specific locales
4-7 and at specified frequencies. The commissioner [State Board of
4-8 Insurance] shall retain the authority to establish the scope and
4-9 type of all examinations. Prior to negotiating and making any
4-10 agreement with any testing service as authorized hereby, the
4-11 commissioner [State Board of Insurance] shall hold a public hearing
4-12 [thereon] in accordance with Chapter 2001, Government Code [the
4-13 provisions of Section 5 of the Administrative Procedure and Texas
4-14 Register Act (Article 6252-13a, Vernon's Texas Civil Statutes)],
4-15 and shall adopt such rules[, regulations,] and standards as may be
4-16 deemed appropriate by the commissioner [Board] to implement the
4-17 authority granted in this article [Article].
4-18 (b) The commissioner may appoint advisory boards consisting
4-19 of any of the following persons: persons holding a license for
4-20 which the respective examinations are intended, persons who are
4-21 employed by insurance companies appointing such licensees, persons
4-22 acting as general agents or managers, persons teaching insurance at
4-23 an accredited college or university in Texas, persons who are
4-24 citizens of the State of Texas but who are not of any of the
4-25 preceding descriptions, or any combination of such persons. The
4-26 function of such advisory boards will be to make recommendations to
4-27 the commissioner [State Board of Insurance] or the testing service
5-1 with respect to the scope, type, and conduct of such examinations
5-2 and the times and places within the state where they shall be held.
5-3 The members of such advisory boards shall serve without pay but
5-4 shall be reimbursed for their reasonable expenses in attending
5-5 meetings of their respective advisory boards.
5-6 (c) In the absence of an agreement with a testing service,
5-7 the department [State Board of Insurance] shall administer any
5-8 required qualifying examination in accordance with this article
5-9 [the provisions of the respective statutes governing the issuance
5-10 of the license sought by the applicant]. The commissioner may
5-11 adopt rules relating to the scope, type, and conduct of the written
5-12 examinations and the times and places in this state at which the
5-13 examinations will be conducted. The commissioner's rules may
5-14 designate textbooks, manuals, and other materials to be studied by
5-15 applicants in preparation for examinations conducted under this
5-16 subsection. Those textbooks, manuals, or other materials may
5-17 consist of material available to an applicant by purchase from the
5-18 publisher or of material prepared at the direction of the
5-19 commissioner and distributed to an applicant on request and on
5-20 payment of the reasonable cost of the material. All examination
5-21 questions shall be prepared from the contents of the textbooks,
5-22 manuals, and other materials designated or prepared by the
5-23 commissioner under this subsection.
5-24 (d) Not later than the 30th day after the date on which a
5-25 licensing examination is administered under this code, the
5-26 department shall notify each examinee of the results of the
5-27 examination. However, if an examination is graded or reviewed by a
6-1 testing service, the department shall notify each examinee
6-2 [examinees] of the results of the examination not later than the
6-3 14th day after the date on which the department receives the
6-4 results from the testing service. If the notice of examination
6-5 results graded or reviewed by a testing service will be delayed for
6-6 longer than 90 days after the examination date, the department
6-7 shall notify the examinee of the reason for the delay before the
6-8 90th day. The department may require a testing service to notify
6-9 examinees of the results of an examination.
6-10 (e) If requested in writing by a person who fails a
6-11 licensing examination administered under this code, the department
6-12 shall furnish the person with an analysis of the person's
6-13 performance on the examination.
6-14 Sec. 2. EXAMINATION OF LICENSE APPLICANT. (a) Except as
6-15 provided by Subsections (c) and (d) of this section, each applicant
6-16 for a license to act as an insurance agent in this state must
6-17 submit to a personal written examination that is prescribed by the
6-18 department and must pass the examination to the satisfaction of the
6-19 department. The examination shall determine the applicant's
6-20 competence with respect to:
6-21 (1) the type of insurance contracts for which the
6-22 applicant seeks a license;
6-23 (2) the laws of this state regulating the business of
6-24 insurance; and
6-25 (3) the ethical obligations and duties of an insurance
6-26 agent.
6-27 (b) The department shall charge each applicant an
7-1 examination fee in an amount determined by the department as
7-2 necessary for administration of the examination. The fee must
7-3 accompany each application to take the examination. The fee is
7-4 nonrefundable other than for failure of the applicant to appear and
7-5 take the examination after the applicant has given at least 24
7-6 hours' notice of an emergency situation to the department and
7-7 received the department's approval of refund of the fee.
7-8 (c) The commissioner shall prescribe a limited written
7-9 licensing examination for applicants for a limited license under
7-10 Article 21.07-1 or Article 21.14 of this code. A limited
7-11 examination shall be administered according to the provisions of
7-12 this article and shall determine the applicant's competence and
7-13 understanding of:
7-14 (1) the basic principles of insurance contracts;
7-15 (2) the basic laws of this state regulating the
7-16 business of insurance; and
7-17 (3) the ethical obligations and duties of an insurance
7-18 agent.
7-19 (d) The department may not require a person to take an
7-20 examination under this article if the person is:
7-21 (1) an applicant for the renewal of an unexpired
7-22 license issued by the department;
7-23 (2) an applicant whose Texas insurance license expired
7-24 less than one year before the date of the application, if the
7-25 previous license was not denied, revoked, or suspended by the
7-26 commissioner;
7-27 (3) a partnership, corporation, or bank;
8-1 (4) an applicant for a life, accident, and health
8-2 license who has attained the designation of chartered life
8-3 underwriter (CLU);
8-4 (5) an applicant for a life and health insurance
8-5 counselor license who has attained the designation of chartered
8-6 life underwriter (CLU), chartered financial consultant (ChFC), or
8-7 certified financial planner (CFP);
8-8 (6) an applicant for a property and casualty license
8-9 who has attained the designation of chartered property and casualty
8-10 underwriter (CPCU);
8-11 (7) an applicant for a specialty license issued by the
8-12 department;
8-13 (8) a nonresident individual who is exempt from the
8-14 examination requirement under Article 21.11 of this code; or
8-15 (9) an applicant for a general life, accident, and
8-16 health license who was authorized to solicit insurance on behalf of
8-17 a fraternal benefit society on September 1, 1999, if the applicant:
8-18 (A) had actually solicited insurance on behalf
8-19 of the fraternal benefit society for at least 24 months preceding
8-20 September 1, 1999;
8-21 (B) does not solicit insurance for any other
8-22 insurer or a different fraternal benefit society on or after
8-23 September 1, 1999;
8-24 (C) does not solicit or procure an insurance
8-25 contract on or after September 1, 1999, except from a person who is
8-26 eligible for membership in the fraternal benefit society; and
8-27 (D) does not solicit or procure an
9-1 interest-sensitive life insurance contract that exceeds $35,000 of
9-2 coverage on an individual life on or after September 1, 1999,
9-3 unless the applicant has obtained the designation of "Fraternal
9-4 Insurance Counselor" at the time the contract is solicited or
9-5 procured.
9-6 (e) A license to which the exemption authorized under
9-7 Subsection (d)(9) of this section applies must be held by the
9-8 applicant in an individual capacity and is not transferable.
9-9 (f) Each examination administered under this article shall
9-10 be offered in English and Spanish.
9-11 Sec. 3. CONTINUING EDUCATION REQUIREMENTS. (a) The
9-12 department has exclusive jurisdiction for all matters relating to
9-13 the continuing education of insurance agents who are licensed under
9-14 this code.
9-15 (b) Except as provided by Subsection (d) of this section,
9-16 each individual who holds a license issued by the department shall
9-17 complete continuing education. All required continuing education
9-18 hours must be completed before the expiration date of the
9-19 individual's license. An individual who holds a life, accident,
9-20 and health license, a life and health insurance counselor license,
9-21 or a property and casualty license shall complete 15 hours of
9-22 continuing education annually. The agent may not be required to
9-23 complete more than 15 continuing education hours annually as a
9-24 result of holding more than one license for which continuing
9-25 education is required. An individual who holds a limited life,
9-26 accident, and health license or a limited property and casualty
9-27 license shall complete five hours of continuing education annually.
10-1 Each individual who holds a license issued by the department shall
10-2 complete four hours of continuing education in ethics during each
10-3 license renewal period. At least 50 percent of all required
10-4 continuing education hours must be completed in a classroom setting
10-5 or a classroom equivalent setting approved by the department. The
10-6 department may grant reciprocity to license holders who complete
10-7 continuing education requirements in other professions or in
10-8 association with professional designations in an insurance-related
10-9 field.
10-10 (c) On a timely written request of an agent, the department
10-11 may extend the time for the agent to comply with the continuing
10-12 education requirements of this section or may exempt the agent from
10-13 some or all of the requirements for a licensing period if the
10-14 department finds that the agent is unable to comply with the
10-15 requirements because of illness, medical disability, or another
10-16 extenuating circumstance beyond the control of the agent. The
10-17 commissioner by rule shall prescribe the criteria for an exemption
10-18 or extension under this subsection.
10-19 (d) An individual who has continuously held a license issued
10-20 under this code to operate as an insurance agent for the 20 years
10-21 preceding September 1, 1999, is exempt from the continuing
10-22 education requirements of this section. The commissioner by rule
10-23 may provide for other reasonable exemptions.
10-24 (e) The department shall certify continuing education
10-25 programs for agents. Only a program that satisfies the criteria
10-26 established by rule by the commissioner may receive certification.
10-27 The certification criteria shall be designed to ensure that
11-1 continuing education programs enhance the knowledge, understanding,
11-2 and professional competence of the license holder. A nonrefundable
11-3 certification fee, in an amount set by the commissioner as
11-4 necessary for administering the program, must accompany each
11-5 application for certification of a continuing education program.
11-6 The fee shall be established by rule and based on a graduated scale
11-7 according to the number of hours required to complete the program.
11-8 (f) Each continuing education course provider shall register
11-9 with the department as a course provider. The department shall
11-10 assess a registration fee for each application for registration as
11-11 a provider, set by the commissioner in an amount necessary for the
11-12 proper administration of this section. The commissioner may adopt
11-13 rules establishing the requirements for continuing education course
11-14 providers. The department may negotiate agreements with
11-15 independent contractors under which the independent contractor
11-16 certifies and registers continuing education courses and providers.
11-17 The department may require those independent contractors to
11-18 correspond directly with providers with regard to the
11-19 administration of continuing education courses, and the contractors
11-20 may collect fees from the providers for administration of the
11-21 courses. The department retains the authority to establish the
11-22 scope and type of continuing education requirements for each type
11-23 of license.
11-24 (g) The commissioner may appoint an advisory council to
11-25 furnish the commissioner with information and assistance in the
11-26 conduct of the continuing education program for agents licensed
11-27 under this subchapter. If an advisory council is appointed, it
12-1 must be composed of nine members, four of whom must be public
12-2 members. The public members are entitled to reimbursement for
12-3 their reasonable travel expenses in attending meetings of the
12-4 advisory council, subject to any applicable limit in the General
12-5 Appropriations Act. A public member may not:
12-6 (1) be an officer, director, or employee of an
12-7 insurance company, insurance agency, agent, broker, adjuster, or
12-8 any other business entity regulated by the department;
12-9 (2) be a person required to register with the Texas
12-10 Ethics Commission under Chapter 305, Government Code; or
12-11 (3) be related to a person described by Subdivision
12-12 (1) or (2) of this subsection within the second degree by affinity
12-13 or consanguinity, as determined under Chapter 573, Government Code.
12-14 SECTION 1.03. Section 2, Article 21.01-2, Insurance Code, is
12-15 redesignated as Section 1A, Article 21.01-2, Insurance Code, and
12-16 amended to read as follows:
12-17 Sec. 1A [2]. EXPIRATION AND RENEWAL OF LICENSES.
12-18 (a) Except as provided by a staggered renewal system adopted under
12-19 Subsection (h) of this section, each agent license issued by the
12-20 department expires on the fifth anniversary of the date of
12-21 issuance unless suspended or revoked by the commissioner. A person
12-22 may renew a [an unexpired] license that has not expired or has not
12-23 been suspended or revoked by filing a properly completed renewal
12-24 application with the department in the form prescribed by the
12-25 department and paying to the department before the expiration date
12-26 of the license the required renewal fee. A renewal fee paid under
12-27 this section is nonrefundable.
13-1 (b) On the filing of a completed renewal application not
13-2 later than the expiration date of the license accompanied by the
13-3 renewal fee set by the commissioner, the original license continues
13-4 in force until:
13-5 (1) the department issues the renewal license; or
13-6 (2) the commissioner issues an order revoking the
13-7 license.
13-8 (c) If a person's license has been expired for 90 days or
13-9 less, the person may renew the license by filing a renewal
13-10 application with the department in the form prescribed by the
13-11 department and paying to the department the required renewal fee
13-12 and an additional [a] fee that is equal to one-half of the renewal
13-13 [license] fee[, if any,] for the license.
13-14 (d) If a person's license has been expired for more than 90
13-15 days but less than one year, the person may not renew the license,
13-16 but is entitled to a new license without taking the applicable
13-17 examination if the person submits to the department a new
13-18 application, the license fee, and an additional fee equal to
13-19 one-half of the license fee.
13-20 (e) [(c)] If a person's license has been expired for one
13-21 year or more [longer than 90 days], the person may not renew the
13-22 license. The person may obtain a new license by submitting to
13-23 reexamination, if examination is required for original issuance of
13-24 the license, and complying with the requirements and procedures for
13-25 obtaining an original license.
13-26 (f) The [However, the] department may renew without
13-27 reexamination an expired license of a person who was licensed in
14-1 this state, moved to another state, and is currently licensed and
14-2 has been in continual practice in the other state for the period
14-3 [two years] preceding application. The person must pay to the
14-4 department a fee that is equal to the license fee.
14-5 (g) [(d)] At least 30 days before the expiration of a
14-6 person's license, the department shall send written notice of the
14-7 impending license expiration to the person at the person's last
14-8 known mailing address according to the records of the department.
14-9 (h) [(e)] The commissioner by rule may adopt a system under
14-10 which licenses expire on various dates during a licensing period.
14-11 For the licensing period in which the license expiration is
14-12 changed, license fees shall be prorated [on a monthly basis] so
14-13 that each license holder shall pay only that portion of the license
14-14 fee that is allocable to the period [number of months] during which
14-15 the license is valid. On renewal of the license on the new
14-16 expiration date, the total license renewal fee is payable. The
14-17 commissioner shall adopt a system under which a person who holds
14-18 more than one license may renew all the licenses held in a single
14-19 process.
14-20 (i) [(f)] This section is not applicable to a license issued
14-21 under Article 21.07-6 or 21.07-7 of this code.
14-22 SECTION 1.04. Article 21.01-2, Insurance Code, is amended by
14-23 adding Section 2A to read as follows:
14-24 Sec. 2A. PROHIBITED ACTIVITIES. (a) A person licensed
14-25 under this code who receives a commission or other consideration
14-26 for services as an insurance agent may not receive an additional
14-27 fee for those services provided to the same client except for a fee
15-1 described by Article 21.35A or 21.35B of this code.
15-2 (b) An insurer or licensed insurance agent engaged in the
15-3 business of insurance in this state may not pay, directly or
15-4 indirectly, and may not accept, any commission or other valuable
15-5 consideration to or from any person for services performed by that
15-6 person as an insurance agent in this state unless the person holds
15-7 a license to act as an insurance agent as required by the laws of
15-8 this state. This subsection does not prevent the payment or
15-9 receipt of renewal or other deferred commissions to or by any
15-10 person solely because the person has ceased to hold a license to
15-11 act as an insurance agent.
15-12 (c) An insurance agent licensed under this code may not pay,
15-13 allow, or give, or offer to pay, allow, or give, directly or
15-14 indirectly, to any person who is not a licensed insurance agent,
15-15 any rebate of premiums payable, commission, paid employment, or
15-16 contract for service, or any other valuable consideration or
15-17 inducement, that is not specified in the policy or contract of
15-18 insurance for or on account of the solicitation or negotiation of
15-19 contracts of insurance.
15-20 (d) In addition to any other penalty imposed under this
15-21 code, a person who is determined by the department to have
15-22 committed conduct described by this subsection is barred from
15-23 receiving a license as an insurance agent before the fifth
15-24 anniversary of the date of the determination. This subsection
15-25 applies to a person who:
15-26 (1) acts as an insurance agent without holding a
15-27 license under this code;
16-1 (2) solicits a contract of insurance or acts as an
16-2 insurance agent without having been appointed or designated by an
16-3 authorized insurance company, association, or organization to do so
16-4 as provided by this code;
16-5 (3) solicits any contract of insurance or acts as an
16-6 agent for a person, including an insurance company, association, or
16-7 organization, not authorized to engage in the business of insurance
16-8 in this state without holding a license issued under Article 1.14-2
16-9 of this code; or
16-10 (4) as an officer or representative of an insurance
16-11 company, knowingly contracts with or appoints as an agent a person
16-12 who does not hold a valid and outstanding license.
16-13 (e) A person who has had an insurance license revoked in
16-14 this state or any other state may not solicit or otherwise transact
16-15 business under Chapter 10 of this code unless it is determined by
16-16 the department to be in the public interest, for good cause shown,
16-17 to allow the person to act in that capacity.
16-18 (f) A person who has had an insurance license revoked in
16-19 this state or any other state may not act as an officer, director,
16-20 member, manager, or partner, or as a shareholder with a controlling
16-21 interest, of an entity licensed under this subchapter unless it is
16-22 determined by the department to be in the public interest, for good
16-23 cause shown, to allow the person to act in that capacity.
16-24 (g) A property and casualty agent may not knowingly grant,
16-25 write, or permit a greater amount of insurance against loss by fire
16-26 than the reasonable value of the subject of the insurance.
16-27 (h) This section does not apply to a person who is licensed
17-1 under, or holds a certificate of authority issued under, Chapter 9
17-2 of this code.
17-3 SECTION 1.05. Section 5, Article 21.01-2, Insurance Code, is
17-4 redesignated as Section 3A, Article 21.01-2, Insurance Code, and
17-5 amended to read as follows:
17-6 Sec. 3A [5]. DENIAL OR REFUSAL OF LICENSE APPLICATION;
17-7 SUSPENSION OR REVOCATION OF LICENSES; DISCIPLINE OF LICENSE
17-8 HOLDERS. (a) In addition to any other remedy available under
17-9 Section 7, Article 1.10, of this code, the [The] department may
17-10 [shall] refuse to issue an original license, revoke, suspend, or
17-11 refuse to renew a license, place on probation a person whose
17-12 license has been suspended, assess an administrative penalty, or
17-13 reprimand a license holder for a violation of this code, another
17-14 insurance law of this state, or a rule of the commissioner [or the
17-15 board]. If a license suspension is probated, the commissioner may
17-16 require the person to:
17-17 (1) report regularly to the department on matters that
17-18 are the basis of the probation;
17-19 (2) limit the person's practice to the areas
17-20 prescribed by the department; or
17-21 (3) continue or review professional education until
17-22 the person attains a degree of skill satisfactory to the
17-23 commissioner in those areas that are the basis of the probation.
17-24 (b) If the department proposes to refuse to issue an
17-25 original license, or to suspend, revoke, or refuse to renew a
17-26 license, the person affected is entitled to a hearing conducted by
17-27 the State Office of Administrative Hearings in accordance with
18-1 Article 1.33B of this code. Notice of the hearing shall be
18-2 provided to the person and to any insurance carrier appearing on
18-3 the application as desiring that the license be issued.
18-4 (c) The department may discipline a license holder or deny a
18-5 license application under this article if the department determines
18-6 that the applicant or license holder, individually or through any
18-7 officer, director, or shareholder:
18-8 (1) has wilfully violated any provision of the
18-9 insurance laws of this state;
18-10 (2) has intentionally made a material misstatement in
18-11 the license application;
18-12 (3) has obtained, or attempted to obtain, a license by
18-13 fraud or misrepresentation;
18-14 (4) has misappropriated, converted to the applicant's
18-15 or holder's own use, or illegally withheld money belonging to:
18-16 (A) an insurer;
18-17 (B) a health maintenance organization; or
18-18 (C) an insured, enrollee, or beneficiary;
18-19 (5) has engaged in fraudulent or dishonest acts or
18-20 practices;
18-21 (6) has materially misrepresented the terms and
18-22 conditions of an insurance policy or contract, including a contract
18-23 relating to membership in a health maintenance organization;
18-24 (7) has made or issued, or caused to be made or
18-25 issued, any statement misrepresenting or making incomplete
18-26 comparisons regarding the terms or conditions of an insurance or
18-27 annuity contract legally issued by an insurer or a membership
19-1 issued by a health maintenance organization to induce the owner of
19-2 the contract or membership to forfeit or surrender the contract or
19-3 membership or allow it to lapse for the purpose of replacing the
19-4 contract or membership with another;
19-5 (8) is convicted of a felony;
19-6 (9) has offered or given a rebate of an insurance
19-7 premium or commission to an insured or enrollee;
19-8 (10) is not actively engaged in the soliciting or
19-9 writing of insurance for the public generally as required by
19-10 Section 2(c), Article 21.07, of this code; or
19-11 (11) has obtained or attempted to obtain a license,
19-12 not for the purpose of holding the license holder or applicant out
19-13 to the general public as an agent, but primarily for the purpose of
19-14 soliciting, negotiating, or procuring insurance or annuity
19-15 contracts or memberships covering:
19-16 (A) the applicant or license holder;
19-17 (B) a member of the applicant's or license
19-18 holder's family; or
19-19 (C) a business associate of the applicant or
19-20 license holder.
19-21 (d) An individual whose license application is denied or
19-22 whose license has been revoked under this article may not apply for
19-23 any license as an insurance agent before the fifth anniversary of:
19-24 (1) the effective date of the denial or revocation; or
19-25 (2) if the applicant or license holder seeks judicial
19-26 review of the department's action, the date of the final court
19-27 order or decree affirming that action.
20-1 (e) The commissioner may deny a timely application filed
20-2 under Subsection (d) of this section if the applicant does not show
20-3 good cause why the denial or revocation of the previous license
20-4 application or license should not be considered a bar to the
20-5 issuance of a new license. This subsection does not apply to an
20-6 applicant whose license application was denied for failure to:
20-7 (1) pass a required written examination; or
20-8 (2) submit a properly completed license application.
20-9 (f) Instead of or in addition to taking disciplinary action
20-10 under this section, the department may order that a license holder
20-11 who is currently afflicted with a disability be placed on
20-12 disability probation under the terms and conditions specified under
20-13 Article 21.15-6 of this code and department rules.
20-14 (g) Subsections (c)-(f) of this section do not apply to a
20-15 person who is licensed under, or holds a certificate of authority
20-16 issued under, Chapter 9 of this code. [The commissioner shall
20-17 prescribe procedures by which all decisions to deny, suspend, or
20-18 revoke a license, or to refuse to renew a license, are made by or
20-19 are appealable to the commissioner.]
20-20 SECTION 1.06. Article 21.01-2, Insurance Code, is amended by
20-21 adding Sections 4A, 5A, and 6A to read as follows:
20-22 Sec. 4A. JUDICIAL REVIEW. A license applicant or license
20-23 holder may appeal as provided by Article 1.04 of this code if:
20-24 (1) the commissioner:
20-25 (A) refuses an application for a license as
20-26 provided by this article; or
20-27 (B) suspends, revokes, or refuses to renew a
21-1 license at a hearing as provided by this article; or
21-2 (2) the applicant or license holder is dissatisfied
21-3 with another action of the commissioner.
21-4 Sec. 5A. AUTOMATIC FINES. (a) To expedite the department's
21-5 processing of certain violations of this code, the commissioner may
21-6 establish by rule monetary fines for certain violations.
21-7 Violations for which the fines may be assessed include a failure
21-8 to:
21-9 (1) obtain the total number of continuing education
21-10 hours before the renewal date of the license;
21-11 (2) timely report a change of address to the
21-12 department; or
21-13 (3) notify the department of an administrative action
21-14 taken against the agent by another state's insurance regulator.
21-15 (b) This section may not be construed to limit the
21-16 department's authority to take any other disciplinary action
21-17 against a license holder as provided under another provision of
21-18 this code.
21-19 (c) If a person disputes the assessment of a fine under this
21-20 section, the matter is a contested case subject to Chapter 2001,
21-21 Government Code.
21-22 Sec. 6A. ENFORCEMENT OF SUBCHAPTER. The attorney general, a
21-23 district or county attorney, or the department acting through the
21-24 commissioner may institute an injunction proceeding or any other
21-25 proceeding to enforce this subchapter and to enjoin any person,
21-26 firm, corporation, or bank from engaging or attempting to engage in
21-27 the business of insurance in violation of this code or any other
22-1 insurance law of this state. The provisions of this section are
22-2 cumulative of the other penalties or remedies provided by this
22-3 article.
22-4 SECTION 1.07. Article 21.04, Insurance Code, is amended to
22-5 read as follows:
22-6 Art. 21.04. LICENSE HOLDER [SOLICITOR] DEEMED COMPANY'S
22-7 AGENT. Any person who solicits an application for life, accident,
22-8 or health insurance, or property or casualty insurance, shall, in
22-9 any controversy between the insured or the insured's beneficiary
22-10 and the company issuing any policy upon such application or between
22-11 the insured or the insured's dependents and that company, be
22-12 regarded as the agent of the company, and not the agent of the
22-13 insured, but such agent shall not have the power to waive, change
22-14 or alter any of the terms or conditions of the application or
22-15 policy.
22-16 SECTION 1.08. Article 21.06, Insurance Code, is amended to
22-17 read as follows:
22-18 Art. 21.06. AUTHORITY TO APPOINT [CERTIFICATES FOR] AGENTS.
22-19 Each [such] foreign or domestic insurance company shall, by
22-20 resolution of its board of directors, designate an [some] officer
22-21 or agent who is empowered to appoint or employ its agents [or
22-22 solicitors] in this State, and such officer or agent shall promptly
22-23 notify the department [Board] in writing of the name, title, and
22-24 address of each person so appointed or employed. The authority of
22-25 that designee to act on behalf of the insurance company continues
22-26 in force [Upon receipt of this notice, the Board shall issue to him
22-27 a certificate which shall include a copy of the certificate of
23-1 authority authorizing the company requesting it to do business in
23-2 this State, and the name and title of the person to whom the
23-3 certificate is issued. Such certificate], unless sooner revoked by
23-4 the commissioner [Board] for cause or cancelled at the request of
23-5 the insurance company [employing the holder thereof, shall continue
23-6 in force until the first day of March next after its issuance, and
23-7 must be renewed annually].
23-8 SECTION 1.09. Section 1, Article 21.07, Insurance Code, is
23-9 amended to read as follows:
23-10 Sec. 1. APPLICABILITY OF ARTICLE [ACT]. (a) No person[,
23-11 corporation, or bank] shall act as an agent of any insurance
23-12 company, health maintenance organization, or [(i) local mutual aid
23-13 association, (ii) local mutual burial association, (iii) statewide
23-14 mutual assessment corporation, (iv) stipulated premium company,
23-15 (v) county mutual insurance company, (vi) casualty company writing
23-16 accident and health insurance, or (vii) any] other type of
23-17 insurance carrier licensed to do business in the State of Texas and
23-18 which insurance carrier's agents are required to be licensed under
23-19 the provisions of this subchapter [Article, on the date that this
23-20 Act shall become effective,] unless that person [individual or
23-21 entity] shall have first procured a license from the department as
23-22 [in this Article is] provided by this subchapter, and no such
23-23 insurance carrier shall appoint any person[, corporation, or bank]
23-24 to act as its agent unless such person[, corporation, or bank]
23-25 shall have obtained a license under the provisions of this
23-26 subchapter [Article], and no such person[, corporation, or bank]
23-27 who obtains a license shall engage in business as an agent until
24-1 that person [individual or entity] shall have been appointed to act
24-2 as an agent by some duly authorized insurance carrier designated by
24-3 the provisions of this code [Article] and authorized to do business
24-4 in the State of Texas. [Any person, corporation, or bank desiring
24-5 to act as an agent of any insurance carrier licensed to do business
24-6 in the State of Texas and writing health and accident insurance may
24-7 obtain a separate license as an agent to write health and accident
24-8 insurance provided such person, corporation, or bank complies with
24-9 the provisions of this Article and has been appointed to act as an
24-10 agent by some duly authorized insurance carrier authorized to do
24-11 health and accident insurance business in the State of Texas.]
24-12 (b) The provisions of this subchapter do not apply to:
24-13 (1) an actual full-time home office salaried employee
24-14 of an insurance carrier licensed to do business in this state,
24-15 other than an employee who solicits or receives an application for
24-16 the sale of insurance through an oral, written, or electronic
24-17 communication in accordance with Article 21.14 of this code;
24-18 (2) an actual attorney in fact or the actual traveling
24-19 salaried representative of a reciprocal exchange or interinsurance
24-20 exchange admitted to do business in this state as to business
24-21 transacted through the attorney in fact or salaried representative;
24-22 (3) the actual attorney in fact for a Lloyd's
24-23 association;
24-24 (4) the group motor vehicle insurance business or the
24-25 group motor vehicle department of companies engaged in that
24-26 business; or
24-27 (5) a salaried employee who is not involved in the
25-1 solicitation or negotiation of insurance in the office of a
25-2 licensed agent who devotes the employee's full time to clerical and
25-3 administrative services, including the incidental taking of
25-4 information from customers and receipt of premiums in the office of
25-5 a licensed agent, if the employee does not receive any commissions
25-6 and the employee's compensation is not varied by the volume of
25-7 premiums taken and received. [No insurer or licensed insurance
25-8 agent doing business in this State shall pay directly or indirectly
25-9 any commission, or other valuable consideration, to any person,
25-10 corporation, or bank for services as an insurance agent within this
25-11 State, unless such person, corporation, or bank shall hold a
25-12 currently valid license to act as an insurance agent as required by
25-13 the laws of this State; nor shall any person, corporation, or bank
25-14 other than a duly licensed insurance agent, accept any such
25-15 commission or other valuable consideration; provided, however, that
25-16 the provisions of this Section shall not prevent the payment or
25-17 receipt of renewal or other deferred commissions to or by any
25-18 person solely because such person, corporation, or bank has ceased
25-19 to hold a license to act as an insurance agent.]
25-20 [(c) A person who has had a license revoked under Section 10
25-21 of this Article may not solicit or otherwise transact business
25-22 under Chapter 10 of this code.]
25-23 SECTION 1.10. Section 1A, Article 21.07, Insurance Code, is
25-24 amended to read as follows:
25-25 Sec. 1A. DEFINITIONS. Unless the context clearly indicates
25-26 otherwise, in [In] this subchapter:
25-27 (1) "Agent" means a person who is an authorized agent
26-1 of an insurance company or health maintenance organization, any
26-2 person who is a sub-agent of an agent, and any other person who
26-3 performs the acts of an agent, whether through an oral, written, or
26-4 electronic communication or otherwise, in the solicitation of,
26-5 negotiation for, procurement of, or collection of premiums on an
26-6 insurance or annuity contract, or who represents or purports to
26-7 represent a health maintenance organization, including a health
26-8 maintenance organization offering only a single health care service
26-9 plan, in the solicitation of, negotiation for, procurement of, or
26-10 effectuation of membership in the health maintenance organization.
26-11 The term does not include:
26-12 (A) a regular salaried officer or employee of an
26-13 insurance company, health maintenance organization, or insurance
26-14 agent who:
26-15 (i) devotes substantially all of the
26-16 officer's or employee's time to activities other than the
26-17 solicitation of applications for insurance, annuity contracts, or
26-18 memberships;
26-19 (ii) does not receive a commission or
26-20 other compensation directly dependent on the business obtained; and
26-21 (iii) does not solicit or accept from the
26-22 public applications for insurance, annuity contracts, or
26-23 memberships;
26-24 (B) an employer or an employer's officers or
26-25 employees or the trustees of an employee benefit plan, to the
26-26 extent that those employers, officers, employees, or trustees are
26-27 engaged in the administration or operation of any program of
27-1 employee benefits involving the use of insurance or annuities
27-2 issued by an insurance company or memberships issued by a health
27-3 maintenance organization, if those employers, officers, employees,
27-4 or trustees are not compensated, directly or indirectly, by the
27-5 insurance company or health maintenance organization issuing the
27-6 insurance or annuity contracts or memberships;
27-7 (C) except as otherwise provided by this code, a
27-8 bank, a savings and loan association, or a credit union, or the
27-9 officers and employees of banks, savings and loan associations, or
27-10 credit unions, to the extent that those banks, savings and loan
27-11 associations, credit unions, or officers and employees collect and
27-12 remit premiums or charges by charging those premiums or charges
27-13 against accounts of depositors on the orders of those depositors;
27-14 or
27-15 (D) a person or the employee of a person who has
27-16 contracted to provide administrative, management, or health care
27-17 services to a health maintenance organization and who is
27-18 compensated for those services by the payment of an amount computed
27-19 as a percentage of the revenues, net income, or profit of the
27-20 health maintenance organization, if that method of compensation is
27-21 the sole basis for subjecting that person or the employee of the
27-22 person to this article.
27-23 (2) "Bank" means:
27-24 (A) a national banking association organized and
27-25 existing under the National Bank Act (12 U.S.C. Section 21 et
27-26 seq.), as amended;
27-27 (B) a state bank organized and existing under
28-1 Subtitle A, Title 3, Finance Code;
28-2 (C) a state savings bank organized and existing
28-3 under Subtitle C, Title 3, Finance Code;
28-4 (D) a bank branch; or
28-5 (E) a bank operating subsidiary, as defined by
28-6 state or federal law.
28-7 (3) "Control" means the power to direct or cause the
28-8 direction of the management and policies of a license holder,
28-9 whether directly or indirectly. For the purposes of this
28-10 subchapter, a person is considered to control:
28-11 (A) a corporate license holder if the person,
28-12 individually or acting with others, directly or indirectly, holds
28-13 with the power to vote, owns, or controls, or holds proxies
28-14 representing, at least 10 percent of the voting stock or voting
28-15 rights of the corporate license holder; or
28-16 (B) a partnership if the person through a right
28-17 to vote or through any other right or power exercises rights in the
28-18 management, direction, or conduct of the business of the
28-19 partnership.
28-20 (4) "Corporation" means a legal entity that is
28-21 organized under the business corporations laws or limited liability
28-22 company laws of this state, another state, or a territory of the
28-23 United States and that has as one of its purposes the authority to
28-24 act as an insurance agent. The licensing and regulation of a
28-25 limited liability company is subject to all provisions of this
28-26 subchapter that apply to a corporation licensed under this
28-27 subchapter.
29-1 (5) "Individual" means a natural person. The term
29-2 includes a resident or a nonresident of this state.
29-3 (6) "Insurance company," "insurance carrier," or
29-4 "insurer" means an insurance company regulated by the department.
29-5 The term includes:
29-6 (A) any domestic or foreign, stock and mutual,
29-7 life, health, or accident insurance company;
29-8 (B) any domestic or foreign, stock and mutual,
29-9 fire and casualty insurance company;
29-10 (C) a Mexican casualty company;
29-11 (D) a domestic or foreign Lloyd's plan insurer;
29-12 (E) a domestic or foreign reciprocal or
29-13 interinsurance exchange;
29-14 (F) a domestic or foreign fraternal benefit
29-15 society;
29-16 (G) a stipulated premium insurance company;
29-17 (H) a nonprofit or for-profit legal service
29-18 corporation;
29-19 (I) a statewide mutual assessment company;
29-20 (J) a local mutual aid association;
29-21 (K) a local mutual burial association;
29-22 (L) an exempt association under Article 14.17 of
29-23 this code;
29-24 (M) a nonprofit hospital, medical, or dental
29-25 service corporation, including a company subject to Chapter 20 of
29-26 this code;
29-27 (N) a health maintenance organization;
30-1 (O) a county mutual insurance company; or
30-2 (P) a farm mutual insurance company.
30-3 (7) "Partnership" means an association of two or more
30-4 persons organized under the partnership laws or limited liability
30-5 partnership laws of this state, another state, or a territory of
30-6 the United States. The term includes a general partnership,
30-7 limited partnership, limited liability partnership, and limited
30-8 liability limited partnership.
30-9 (8) "Person" means an individual, partnership,
30-10 corporation, or bank.
30-11 (9) "Sub-agent" means any person, other than a
30-12 regular salaried officer or employee of an insurance company,
30-13 insurance carrier, or health maintenance organization, or of an
30-14 agent, engaging in activities described under Subdivision (1) of
30-15 this section who acts for or on behalf of an agent, whether through
30-16 an oral, written, or electronic communication or otherwise, in the
30-17 solicitation of, negotiation for, or procurement of an insurance or
30-18 annuity contract or health maintenance organization membership, or
30-19 the collection of premiums or charges on an insurance or annuity
30-20 contract or health maintenance organization membership, whether or
30-21 not the sub-agent is designated by the agent as a sub-agent or by
30-22 any other title. A sub-agent is an agent, for all purposes of this
30-23 subchapter, and wherever the term "agent" is used in this chapter,
30-24 it includes sub-agents whether or not a sub-agent is specifically
30-25 mentioned. A sub-agent must hold at least one of the licenses
30-26 issued to the agent for whom the sub-agent acts, but is not
30-27 required to hold each of those licenses. However, the sub-agent
31-1 must be properly licensed to write each type of insurance that the
31-2 sub-agent is employed to write [Article, "person" means an
31-3 individual or a general partnership composed of two or more
31-4 individuals or a limited liability partnership registered with the
31-5 Secretary of State under Section 3.08, Texas Revised Partnership
31-6 Act (Article 6132b-3.08, Vernon's Texas Civil Statutes). The term
31-7 "partnership" or "agency partnership" as used in this Article means
31-8 a general partnership or a registered limited liability
31-9 partnership].
31-10 SECTION 1.11. Section 2, Article 21.07, Insurance Code, is
31-11 amended to read as follows:
31-12 Sec. 2. APPLICATION FOR LICENSE; TO WHOM LICENSE MAY BE
31-13 ISSUED. (a) Any person[, corporation, or bank] that desires to
31-14 become an agent for an [a local mutual aid association, a local
31-15 mutual burial association, a statewide mutual assessment
31-16 corporation, a stipulated premium company, a county mutual]
31-17 insurance company or health maintenance organization[, a casualty
31-18 company writing accident and health insurance, or any other type of
31-19 insurance carrier licensed to do business in the State of Texas],
31-20 the agents of which are required to be licensed under this
31-21 subchapter [Article], shall submit to the department an application
31-22 for a license in the form required by the department.
31-23 (b) Each applicant for a license to act as an insurance
31-24 agent in this state shall file with the commissioner a completed
31-25 application on forms developed by the department. The commissioner
31-26 shall establish by rule the requirements for a properly completed
31-27 application.
32-1 (c) The commissioner may not grant a license as an insurance
32-2 agent to write any form of insurance unless the department finds
32-3 that:
32-4 (1) the applicant is or intends to be actively engaged
32-5 in the soliciting or writing of insurance for the public generally
32-6 and is to be actively engaged in the business of insurance; and
32-7 (2) the application is not made to evade the laws
32-8 against rebating and discrimination, either for the applicant or
32-9 for some other person.
32-10 (d) This section does not prohibit an applicant insuring
32-11 property that the applicant owns or in which the applicant has an
32-12 interest, but it is the intent of this section to prohibit coercion
32-13 of insurance and to preserve to each individual the right to choose
32-14 that individual's own agent or insurance company, and to prohibit
32-15 the licensing of a person to engage in the insurance business
32-16 principally to handle business that the applicant controls only
32-17 through ownership, mortgage or sale, family relationship, or
32-18 employment. An applicant for an original license must have a bona
32-19 fide intention to engage in business in which, in any calendar
32-20 year, at least 25 percent of the total volume of premiums is
32-21 derived from persons other than the applicant and from property
32-22 other than that on which the applicant controls the placing of
32-23 insurance through ownership, mortgage, sale, family relationship,
32-24 or employment.
32-25 (e) The department may not deny a license application solely
32-26 on the ground that the applicant will act only part-time as an
32-27 agent.
33-1 (f) The [application must bear a signed endorsement by an
33-2 officer or properly authorized representative of the insurance
33-3 carrier that the individual applicant or each member of the
33-4 partnership or each officer, director, and shareholder of the
33-5 corporation or the responsible officer and employee of the bank is
33-6 qualified to hold that individual or the partnership, the
33-7 corporation, or the bank out in good faith to the general public as
33-8 an insurance agent, and that the insurance carrier desires that the
33-9 applicant act as an insurance agent to represent it in this State.]
33-10 [(c) The] department shall issue a license to an individual
33-11 to engage [or to a general partnership engaging] in the business of
33-12 insurance if the department finds that the individual:
33-13 (1) is at least 18 years of age;
33-14 (2) has passed the applicable licensing examination
33-15 required under Article 21.01-1 of this code within the past 12
33-16 months;
33-17 (3) has not committed an act for which a license may
33-18 be denied under Article 21.01-2 of this code; and
33-19 (4) has submitted the application, appropriate fees,
33-20 and any other information required by the department.
33-21 (g) An individual agent licensed under Section 2, Article
33-22 21.07-1, of this code or Section 2, Article 21.14, of this code who
33-23 is operating as an individual agent and who is not covered by an
33-24 errors and omissions insurance policy of a general agency or
33-25 corporation shall certify to the department that the agent will
33-26 maintain the ability to pay any amount that the individual agent
33-27 might become legally obligated to pay due to any claim made against
34-1 the agent by a customer and caused by a negligent act, error, or
34-2 omission of the individual agent or any person for whose acts the
34-3 individual agent is legally liable in the conduct of business under
34-4 this code. The insurance or bond requirement adopted under this
34-5 subsection does not apply to an employee of a licensed insurer, but
34-6 does apply to a person who operates as an independent contractor.
34-7 For purposes of this subsection, the term "customer" means a
34-8 person, including a firm or corporation, to whom the individual
34-9 agent sells or attempts to sell a policy of insurance, or from whom
34-10 the individual agent accepts an application for insurance. The
34-11 individual agent shall maintain proof of the ability to pay the
34-12 amount through:
34-13 (1) an errors and omissions policy insuring the
34-14 individual agent against errors and omissions in at least the sum
34-15 of $250,000 with a deductible of not more than 10 percent of the
34-16 face amount of the policy issued by an insurance company licensed
34-17 to do business in this state, or, if a policy cannot be obtained
34-18 from a company licensed to do business in this state, through a
34-19 properly obtained surplus lines policy; or
34-20 (2) a bond executed by the individual agent as
34-21 principal and a surety company authorized to do business in this
34-22 state, as surety, in the principal sum of $25,000, payable to the
34-23 department for the use and benefit of customers of the individual
34-24 agent, and conditioned that the individual agent shall pay any
34-25 final judgment recovered against the agent by a customer.
34-26 (h) A binding commitment to issue a policy or bond described
34-27 by Subsection (g) of this section is sufficient in connection with
35-1 an application for a license. An individual agent licensed under
35-2 both Articles 21.07-1 and 21.14 of this code is only required to
35-3 maintain one errors and omissions policy or bond to comply with
35-4 Subsection (g) of this section.
35-5 (i) An individual engaging in the business of insurance as a
35-6 sole proprietorship under the authority of a license issued under
35-7 this subchapter may incorporate, but the corporation does not have
35-8 greater license authority than that granted to the license holder
35-9 in the holder's individual capacity.
35-10 (j) Each individual license holder shall notify the
35-11 department on a monthly basis of:
35-12 (1) a change of the license holder's mailing address;
35-13 (2) a conviction of the license holder of a felony; or
35-14 (3) an administrative action taken against the license
35-15 holder by the insurance regulator of another state [partner in the
35-16 partnership must be licensed individually as an agent under this
35-17 Article].
35-18 (k) [(d)] The department shall issue a license to a
35-19 corporation or partnership if the department finds that:
35-20 (1) [That] the corporation or partnership is:
35-21 (A) organized under the laws of this state or
35-22 any other state or territory of the United States;
35-23 (B) admitted to conduct business in this state
35-24 by the secretary of state, if so required; and
35-25 (C) authorized by its articles of incorporation
35-26 or its partnership agreement to act as an insurance agent [a Texas
35-27 corporation organized or existing under the Texas Business
36-1 Corporation Act or the Texas Professional Corporation Act (Article
36-2 1528e, Vernon's Texas Civil Statutes) having its principal place of
36-3 business in the State of Texas and having as one of its purposes
36-4 the authority to act as an agent covered by this Article];
36-5 (2) the corporation or partnership meets the
36-6 definition of that entity adopted under Section 1A of this article;
36-7 [That every officer, director, and shareholder of the corporation
36-8 is individually licensed under the provisions of this Article, or
36-9 that every officer and director of the corporation is individually
36-10 licensed under this Article, that the corporation is a wholly owned
36-11 subsidiary of a parent corporation that is licensed under this
36-12 Article, and that every shareholder of the parent corporation is
36-13 individually licensed under this Article; and]
36-14 (3) at least one officer of the corporation or one
36-15 active partner of the partnership and all other persons performing
36-16 any acts of an agent on behalf of the corporation or partnership in
36-17 this state are individually licensed by the department separately
36-18 from the corporation or partnership;
36-19 (4) the [That such] corporation or partnership will
36-20 have the ability to pay any sums up to $25,000 which it might
36-21 become legally obligated to pay on account of any claim made
36-22 against it by any customer and caused by any negligent act, error,
36-23 or omission of the corporation or partnership or any person for
36-24 whose acts the corporation or partnership is legally liable in the
36-25 conduct of its business under this code [Article]. The term
36-26 "customer" means any person, firm, or corporation to whom such
36-27 corporation or partnership sells or attempts to sell a policy of
37-1 insurance, or from whom such corporation or partnership accepts an
37-2 application for insurance. Such ability shall be maintained
37-3 [proven] in one of the following ways:
37-4 (A) an errors and omissions policy insuring such
37-5 corporation or partnership against errors and omissions in at least
37-6 the sum of $250,000 [$100,000] with [no more than] a [$10,000]
37-7 deductible of not more than 10 percent of the face amount of the
37-8 policy [feature] issued by an insurance company licensed to do
37-9 business in this state [the State of Texas] or, if a policy cannot
37-10 be obtained from a company licensed to do business in this state
37-11 [Texas], through a properly obtained surplus lines policy [issued
37-12 by a company not licensed to do business in Texas on filing an
37-13 affidavit with the department stating the inability to obtain
37-14 coverage and receiving the commissioner's approval]; or
37-15 (B) a bond executed by such corporation or
37-16 partnership as principal and a surety company authorized to do
37-17 business in this state [State], as surety, in the principal sum of
37-18 $25,000, payable to the department for the use and benefit of
37-19 customers of such corporation or partnership, conditioned that such
37-20 corporation or partnership shall pay any final judgment recovered
37-21 against it by any customer[; or]
37-22 [(C) a deposit of cash or securities of the
37-23 class authorized by Articles 2.08 and 2.10, Insurance Code, as
37-24 amended, having a fair market value of $25,000 with the
37-25 comptroller. The comptroller is directed to accept and receive
37-26 such deposit and hold it exclusively for the protection of any
37-27 customer of such corporation recovering a final judgment against
38-1 such corporation. Such deposit may be withdrawn only upon filing
38-2 with the department evidence satisfactory to it that the
38-3 corporation has withdrawn from business and has no unsecured
38-4 liabilities outstanding, or that such corporation has provided for
38-5 the protection of its customers by furnishing an errors and
38-6 omissions policy or a bond as provided. Securities so deposited
38-7 may be exchanged from time to time for other qualified securities].
38-8 A binding commitment to issue such a policy or bond[, or the tender
38-9 of such securities,] shall be sufficient in connection with any
38-10 application for license;
38-11 (5) the corporation or partnership intends to be
38-12 actively engaged in the business of insurance as required under
38-13 Subsection (c) of this section;
38-14 (6) each location from which the corporation or
38-15 partnership will conduct its Texas business under authority of an
38-16 insurance license is separately registered with the department;
38-17 (7) the corporation or partnership has submitted the
38-18 application, appropriate fees, and any other information required
38-19 by the department; and
38-20 (8) an officer, director, member, manager, partner, or
38-21 any other person who has the right or ability to control the
38-22 license holder has not:
38-23 (A) had a license suspended or revoked or been
38-24 the subject of any other disciplinary action by the insurance
38-25 regulator of this or any other state; or
38-26 (B) committed an act for which a license may be
38-27 denied under Article 21.01-2 of this code.
39-1 (l) Nothing contained in this section [herein] shall be
39-2 construed to permit any unlicensed employee or agent of any
39-3 corporation or partnership to perform any act of an agent under
39-4 this subchapter [Article] without obtaining a license.
39-5 (m) [If at any time, any corporation holding an agent's
39-6 license does not maintain the qualifications necessary to obtain a
39-7 license, the license of such corporation to act as an agent shall
39-8 be cancelled or denied in accordance with the provisions of
39-9 Sections 10 and 11 of this Article; provided, however, that should
39-10 any person who is not a licensed agent under this Article acquire
39-11 shares in such a corporation by devise or descent, that person
39-12 shall have a period of 90 days from date of acquisition within
39-13 which to obtain a license or to dispose of the shares to a person
39-14 licensed under this Article.]
39-15 [Should such an unlicensed person acquire shares in a
39-16 corporation and not dispose of them within a period of 90 days to a
39-17 licensed agent, then they must be purchased by the corporation for
39-18 their book value, that is, the value of said shares of stock as
39-19 reflected by the regular books and records of said corporation, as
39-20 of the date of the acquisition of said shares by said unlicensed
39-21 person. Should the corporation fail or refuse to so purchase such
39-22 shares, its license shall be cancelled.]
39-23 [Any such corporation shall have the power to redeem the
39-24 shares of any shareholder, or the shares of a deceased shareholder,
39-25 upon such terms as may be agreed upon by the board of directors and
39-26 such shareholder or such shareholder's personal representative, or
39-27 at a price and upon such terms as may be provided in the articles
40-1 of incorporation, the bylaws, or an existing contract entered into
40-2 between the shareholders of the corporation.]
40-3 Each corporation or partnership licensed as an agent under
40-4 this subchapter [Article] shall file, under oath, on a form
40-5 developed by the department, biographical information for each [a
40-6 list of the names and addresses of all] of its executive officers
40-7 and[,] directors or unlicensed partners who administer the entity's
40-8 operations in this state, and shareholders who are in control of
40-9 the corporation, or any other partners who have the right or
40-10 ability to control the partnership. If any corporation or
40-11 partnership is owned, in whole or in part, by another entity, a
40-12 biographical form is required for each individual who is in control
40-13 of the parent entity[, and shareholders with its application for
40-14 renewal license].
40-15 (n) Each corporation or partnership shall notify the
40-16 department on a monthly basis of:
40-17 (1) the addition or removal of licensed agents
40-18 employed by the corporation or partnership to perform any act of an
40-19 agent in this state;
40-20 (2) a felony conviction of a licensed agent of the
40-21 entity or any individual associated with the corporation or
40-22 partnership who is required to file biographical information with
40-23 the department;
40-24 (3) an event that would require notification under
40-25 Article 1.30 of this code; and
40-26 (4) the addition or removal of an officer, director,
40-27 partner, member, or manager.
41-1 (o) The department shall issue a license to a bank in the
41-2 manner provided for the licensing of a corporation under this
41-3 section.
41-4 (p) A person may not acquire in any manner any ownership
41-5 interest in an entity licensed as an agent under this subchapter if
41-6 the person is, or after the acquisition would be, directly or
41-7 indirectly, in control of the license holder, or otherwise acquire
41-8 control of or exercise any control over the license holder, unless
41-9 the person has filed the following information with the department
41-10 under oath:
41-11 (1) a biographical form for each person by whom or on
41-12 whose behalf the acquisition of control is to be effected;
41-13 (2) a statement certifying that no person who is
41-14 acquiring an ownership interest in or control of the license holder
41-15 has been the subject of a disciplinary action taken by any state
41-16 insurance regulator;
41-17 (3) a statement certifying that, immediately on the
41-18 change of control, the license holder will be able to satisfy the
41-19 requirements for the issuance of the license to solicit the line or
41-20 lines of insurance for which it is licensed; and
41-21 (4) any additional information that the commissioner
41-22 may by rule prescribe as necessary or appropriate to the protection
41-23 of the insurance consumers of this state or as in the public
41-24 interest.
41-25 (q) If a person required to file a statement under
41-26 Subsection (p) of this section is a partnership, limited
41-27 partnership, syndicate, or other group, the commissioner may
42-1 require that the information required by Subdivisions (1)-(4) of
42-2 that subsection for an individual be provided regarding each
42-3 partner of the partnership or limited partnership, each member of
42-4 the syndicate or group, and each person who controls the partner or
42-5 member. If the partner, member, or person is a corporation or the
42-6 person required to file the statement under Subsection (p) of this
42-7 section is a corporation, the commissioner may require that the
42-8 information required by Subdivisions (1)-(4) of that subsection be
42-9 provided regarding:
42-10 (1) the corporation;
42-11 (2) each individual who is an executive officer or
42-12 director of the corporation; and
42-13 (3) each person who is directly or indirectly the
42-14 beneficial owner of more than 10 percent of the outstanding voting
42-15 securities of the corporation.
42-16 (r) The department may disapprove an acquisition of control
42-17 if, after notice and opportunity for hearing, the commissioner
42-18 determines that:
42-19 (1) immediately on the change of control the license
42-20 holder would not be able to satisfy the requirements for the
42-21 issuance of the license to solicit the line or lines of insurance
42-22 for which it is presently licensed;
42-23 (2) the competence, trustworthiness, experience, and
42-24 integrity of the persons who would control the operation of the
42-25 license holder are such that it would not be in the interest of the
42-26 insurance consumers of this state to permit the acquisition of
42-27 control; or
43-1 (3) the acquisition of control would violate this code
43-2 or another law of this state, another state, or the United States.
43-3 (s) Notwithstanding Subsection (q) of this section, a change
43-4 in control is considered approved if the department has not
43-5 proposed to deny the requested change before the 91st day after the
43-6 date of receipt by the department of all information required by
43-7 this section.
43-8 (t) The commissioner shall be the corporation's or
43-9 partnership's attorney for service of process on whom all lawful
43-10 process, notice, or demand may be served in any legal proceeding
43-11 against the corporation or partnership if:
43-12 (1) the corporation or partnership licensed to
43-13 transact business in this state fails to appoint or maintain an
43-14 attorney for service in this state;
43-15 (2) an attorney for service cannot with reasonable
43-16 diligence be found; or
43-17 (3) the license of a corporation or partnership is
43-18 revoked.
43-19 (u) If a corporation or partnership that holds an agent's
43-20 license does not maintain the qualifications necessary for issuance
43-21 of the license, the department shall deny, revoke, or suspend the
43-22 license of the corporation or partnership to act as an agent as
43-23 provided by Article 21.01-2 of this code.
43-24 (v) A person licensed under this subchapter shall maintain
43-25 all insurance records, including all records relating to customer
43-26 complaints, separate from the records of any other business in
43-27 which the person may be engaged.
44-1 [Each corporation shall notify the department upon any change
44-2 in its officers, directors, or shareholders not later than the 30th
44-3 day after the date on which the change becomes effective.]
44-4 [Except as provided by Subdivision (2) of this subsection, a
44-5 corporation may not own any interest in another corporation
44-6 licensed under this Article, and each owner of an interest in a
44-7 corporation licensed under this Article shall be a natural person
44-8 who holds a valid license issued under this Article.]
44-9 [(e) The department shall issue a license to a bank if the
44-10 department finds that:]
44-11 [(1) the bank satisfies the definition of Section 1C
44-12 of this Article;]
44-13 [(2) at least one officer of the bank and each
44-14 individual who will be performing any acts as an agent for the bank
44-15 are individually licensed under this Article; and]
44-16 [(3) the bank will have the ability to pay any sums up
44-17 to $25,000 that it might become legally obligated to pay on account
44-18 of any claim made against it by a customer and caused by a
44-19 negligent act, error, or omission of the bank or any person for
44-20 whose acts the bank is legally liable in the conduct of its
44-21 business under this Article. The term "customer" means any person,
44-22 firm, or corporation to whom the bank sells or attempts to sell a
44-23 policy of insurance or from whom the bank accepts an application
44-24 for insurance. That ability shall be proven through:]
44-25 [(A) an errors and omissions policy insuring the
44-26 bank against errors and omissions in at least the sum of $100,000
44-27 with not more than a $10,000 deductible feature, issued by an
45-1 insurance company licensed to do business in this state or, if a
45-2 policy cannot be obtained from a company licensed to do business in
45-3 this state, a policy issued by a company not licensed to do
45-4 business in this state on filing an affidavit with the department
45-5 stating the inability to obtain coverage and receiving the
45-6 department's approval;]
45-7 [(B) a bond executed by the bank as principal
45-8 and a surety company authorized to do business in this state, as
45-9 surety, in the principal sum of $25,000, payable to the department
45-10 for the use and benefit of customers of the bank, conditioned that
45-11 the bank shall pay any final judgment recovered against it by a
45-12 customer; or]
45-13 [(C) a deposit with the comptroller of cash or
45-14 securities of the class authorized by Articles 2.08 and 2.10 of
45-15 this code, with a fair market value of $25,000. The comptroller
45-16 shall accept and receive the deposit and hold it exclusively for
45-17 the protection of a customer of the bank who recovers a final
45-18 judgment against the bank. The deposit may be withdrawn only on
45-19 filing with the department satisfactory evidence that the bank has
45-20 withdrawn from the business of insurance and has no unsecured
45-21 liabilities outstanding or that the bank has provided for the
45-22 protection of its customers by furnishing an errors and omissions
45-23 policy or a bond as provided by this subdivision. Securities so
45-24 deposited may be exchanged from time to time for other qualified
45-25 securities.]
45-26 [A binding commitment to issue such a policy or bond, or the
45-27 tender of applicable securities, is sufficient in connection with
46-1 an application for license.]
46-2 [Nothing in this subsection permits an unlicensed employee or
46-3 agent of a bank to perform any act of an agent under this Article
46-4 without obtaining a license.]
46-5 [A bank licensed as an agent under this Article may have
46-6 additional offices from which the business of insurance is
46-7 conducted only in a place with a population of 5,000 or less and
46-8 must comply with the department's regulations regarding additional
46-9 offices.]
46-10 [A bank licensed as an agent under this Article must maintain
46-11 the insurance records of the bank, including all files relating to
46-12 customer complaints, separate from records relating to the banking
46-13 transactions of the bank.]
46-14 [If at any time, a bank that holds an agent's license does
46-15 not maintain the qualifications necessary to obtain a license, the
46-16 license of that bank to act as an agent shall be canceled or denied
46-17 in accordance with Sections 10 and 11 of this Article.]
46-18 [Each bank licensed as an agent under this Article shall file
46-19 under oath with its application for license renewal a list of the
46-20 name and address of each individual who will be acting as an agent
46-21 on behalf of the bank and of each officer and director of the bank,
46-22 as defined by Article 21.02 of this code, and other biographical
46-23 information as required by the department.]
46-24 [Each bank shall notify the department of any change in its
46-25 officers and directors, and any change in other persons who will be
46-26 acting as agents, as defined by Article 21.02 of this code, and
46-27 submit biographical information on those officers, directors, and
47-1 persons as required by the department not later than the 30th day
47-2 after the date on which the change takes effect.]
47-3 SECTION 1.12. Article 21.07, Insurance Code, is amended by
47-4 adding Section 3A to read as follows:
47-5 Sec. 3A. TEMPORARY LICENSE. (a) The department may issue a
47-6 temporary agent's license to an applicant for a license under
47-7 Section 2 of this article who is being considered for appointment
47-8 as an agent by another license holder, an insurer, or a health
47-9 maintenance organization. An applicant for a temporary license is
47-10 not required to pass a written examination. A temporary license is
47-11 valid for the 90 days after the date of issuance. The department
47-12 shall issue a temporary license immediately on receipt by the
47-13 department of a properly completed application executed by the
47-14 person in the form required by Section 2 of this article,
47-15 accompanied by the nonrefundable filing fee set by the department
47-16 and a certificate signed by an officer or properly authorized
47-17 representative of the agent, insurer, or health maintenance
47-18 organization stating that:
47-19 (1) the applicant is being considered for appointment
47-20 by the agent, insurer, or health maintenance organization as its
47-21 full-time agent;
47-22 (2) the agent, insurer, or health maintenance
47-23 organization desires that the applicant be issued a temporary
47-24 license; and
47-25 (3) the applicant will complete, under the agent's,
47-26 insurer's, or health maintenance organization's supervision, at
47-27 least 40 hours of training as prescribed by Subsection (h) of this
48-1 section not later than the 14th day after the date on which the
48-2 application, certificate, and nonrefundable fee are delivered or
48-3 mailed to the department.
48-4 (b) If the temporary license is not received from the
48-5 department before the eighth day after the date on which the
48-6 application, certificate, and nonrefundable fee are delivered or
48-7 mailed to the department and the agent, insurer, or health
48-8 maintenance organization has not been notified that the application
48-9 is denied, the agent, insurer, or health maintenance organization
48-10 may assume that the temporary license will be issued in due course
48-11 and the applicant may proceed to act as an agent.
48-12 (c) A temporary license may not be renewed or issued more
48-13 than once in a consecutive six-month period to the same applicant.
48-14 (d) A temporary license may not be granted to a person who
48-15 does not intend to apply for a license to sell insurance or
48-16 memberships to the public generally.
48-17 (e) A temporary license may not be used to obtain
48-18 commissions from sales made to persons who have family, employment,
48-19 or business relationships with the temporary license holder. An
48-20 agent, insurer, or health maintenance organization may not
48-21 knowingly pay, directly or indirectly, to the holder of a temporary
48-22 license under this section, and a temporary license holder may not
48-23 receive or accept, a commission on the sale of a contract of
48-24 insurance or membership covering:
48-25 (1) the temporary license holder;
48-26 (2) a person related to the temporary license holder
48-27 by consanguinity or affinity;
49-1 (3) a person who is or has been during the past six
49-2 months the temporary license holder's employer, either as an
49-3 individual or as a member of a partnership, association, firm, or
49-4 corporation; or
49-5 (4) a person who is or who has been during the past
49-6 six months the employee of the temporary license holder.
49-7 (f) A person who has been issued a temporary license under
49-8 this section and is acting under the authority of the temporary
49-9 license may not engage in any insurance solicitation, sale, or
49-10 other agency transaction that results in or is intended to result
49-11 in the replacement of any existing individual life insurance policy
49-12 form or annuity contract that is in force, or receive, directly or
49-13 indirectly, any commission or other compensation that may or does
49-14 result from such a solicitation, sale, or other agency transaction.
49-15 A person who holds a permanent license may not circumvent or
49-16 attempt to circumvent the intent of this subsection by acting for
49-17 or with a person holding a temporary license. As used in this
49-18 subsection, "replacement" means a transaction in which a new life
49-19 insurance or annuity contract is to be purchased, and it is known
49-20 or should be known to the temporary agent that by reason of the
49-21 solicitation, sale, or other transaction the existing life
49-22 insurance or annuity contract has been or is to be:
49-23 (1) lapsed, forfeited, surrendered, or otherwise
49-24 terminated;
49-25 (2) converted to reduced paid-up insurance, continued
49-26 as extended term insurance, or otherwise reduced in value by the
49-27 use of nonforfeiture benefits or other policy values;
50-1 (3) amended so as to effect either a reduction in
50-2 benefits or in the term for which coverage would otherwise remain
50-3 in force or for which benefits would be paid;
50-4 (4) reissued with any reduction in cash value; or
50-5 (5) pledged as collateral or subjected to borrowing,
50-6 whether in a single loan or under a schedule of borrowing over a
50-7 period of time, for amounts in the aggregate exceeding 25 percent
50-8 of the loan value set forth in the policy.
50-9 (g) The department may cancel, suspend, or revoke the
50-10 temporary appointment powers of an agent, insurer, or health
50-11 maintenance organization if, after notice and opportunity for
50-12 hearing, the commissioner finds that that agent, insurer, or health
50-13 maintenance organization has abused the temporary appointment
50-14 powers. An appeal from the department's decision is subject to
50-15 Article 1.04 of this code. In considering whether abuse has
50-16 occurred, the department may consider:
50-17 (1) the number of temporary appointments made;
50-18 (2) the percentage of appointees sitting for
50-19 examination as agents under this article, as provided by Subsection
50-20 (j) of this section; and
50-21 (3) the number of appointees who pass the examination.
50-22 (h) The agent, insurer, or health maintenance organization
50-23 shall administer at least 40 hours of training to each applicant
50-24 for a temporary license not later than the 14th day after the date
50-25 on which the application, certificate, and nonrefundable fee are
50-26 delivered or mailed to the department. At least 10 hours must be
50-27 taught in a classroom setting, including an accredited college,
51-1 university, junior college, or community college, a business
51-2 school, or a private institute or classes sponsored by the agent,
51-3 insurer, or health maintenance organization and especially
51-4 established for this purpose. The training program must be
51-5 designed to provide an applicant with basic knowledge of:
51-6 (1) the broad principles of insurance, including the
51-7 licensing and regulatory laws of this state;
51-8 (2) the broad principles of health maintenance
51-9 organizations, including membership requirements and related
51-10 licensing and regulatory laws of this state; and
51-11 (3) the ethical obligations and duties of an agent.
51-12 (i) If the commissioner finds under Subsection (g) of this
51-13 section that an abuse of temporary appointment powers has occurred,
51-14 the commissioner may require the affected agent, insurer, or health
51-15 maintenance organization to file with the department a description
51-16 of the agent's, insurer's, or health maintenance organization's
51-17 training program and may require the agent, insurer, or health
51-18 maintenance organization to obtain the approval of the department
51-19 before continuing to use the training program.
51-20 (j) Each agent, insurer, or health maintenance organization
51-21 shall ensure that, during any two consecutive calendar quarters, at
51-22 least 70 percent of the agent's, insurer's, or health maintenance
51-23 organization's applicants for temporary licenses sit for the
51-24 required licensing examination. At least 50 percent of the
51-25 applicants taking the examination must pass during that period.
51-26 (k) An agent, insurer, or health maintenance organization
51-27 may not make more than 250 appointments of temporary license
52-1 holders during a calendar year.
52-2 SECTION 1.13. Section 6, Article 21.07, Insurance Code, is
52-3 amended to read as follows:
52-4 Sec. 6. FILING OF [AGENT MAY BE LICENSED TO REPRESENT]
52-5 ADDITIONAL APPOINTMENTS [INSURERS]. (a) Except as specifically
52-6 prohibited by another provision of this code, an [Any] agent
52-7 licensed under this subchapter [Article] may represent and act as
52-8 an agent for more than one insurance carrier at any time while the
52-9 agent's license is in force, if the agent so desires. Any such
52-10 agent and the insurance carrier involved shall file with the
52-11 department [must give notice to the State Board of Insurance of]
52-12 any additional appointment [or appointments] authorizing the agent
52-13 to act as agent for an additional insurance carrier or carriers not
52-14 later than the 30th day after the effective date of the
52-15 appointment. The filing [Such notice] must include:
52-16 (1) [be accompanied by] a certificate from the [each]
52-17 insurance carrier to be named in the [each] additional appointment
52-18 that states[, and must state] that the [said] insurance company
52-19 desires to appoint the applicant as its agent;
52-20 (2) [. This notice shall also contain such] other
52-21 information as the commissioner [State Board of Insurance] may
52-22 require; and
52-23 (3) [. The agent shall be required to pay] a
52-24 nonrefundable fee in an amount [not to exceed $16 as] determined by
52-25 the commissioner [State Board of Insurance] for each additional
52-26 appointment for which the insurance carrier applies [applied for,
52-27 which fee shall accompany the notice. If approval of the
53-1 additional appointment is not received from the State Board of
53-2 Insurance before the eighth day after the date on which the
53-3 completed application and fee were received by the Board, the agent
53-4 and the insurance carrier, in the absence of notice of disapproval,
53-5 may assume that the Board approves the application, and the agent
53-6 may act for the insurance carrier].
53-7 (b) An appointment made under this Article to authorize an
53-8 agent to act as an agent for an insurance carrier continues in
53-9 effect without the necessity of renewal until it is terminated or
53-10 [and] withdrawn by the insurance carrier or agent. If the agent is
53-11 terminated for cause, the insurance carrier shall follow the
53-12 procedures established under Section 6B of [as provided by this
53-13 section or is otherwise terminated in accordance with] this
53-14 Article. Each renewal license issued to the agent authorizes the
53-15 agent to represent and act for the insurance carriers for which the
53-16 agent holds an appointment until the appointment is terminated or
53-17 withdrawn, and that agent is considered to be the agent of the
53-18 appointing insurance carriers for the purposes of this code
53-19 [Article].
53-20 (c) An agent appointed under this section may act on behalf
53-21 of the appointing carrier before the department receives the filing
53-22 made under this section.
53-23 (d) A person acting as a sub-agent is not required to be
53-24 separately appointed by each insurance carrier that has appointed
53-25 the licensed person who has designated the sub-agent in writing to
53-26 the department. Termination of the sub-agent by the licensed
53-27 person shall be reported promptly to the department and terminates
54-1 the sub-agent's authority to act for the licensed person and that
54-2 person's insurance carriers.
54-3 SECTION 1.14. Article 21.07, Insurance Code, is amended by
54-4 adding Sections 6B, 6C, 6D, and 6E to read as follows:
54-5 Sec. 6B. INSURANCE CARRIER TO NOTIFY DEPARTMENT OF
54-6 TERMINATION OF CONTRACT; COMMUNICATION PRIVILEGED. (a) Each
54-7 insurance carrier shall, on termination of the appointment of an
54-8 agent for cause, immediately file with the department a statement
54-9 of the facts relating to the termination of the appointment and
54-10 the date and cause of the termination. On receipt of the statement
54-11 the department shall record the termination of the appointment of
54-12 that agent to represent the insurance carrier in this state.
54-13 (b) A document, record, statement, or other information
54-14 required to be made or disclosed to the department under this
54-15 section is a privileged and confidential communication and is not
54-16 admissible in evidence in any court action or proceeding except
54-17 under a subpoena issued by a court of record.
54-18 (c) An insurance carrier, an employee or agent of the
54-19 carrier, or any other person, acting without malice, is not liable
54-20 for providing the information required to be disclosed under this
54-21 section.
54-22 Sec. 6C. FEES; USE OF FUNDS. (a) The department shall
54-23 collect from each agent of an insurance carrier writing insurance
54-24 in this state under this code a nonrefundable license fee and a
54-25 nonrefundable appointment fee for each appointment by an insurance
54-26 carrier. These fees, together with examination fees, license fees,
54-27 and license renewal fees, shall be deposited to the credit of the
55-1 Texas Department of Insurance operating fund.
55-2 (b) The department may use any portion of the fees collected
55-3 to enforce this subchapter, may employ persons as it considers
55-4 necessary to investigate and make reports regarding alleged
55-5 violations of this code and misconduct on the part of agents, and
55-6 may pay the salaries and expenses of those persons and office
55-7 employees and other expenses necessary to enforce this subchapter
55-8 from the fees collected. A person employed by the department under
55-9 this section may administer the oath and examine under oath any
55-10 person considered necessary in gathering information and evidence
55-11 and may have that information and evidence reduced to writing if
55-12 considered necessary, and all such expenses shall be paid from the
55-13 fees.
55-14 (c) The department shall set the fees in amounts reasonable
55-15 and necessary to implement this subchapter.
55-16 Sec. 6D. DUPLICATE LICENSE FEE. The department shall
55-17 collect in advance from an agent requesting a duplicate license a
55-18 fee in an amount set by the department. The fee collected under
55-19 this section shall be deposited to the credit of the Texas
55-20 Department of Insurance operating fund.
55-21 Sec. 6E. REQUIREMENT TO APPOINT SUB-AGENT. If a general
55-22 life, accident, and health agent or general property and casualty
55-23 agent who has been appointed by an insurance carrier that has a
55-24 permit to do business in this state desires to appoint a sub-agent
55-25 in the operation of an insurance business, the general agent shall
55-26 submit to the department in writing, in the form prescribed by the
55-27 department, notice of the sub-agent's appointment. The notice must
56-1 be accompanied by a nonrefundable fee in an amount determined by
56-2 the commissioner.
56-3 ARTICLE 2. LIFE, ACCIDENT, AND HEALTH LICENSES
56-4 SECTION 2.01. Subchapter A, Chapter 21, Insurance Code, is
56-5 amended by adding Article 21.07-1 to read as follows:
56-6 Art. 21.07-1. TEXAS LIFE, ACCIDENT, AND HEALTH AGENTS
56-7 LICENSE ACT
56-8 Sec. 1. SHORT TITLE; APPLICATION. (a) This article may be
56-9 cited as the Texas Life, Accident, and Health Agents License Act.
56-10 (b) Each agent of an insurance company authorized to provide
56-11 life, accident, and health insurance coverage in this state is
56-12 subject to this article. This article applies to each person who:
56-13 (1) performs the acts of an agent, as defined by
56-14 Article 21.02 of this code, whether through oral, written, or
56-15 electronic communications or otherwise, by the solicitation of,
56-16 negotiation for, procurement of, or collection of premiums on an
56-17 insurance or annuity contract offered by any type of insurance
56-18 carrier authorized to sell life, accident, and health insurance
56-19 products in this state; or
56-20 (2) represents or purports to represent a health
56-21 maintenance organization in the solicitation, negotiation,
56-22 procurement, or effectuation of membership in the health
56-23 maintenance organization.
56-24 Sec. 2. GENERAL LIFE, ACCIDENT, AND HEALTH LICENSE; LICENSE
56-25 REQUIRED. (a) A general life, accident, and health license is
56-26 required for each person who acts as:
56-27 (1) an agent writing life, accident, and health
57-1 insurance for a life insurance company;
57-2 (2) an agent writing only accident and health
57-3 insurance;
57-4 (3) an agent representing a health maintenance
57-5 organization;
57-6 (4) an agent writing fixed or variable annuity
57-7 contracts or variable life contracts;
57-8 (5) an industrial life insurance agent for an
57-9 industrial company that writes only weekly premium life insurance
57-10 on a debit basis under Article 3.52 of this code;
57-11 (6) an agent writing:
57-12 (A) only life insurance in excess of $15,000 on
57-13 any one life for a stipulated premium insurance company;
57-14 (B) only accident and health insurance for a
57-15 stipulated premium insurance company; or
57-16 (C) both types of insurance described by
57-17 Paragraphs (A) and (B) of this subdivision;
57-18 (7) an agent writing life, accident, and health
57-19 insurance for any type of authorized life insurance company,
57-20 including a legal reserve life insurance company, domiciled in this
57-21 state, representing the insurer in a foreign country or territory
57-22 and either on a United States military installation or with United
57-23 States military personnel; or
57-24 (8) an agent writing any other type of insurance as
57-25 required by the commissioner for the protection of the insurance
57-26 consumers of this state.
57-27 (b) For the purposes of this subsection, a "combination
58-1 company" is an insurer that writes weekly premium life insurance or
58-2 monthly ordinary life insurance on a debit basis. A general life,
58-3 accident, and health license is required for each person who acts
58-4 as a combination life insurance agent for a combination company. A
58-5 combination company and a combination life insurance agent may also
58-6 write ordinary contracts of life insurance.
58-7 (c) Except as otherwise provided by this subsection, a
58-8 general life, accident, and health license is required for an agent
58-9 writing life, accident, and health insurance for a fraternal
58-10 benefit society under Chapter 10 of this code. A license is not
58-11 required for an agent, regularly salaried officer, employee,
58-12 representative, or member of a fraternal benefit society who
58-13 devotes less than 50 percent of the person's time to the
58-14 solicitation or procurement of insurance contracts for the society.
58-15 A person who, in the preceding calendar year, has solicited or
58-16 procured the following amounts on any of the following contracts of
58-17 insurance on behalf of a fraternal benefit society is presumed to
58-18 have devoted 50 percent or more of the person's time to the
58-19 solicitation or procurement of insurance contracts:
58-20 (1) life insurance contracts that generate, in the
58-21 aggregate, more than $20,000 of direct premium for all lives
58-22 insured for the preceding calendar year, if no interest-sensitive
58-23 life insurance certificate is solicited or procured with a face
58-24 amount of insurance that exceeds $35,000 unless the person has
58-25 obtained the designation of "Fraternal Insurance Counselor";
58-26 (2) an insurance contract, other than a life insurance
58-27 contract, that the fraternal benefit society may write that insures
59-1 the individual lives of more than 25 persons; or
59-2 (3) a variable life insurance or variable annuity
59-3 contract.
59-4 Sec. 3. AUTHORITY TO WRITE ADDITIONAL PRODUCT LINES. A
59-5 person who holds a general life, accident, and health license
59-6 issued under the requirements of this subchapter may write
59-7 additional types of insurance contracts as provided under Section 4
59-8 of this article or under a specialty license program established by
59-9 the department without obtaining an additional license.
59-10 Sec. 4. LIMITED LIFE, ACCIDENT, AND HEALTH LICENSE. (a) In
59-11 this section, "job protection insurance" has the meaning assigned
59-12 by Article 25.01 of this code.
59-13 (b) This section applies to:
59-14 (1) an agent for an insurance company that writes only
59-15 job protection insurance;
59-16 (2) an agent for a local mutual aid association, a
59-17 local mutual burial association, or a statewide mutual aid
59-18 association;
59-19 (3) an agent writing policies or riders to policies
59-20 that provide only:
59-21 (A) lump-sum cash benefits in the event of
59-22 accidental death, death by accidental means, or dismemberment; or
59-23 (B) ambulance expense benefits in the event of
59-24 accident or sickness;
59-25 (4) an agent writing prepaid legal services contracts
59-26 under Article 5.13-1 or Chapter 23 of this code;
59-27 (5) an agent writing credit insurance except as
60-1 otherwise provided under a specialty license program established by
60-2 the department;
60-3 (6) the marketing, offering for sale, or delivery of
60-4 credit insurance products for use by a person, regardless of
60-5 whether the person holds a specialty license issued by the
60-6 department under this code, who is:
60-7 (A) a retail distributor of goods;
60-8 (B) an automobile dealer;
60-9 (C) a bank, state or federal savings and loan,
60-10 or state or federal credit union;
60-11 (D) a finance company;
60-12 (E) a production credit association; or
60-13 (F) a retailer of manufactured housing,
60-14 including mobile homes; and
60-15 (7) an agent writing any other type of insurance
60-16 required by the commissioner to be licensed for the protection of
60-17 the insurance consumers of this state.
60-18 (c) A person to whom this section applies must hold a
60-19 limited life, health, and accident license under this section. The
60-20 commissioner may adopt rules as necessary to implement this
60-21 section.
60-22 (d) Notwithstanding this section or any other law, a funeral
60-23 prearrangement life insurance agent may not:
60-24 (1) act as an agent for an insurance company unless
60-25 the agent acts under the supervision of a person, including a
60-26 corporation, who:
60-27 (A) holds a general life, accident, and health
61-1 license; and
61-2 (B) holds or is an authorized representative of
61-3 a holder of a permit issued by the Texas Department of Banking to
61-4 sell prepaid funeral benefits under Chapter 154, Finance Code;
61-5 (2) write any coverage or combination of coverages
61-6 with an initial guaranteed death benefit in excess of $15,000 on
61-7 any life; or
61-8 (3) act as an agent for more than one insurance
61-9 company.
61-10 (e) A person who holds a limited life, accident, and health
61-11 license issued under this section may write only the types of
61-12 insurance products described by this section.
61-13 (f) An applicant for a limited life, accident, and health
61-14 license is eligible for a temporary license under Section 3A,
61-15 Article 21.07, of this code.
61-16 Sec. 5. FUNERAL PREARRANGEMENT LIFE INSURANCE AGENT. (a)
61-17 In this section, "funeral prearrangement life insurance agent"
61-18 means a life insurance agent who, subject to the limitations of
61-19 this section, writes only life insurance policies and fixed annuity
61-20 contracts to secure the delivery of funeral services and
61-21 merchandise under prepaid funeral contracts regulated by the Texas
61-22 Department of Banking under Chapter 154, Finance Code.
61-23 (b) The commissioner shall issue a license to act as a
61-24 funeral prearrangement life insurance agent to an individual after
61-25 receiving certification from an insurance company authorized to
61-26 write life insurance and annuities in this state that the applicant
61-27 has completed a course of study and instruction on life insurance
62-1 and fixed annuities for applicants offered by the insurance company
62-2 and passed without aid a written examination administered by the
62-3 insurance company. The course of study and instruction must be at
62-4 least a five-hour course and must include instruction on:
62-5 (1) the policies to be sold; and
62-6 (2) the laws relating to funeral prearrangement.
62-7 (c) The commissioner shall authorize an insurance company to
62-8 administer a funeral prearrangement life insurance agent
62-9 examination as provided by Subsection (b) of this section after
62-10 approval by the commissioner of a complete outline and explanation
62-11 of the course of study and instruction and the nature and manner of
62-12 conducting the examination for applicants. The commissioner shall
62-13 prescribe a uniform examination for applicants that fairly
62-14 addresses the information contained in the approved course of study
62-15 and instruction.
62-16 (d) The commissioner may investigate as necessary the manner
62-17 of instruction and the examination administered by an insurance
62-18 company under this section. The commissioner may withdraw from an
62-19 insurance company the authority under this section to offer
62-20 instruction and administer an examination.
62-21 (e) A funeral prearrangement life insurance agent licensed
62-22 under this section may not:
62-23 (1) write any coverage or combination of coverages
62-24 with an initial guaranteed death benefit that exceeds $15,000 on
62-25 any life; or
62-26 (2) act as an agent for more than one insurance
62-27 company.
63-1 (f) A license issued under this section to act as an agent
63-2 for an insurance company is canceled when the license holder ceases
63-3 to act as an agent for an insurance company. Not later than the
63-4 15th day after the date on which the license holder ceases to act
63-5 as an agent for an insurance company, the insurance company or
63-6 agent shall send written notification to the department.
63-7 (g) Except as specifically provided by this section, the
63-8 provisions of Subchapter A of this chapter that apply to a limited
63-9 license apply to a license issued under this section.
63-10 Sec. 6. LIFE INSURANCE NOT EXCEEDING $15,000. (a) The
63-11 commission shall issue a license to act as an agent to an
63-12 individual who writes only life insurance not to exceed $15,000 on
63-13 any one life after receiving certification from a stipulated
63-14 premium insurance company, a statewide mutual assessment company, a
63-15 local mutual aid association, or a local mutual burial association,
63-16 that the applicant has completed a course of study and instruction
63-17 on life insurance and fixed annuities for applicants offered by the
63-18 insurer and passed without aid a written examination administered
63-19 by the insurer. The course of study and instruction must be at
63-20 least a five-hour course and must include instruction on:
63-21 (1) the policies to be sold; and
63-22 (2) the laws relating to the regulation of insurance
63-23 in this state.
63-24 (b) The commissioner shall authorize an insurer described by
63-25 Subsection (a) of this section to administer an agent examination
63-26 as provided by Subsection (a) of this section after approval by the
63-27 commissioner of a complete outline and explanation of the course of
64-1 study and instruction and the nature and manner of conducting the
64-2 examination for applicants. The commissioner shall prescribe a
64-3 uniform examination for applicants that fairly addresses the
64-4 information contained in the approved course of study and
64-5 instruction.
64-6 (c) The commissioner may investigate as necessary the manner
64-7 of instruction and the examination administered by an insurer under
64-8 this section. The commissioner may withdraw from an insurer the
64-9 authority under this section to offer instruction and administer an
64-10 examination.
64-11 (d) An insurance agent licensed under this section may not
64-12 write any coverage or combination of coverages with an initial
64-13 guaranteed death benefit that exceeds $15,000 on any life.
64-14 (e) Except as specifically provided by this section, the
64-15 provisions of Subchapter A of this chapter that apply to a limited
64-16 license apply to a license issued under this section.
64-17 ARTICLE 3. PROPERTY AND CASUALTY LICENSES
64-18 SECTION 3.01. Article 21.14, Insurance Code, is amended to
64-19 read as follows:
64-20 Art. 21.14. TEXAS PROPERTY AND CASUALTY AGENTS LICENSE ACT
64-21 Sec. 1. SHORT TITLE; APPLICATION. (a) This article may be
64-22 cited as the Texas Property and Casualty Agents License Act.
64-23 (b) Each agent of an insurance company authorized to provide
64-24 property and casualty insurance coverage in this state is subject
64-25 to this article. This article applies to each person who performs
64-26 the acts of an agent, as defined by Article 21.02 of this code,
64-27 whether through oral, written, or electronic communications or
65-1 otherwise, by the solicitation of, negotiation for, procurement of,
65-2 or collection of premiums on an insurance contract offered by any
65-3 type of insurance carrier authorized to sell property and casualty
65-4 insurance products in this state, including:
65-5 (1) a fidelity or surety company;
65-6 (2) an interinsurance exchange;
65-7 (3) a mutual company, including a farm mutual or a
65-8 county mutual;
65-9 (4) a reciprocal exchange; or
65-10 (5) a Lloyd's plan.
65-11 Sec. 2. GENERAL PROPERTY AND CASUALTY LICENSE; LICENSE
65-12 REQUIRED. A general property and casualty license is required for
65-13 each person who acts as:
65-14 (1) an agent writing property and casualty insurance
65-15 for an insurance carrier authorized to provide property and
65-16 casualty insurance coverage in this state;
65-17 (2) a sub-agent of a person licensed as an agent under
65-18 this article who solicits and binds insurance risks on behalf of
65-19 that agent; or
65-20 (3) an agent writing any other type of insurance as
65-21 required by the commissioner for the protection of the insurance
65-22 consumers of this state.
65-23 Sec. 3. AUTHORITY TO WRITE ADDITIONAL PRODUCT LINES. A
65-24 person who holds a general property and casualty license issued
65-25 under this subchapter may write additional types of insurance
65-26 contracts as provided under Section 6 of this article or under a
65-27 specialty license program established by the department.
66-1 Sec. 4. AUTHORITY TO WRITE ACCIDENT AND HEALTH INSURANCE. A
66-2 person who holds a general property and casualty license issued
66-3 under this subchapter may write health and accident insurance for a
66-4 property and casualty insurer authorized to sell those insurance
66-5 products in this state without holding a license issued under
66-6 Article 21.07-1 of this code.
66-7 Sec. 5. EMERGENCY LICENSE WITHOUT EXAMINATION. In the event
66-8 of the death or disability of a property and casualty agent or if a
66-9 property and casualty agent is found to be insolvent and unable to
66-10 pay for premiums as they become due to an insurer, the department
66-11 may issue to an applicant for a property and casualty license an
66-12 emergency property and casualty license without examination if it
66-13 is established to the satisfaction of the department that the
66-14 emergency license is necessary for the preservation of the agency
66-15 assets of a deceased, disabled, or insolvent property and casualty
66-16 agent. An emergency license is valid for 90 days in any 12
66-17 consecutive months and may be renewed by the department for an
66-18 additional 90 days during the 12-month period if the other
66-19 requirements of this subchapter are met.
66-20 Sec. 6. LIMITED PROPERTY AND CASUALTY LICENSE.
66-21 (a) Notwithstanding any other law, a limited property and casualty
66-22 license is required for each person who desires to act as an agent
66-23 writing:
66-24 (1) insurance only on growing crops under Article
66-25 21.14-2 of this code;
66-26 (2) any form of insurance authorized under Chapter 16
66-27 of this code for a farm mutual insurance company, except that a
67-1 license is not required under this subsection for a person who
67-2 wrote policies that generated, in the aggregate, less than $50,000
67-3 in direct premium for the preceding calendar year;
67-4 (3) exclusively all forms of insurance authorized to
67-5 be solicited and written in this state that cover the ownership,
67-6 operation, maintenance, or use of a motor vehicle that is designed
67-7 for use on the public highways, including a trailer or semitrailer,
67-8 and the motor vehicle's accessories or equipment;
67-9 (4) prepaid legal services contracts under Article
67-10 5.13-1 or Chapter 23 of this code;
67-11 (5) only industrial fire insurance policies covering
67-12 dwellings, household goods, and wearing apparel on a weekly,
67-13 monthly, or quarterly basis on a continuous premium payment plan
67-14 written for an insurance company whose business is devoted
67-15 exclusively to that business as described by Article 17.02 of this
67-16 code, except that a license is not required under this subsection
67-17 for a person who wrote industrial fire insurance policies that
67-18 generated, in the aggregate, less than $20,000 in direct premium
67-19 for the preceding calendar year;
67-20 (6) an agent writing credit insurance, except as
67-21 otherwise provided by a specialty license program established by
67-22 the department; and
67-23 (7) any other type of insurance as required by the
67-24 commissioner for the protection of the insurance consumers of this
67-25 state.
67-26 (b) Subsection (a)(1) of this section applies to a
67-27 production credit association or bank for a cooperative, as
68-1 provided under the farm credit system under 12 U.S.C. 2001 et seq.,
68-2 as amended.
68-3 (c) A person who holds a limited property and casualty
68-4 license issued under this subchapter may write only the types of
68-5 insurance products designated on the license by the department.
68-6 Sec. 7. FULL-TIME HOME OFFICE EMPLOYEES: MANDATORY
68-7 REGISTRATION, CONTINUING EDUCATION REQUIREMENTS, AND NOTIFICATION
68-8 TO CONSUMERS; DISCIPLINARY ACTIONS. (a) Each actual full-time
68-9 home office salaried employee of an insurance carrier licensed to
68-10 do business in this state who solicits or receives an application
68-11 for the sale of insurance through an oral, written, or electronic
68-12 communication shall register with the commissioner.
68-13 (b) An insurance carrier licensed to do business in this
68-14 state whose general plan of operation includes the use of employees
68-15 described by Subsection (a) of this section shall certify to the
68-16 commissioner that each of those employees receives at least 15
68-17 hours of continuing education annually. Each continuing education
68-18 course provided by the insurance carrier shall be submitted to the
68-19 department for approval as provided by Section 3, Article 21.01-1,
68-20 of this code. A person registered under this section shall comply
68-21 with the continuing education requirements adopted under Section 3,
68-22 Article 21.01-1, of this code, as if the person were a licensed
68-23 agent. The continuing education must be designed to give the
68-24 employee:
68-25 (1) reasonable familiarity with:
68-26 (A) the broad principles of insurance;
68-27 (B) insurance licensing and regulatory laws; and
69-1 (C) the terms and conditions of the insurance
69-2 that the registrant transacts; and
69-3 (2) a fair and general understanding of the duties of
69-4 an insurer to an insured, including training in ethical
69-5 considerations.
69-6 (c) The registration of an actual full-time home office
69-7 salaried employee shall be suspended and the employer insurance
69-8 carrier may be disciplined for any act for which an agent may be
69-9 disciplined under Article 21.01-2 of this code.
69-10 (d) Each registrant under this section shall disclose the
69-11 fact of the registration when making an oral, written, or
69-12 electronic communication to solicit or receive an application for
69-13 the sale of insurance.
69-14 (e) Each person who registers under this section shall
69-15 submit a nonrefundable registration fee in an amount determined by
69-16 the department.
69-17 Sec. 8. INSURANCE SERVICE REPRESENTATIVE LICENSE. (a) An
69-18 insurance service representative license is required for each
69-19 person who is employed on a salaried basis to perform assigned
69-20 duties only within the office of a property and casualty agent.
69-21 Those duties may include the issuance of insurance binders only
69-22 with the express approval of the property and casualty agent who
69-23 supervises the insurance service representative.
69-24 (b) The provisions of Subchapter A of this chapter that
69-25 apply to a general license apply to a license issued under this
69-26 section, except that proof of financial responsibility is not
69-27 required of a person licensed only as an insurance service
70-1 representative.
70-2 Sec. 9. COUNTY MUTUAL AGENT LICENSE. (a) The commission
70-3 shall issue a license to act as an agent for a county mutual
70-4 insurance company under Chapter 17 of this code to an individual
70-5 after receiving certification from the insurance company that the
70-6 applicant has completed a course of study and instruction on motor
70-7 vehicle insurance and insurance covering dwellings for applicants
70-8 offered by the insurance company and passed without aid a written
70-9 examination administered by the insurance company. The course of
70-10 study and instruction must be at least a five-hour course and must
70-11 include instruction on:
70-12 (1) the policies to be sold; and
70-13 (2) the laws relating to the regulation of insurance
70-14 in this state.
70-15 (b) The commissioner shall authorize a county mutual
70-16 insurance company to administer an agent examination as provided by
70-17 Subsection (a) of this section after approval by the commissioner
70-18 of a complete outline and explanation of the course of study and
70-19 instruction and the nature and manner of conducting the examination
70-20 for applicants. The commissioner shall prescribe a uniform
70-21 examination for applicants that fairly addresses the information
70-22 contained in the approved course of study and instruction.
70-23 (c) The commissioner may investigate as necessary the manner
70-24 of instruction and the examination administered by an insurance
70-25 company under this section. The commissioner may withdraw from an
70-26 insurance company the authority under this section to offer
70-27 instruction and administer an examination.
71-1 (d) Except as specifically provided by this section, the
71-2 provisions of Subchapter A of this chapter that apply to a limited
71-3 license apply to a license issued under this section. [LICENSING
71-4 OF LOCAL RECORDING AGENTS AND SOLICITORS; LIFE, HEALTH AND ACCIDENT
71-5 INSURANCE EXCEPTED; OTHER EXCEPTIONS]
71-6 [Sec. 1. CLASSES OF AGENTS. Insurance agents, as that term
71-7 is defined in the laws of this State, shall for the purpose of this
71-8 article be divided into two classes: Local Recording Agents and
71-9 Solicitors.]
71-10 [Sec. 2. DEFINITIONS; CERTAIN ORDERS, SOCIETIES OR
71-11 ASSOCIATIONS NOT AFFECTED. (a) In this article:]
71-12 [(1) "Local Recording Agent" means a person or firm
71-13 engaged in soliciting and writing insurance, being authorized by an
71-14 insurance company or insurance carrier, including fidelity and
71-15 surety companies, to solicit business and to write, sign, execute,
71-16 and deliver policies of insurance, and to bind companies on
71-17 insurance risks, and who maintain an office and a record of such
71-18 business and the transactions which are involved, who collect
71-19 premiums on such business and otherwise perform the customary
71-20 duties of a local recording agent representing an insurance carrier
71-21 in its relation with the public; or a person or firm engaged in
71-22 soliciting and writing insurance, being authorized by an insurance
71-23 company or insurance carrier, including fidelity and surety
71-24 companies, to solicit business, and to forward applications for
71-25 insurance to the home office of the insurance companies and
71-26 insurance carriers, where the insurance company's and insurance
71-27 carrier's general plan of operation in this State provides for the
72-1 appointment and compensation of agents for insurance and for the
72-2 execution of policies of insurance by the home office of the
72-3 insurance company or insurance carrier, or by a supervisory office
72-4 of such insurance company or insurance carrier, and who maintain an
72-5 office and a record of such business and the transactions which are
72-6 involved, and who collect premiums on such business and otherwise
72-7 qualify and perform the customary duties of a local recording agent
72-8 representing an insurance carrier in its relation with the public.]
72-9 [(2) "Solicitor" means a person who is a bona fide
72-10 solicitor and engaged in the business of soliciting and binding
72-11 insurance risks on behalf of a local recording agent, and who
72-12 offices with such local recording agent, and who does not sign and
72-13 execute policies of insurance, and who does not maintain company
72-14 records of such transactions. This shall not be construed to make
72-15 a solicitor of a local recording agent, who places business of a
72-16 class which the rules of the company or carrier require to be
72-17 placed on application or to be written in a supervisory office. A
72-18 solicitor may bind insurance risks only with the express prior
72-19 approval of the local recording agent for whom the solicitor works.]
72-20 [(3) "Board" means the State Board of Insurance.]
72-21 [(4) "Company" or "Carrier" means any insurance
72-22 company, corporation, inter-insurance exchange, mutual, reciprocal,
72-23 association, Lloyds or other insurance carrier licensed to transact
72-24 business in the State of Texas other than as excepted herein.]
72-25 [(5) "Insurance service representative" means a
72-26 solicitor employed on a salaried basis who performs assigned duties
72-27 only within the office of a local recording agent, which may
73-1 include binding insurance risks, but only with the express prior
73-2 approval of the local recording agent for whom the representative
73-3 works.]
73-4 [(b) Nothing contained in this article shall be so construed
73-5 as to affect or apply to orders, societies, or associations which
73-6 admit to membership only persons engaged in one or more crafts or
73-7 hazardous occupations in the same or similar lines of business, and
73-8 the ladies' societies, or ladies' auxiliary to such orders,
73-9 societies or associations, or any secretary of a Labor Union or
73-10 organization, or any secretary or agent of any fraternal benefit
73-11 society, which does not operate at a profit, except that a person
73-12 who has had a license revoked under Section 16 of this article may
73-13 not solicit or otherwise transact business under Chapter 10 of this
73-14 code.]
73-15 [Sec. 3. APPLICATION FOR LICENSE; TO WHOM LICENSE MAY BE
73-16 ISSUED. (a) When any person, partnership, registered limited
73-17 liability partnership, limited liability company, corporation, or
73-18 bank shall desire to engage in business as a local recording agent
73-19 for an insurance company, or insurance carrier, that person or
73-20 entity shall make application for a license to the Texas Department
73-21 of Insurance, in such form as the Department may require. Such
73-22 application shall bear a signed endorsement by a general, state or
73-23 special agent of a qualified insurance company, or insurance
73-24 carrier that applicant or each member of the partnership or each
73-25 stockholder of the corporation or each member of the limited
73-26 liability company is a resident of this state.]
73-27 [(b) The Department shall issue a license to an individual
74-1 or a general partnership or a limited liability partnership
74-2 registered with the Secretary of State under Section 3.08, Texas
74-3 Revised Partnership Act (Article 6132b-3.08, Vernon's Texas Civil
74-4 Statutes), engaging in the business of insurance. The Department
74-5 may not issue a license to a partnership if an inactive partner who
74-6 is not subject to Section 3a of this article has an interest in the
74-7 partnership principally to have written and be compensated therefor
74-8 for insurance on property controlled through ownership, mortgage or
74-9 sale, family relationship, or employment; and provided further,
74-10 that all licensed agents must be residents of Texas. Provided,
74-11 that a person who resides in a town through which the state line
74-12 runs and whose residence is in the town in the adjoining state may
74-13 be licensed, if the person's business office is being maintained in
74-14 this state. All persons acting as agent or solicitor for health
74-15 and accident insurance within the provisions hereof, and who
74-16 represent only fire and casualty companies, and not life insurance
74-17 companies, shall be required to procure only one license, and such
74-18 license as is required under the provisions of this article.]
74-19 [(c) The Department shall issue a license to a corporation
74-20 if the Department finds:]
74-21 [(1) That the corporation is a Texas corporation
74-22 organized or existing under the Texas Business Corporation Act or
74-23 the Texas Professional Corporation Act having its principal place
74-24 of business in the State of Texas and having as one of its purposes
74-25 the authority to act as a local recording agent; and]
74-26 [(2) That every officer, director and shareholder of
74-27 the corporation is individually licensed as a local recording agent
75-1 under the provisions of this Insurance Code, except as may be
75-2 otherwise permitted by this Section or Section 3a of this article,
75-3 or that every officer and director of the corporation is
75-4 individually licensed as a local recording agent under this
75-5 Insurance Code, that the corporation is a wholly owned subsidiary
75-6 of a parent corporation that is licensed as a local recording agent
75-7 under this Insurance Code, and that every shareholder of the parent
75-8 corporation is individually licensed as a local recording agent
75-9 under this Insurance Code, and except as specifically provided by
75-10 this article, that no shareholder of the corporation is a corporate
75-11 entity; and]
75-12 [(3) That such corporation will have the ability to
75-13 pay any sums up to $25,000 which it might become legally obligated
75-14 to pay on account of any claim made against it by any customer and
75-15 caused by any negligent act, error or omission of the corporation
75-16 or any person for whose acts the corporation is legally liable in
75-17 the conduct of its business as a local recording agent. The term
75-18 "customer" as used herein shall mean any person, firm or
75-19 corporation to whom such corporation sells or attempts to sell a
75-20 policy of insurance, or from whom such corporation accepts an
75-21 application for insurance. Such ability shall be proven in one of
75-22 the following ways:]
75-23 [(A) An errors and omissions policy insuring
75-24 such corporation against errors and omissions, in at least the sum
75-25 of $100,000 with no more than a $10,000 deductible feature or the
75-26 sum of at least $300,000 with no more than a $25,000 deductible
75-27 feature, issued by an insurance company licensed to do business in
76-1 the State of Texas or, if a policy cannot be obtained from a
76-2 company licensed to do business in Texas, a policy issued by a
76-3 company not licensed to do business in Texas, on filing an
76-4 affidavit with the Texas Department of Insurance stating the
76-5 inability to obtain coverage and receiving the Department's
76-6 approval; or]
76-7 [(B) A bond executed by such corporation as
76-8 principal and a surety company authorized to do business in this
76-9 state, as surety, in the principal sum of $25,000, payable to the
76-10 Texas Department of Insurance for the use and benefit of customers
76-11 of such corporation, conditioned that such corporation shall pay
76-12 any final judgment recovered against it by any customer; or]
76-13 [(C) A deposit of cash or securities of the
76-14 class authorized by Articles 2.08 and 2.10 of this Code, having a
76-15 fair market value of $25,000 with the comptroller. The comptroller
76-16 is hereby authorized and directed to accept and receive such
76-17 deposit and hold it exclusively for the protection of any customer
76-18 of such corporation recovering a final judgment against such
76-19 corporation. Such deposit may be withdrawn only upon filing with
76-20 the Department evidence satisfactory to it that the corporation has
76-21 withdrawn from business, and has no unsecured liabilities
76-22 outstanding, or that such corporation has provided for the
76-23 protection of its customers by furnishing an errors and omissions
76-24 policy or a bond as hereinbefore provided. Securities so deposited
76-25 may be exchanged from time to time for other qualified securities.]
76-26 [A binding commitment to issue such a policy or bond, or the
76-27 tender of such securities, shall be sufficient in connection with
77-1 any application for license.]
77-2 [Nothing contained herein shall be construed to permit any
77-3 unlicensed employee or agent of any corporation to perform any act
77-4 of a local recording agent without obtaining a local recording
77-5 agent's license. The Department shall not require a corporation to
77-6 take the examination provided in Section 6 of this Article 21.14.]
77-7 [If at any time, any corporation holding a local recording
77-8 agent's license does not maintain the qualifications necessary to
77-9 obtain a license, the license of such corporation to act as a local
77-10 recording agent shall be cancelled or denied in accordance with the
77-11 provisions of Sections 16, 17 and 18 of this Article 21.14;
77-12 provided, however, that should any person who is not a licensed
77-13 local recording agent acquire shares in such a corporation by
77-14 devise or descent, they shall have a period of 90 days from date of
77-15 acquisition within which to obtain a license as a local recording
77-16 agent or to dispose of the shares to a licensed local recording
77-17 agent except as may be permitted by Section 3a of this article.]
77-18 [Should such an unlicensed person, except as may be permitted
77-19 by Section 3a of this article, acquire shares in such a corporation
77-20 and not dispose of them within said period of 90 days to a licensed
77-21 local recording agent, then they must be purchased by the
77-22 corporation for their book value, that is, the value of said shares
77-23 of stock as reflected by the regular books and records of said
77-24 corporation, as of the date of the acquisition of said shares by
77-25 said unlicensed person. Should the corporation fail or refuse to
77-26 so purchase such shares, its license shall be cancelled.]
77-27 [Any such corporation shall have the power to redeem the
78-1 shares of any shareholder, or the shares of a deceased shareholder,
78-2 upon such terms as may be agreed upon by the Board of Directors and
78-3 such shareholder or his personal representative, or at such price
78-4 and upon such terms as may be provided in the Articles of
78-5 Incorporation, the Bylaws, or an existing contract entered into
78-6 between the shareholders of the corporation.]
78-7 [Each corporation licensed as a local recording agent shall
78-8 file, under oath, a list of the names and addresses of all of its
78-9 officers, directors and shareholders with its application for
78-10 renewal license.]
78-11 [Each corporation licensed as a local recording agent shall
78-12 notify the Texas Department of Insurance upon any change in its
78-13 officers, directors or shareholders not later than the 30th day
78-14 after the date on which the change became effective.]
78-15 [The term "firm" as it applies to local recording agents in
78-16 Sections 2, 12 and 16 of this Article 21.14 shall be construed to
78-17 include corporations.]
78-18 [(d) The department shall issue a license to a bank if the
78-19 department finds that:]
78-20 [(1) the bank is a national banking association
78-21 organized and existing under the National Bank Acts (12 U.S.C.
78-22 Section 21 et seq.), a state bank organized and existing under the
78-23 Texas Banking Act (Article 342-1.001 et seq., Vernon's Texas Civil
78-24 Statutes), a state savings bank organized and existing under the
78-25 Texas Savings Bank Act (Article 489e, Vernon's Texas Civil
78-26 Statutes), or a bank operating subsidiary, as defined by state or
78-27 federal law, that is located and doing business in this state in a
79-1 place with a population of 5,000 or less;]
79-2 [(2) at least one officer of the bank and each
79-3 individual who will be performing any acts of an agent for the bank
79-4 are individually licensed under this Article; and]
79-5 [(3) the bank will have the ability to pay any sums up
79-6 to $25,000 that it might become legally obligated to pay on account
79-7 of any claim made against it by a customer and caused by a
79-8 negligent act, error, or omission of the bank or any person for
79-9 whose acts the bank is legally liable in the conduct of its
79-10 business as a local recording agent. The term "customer" means any
79-11 person, firm, or corporation to whom the bank sells or attempts to
79-12 sell a policy of insurance or from whom the bank accepts an
79-13 application for insurance. That ability shall be proven through:]
79-14 [(A) an errors and omissions policy insuring the
79-15 bank against errors and omissions, in at least the sum of $100,000
79-16 with not more than a $10,000 deductible feature, or the sum of at
79-17 least $300,000 with not more than a $25,000 deductible feature,
79-18 issued by an insurance company licensed to do business in this
79-19 state or, if a policy cannot be obtained from a company licensed to
79-20 do business in this state, a policy issued by a company not
79-21 licensed to do business in this state, on filing an affidavit with
79-22 the department stating the inability to obtain coverage and
79-23 receiving the department's approval;]
79-24 [(B) a bond executed by the bank as principal
79-25 and a surety company authorized to do business in this state, as
79-26 surety, in the principal sum of $25,000, payable to the department
79-27 for the use and benefit of customers of the bank, conditioned that
80-1 the bank shall pay any final judgment recovered against it by a
80-2 customer; or]
80-3 [(C) a deposit with the comptroller of cash or
80-4 securities of the class authorized by Articles 2.08 and 2.10 of
80-5 this code, with a fair market value of $25,000. The comptroller
80-6 shall accept and receive the deposit and hold it exclusively for
80-7 the protection of a customer of the bank who recovers a final
80-8 judgment against the bank. The deposit may be withdrawn only on
80-9 filing with the department satisfactory evidence that the bank has
80-10 withdrawn from the business of insurance and has no unsecured
80-11 liabilities outstanding or that the bank has provided for the
80-12 protection of its customers by furnishing an errors and omissions
80-13 policy or a bond as provided by this subsection. Securities so
80-14 deposited may be exchanged from time to time for other qualified
80-15 securities.]
80-16 [A binding commitment to issue such a policy or bond, or the
80-17 tender of applicable securities, is sufficient in connection with
80-18 an application for license.]
80-19 [Nothing in this subsection shall be construed to permit an
80-20 unlicensed employee or agent of a bank to perform any act of a
80-21 local recording agent without obtaining a local recording agent's
80-22 license. The department may not require a bank to take the
80-23 examination provided by Section 6 of this Article.]
80-24 [A bank licensed as an agent under this Article may have
80-25 additional offices from which the business of insurance is
80-26 conducted only in a place with a population of 5,000 or less and
80-27 must comply with the department's regulations regarding additional
81-1 offices.]
81-2 [A bank licensed as an agent under this article must maintain
81-3 its insurance records, including all files relating to and
81-4 reflecting customer complaints, separate from records relating to
81-5 banking transactions of the bank.]
81-6 [If a bank that holds a local recording agent's license does
81-7 not maintain the qualifications necessary to obtain a license, the
81-8 license of that bank to act as a local recording agent shall be
81-9 canceled or denied in accordance with Sections 16 and 18 of this
81-10 article.]
81-11 [Each bank licensed as a local recording agent shall file
81-12 under oath with its application for license renewal a list of the
81-13 name and address of each individual who will be acting as an agent
81-14 on behalf of the bank and of each officer and director of the bank,
81-15 as defined by Article 21.02 of this code, and other biographical
81-16 information as required by the department.]
81-17 [Each bank licensed as a local recording agent shall notify
81-18 the department of any change in its officers and directors and any
81-19 change in other persons who will be performing any acts of an
81-20 agent, as defined by Article 21.02 of this code, and submit
81-21 biographical information on those officers, directors, and persons
81-22 as required by the department not later than the 30th day after the
81-23 date on which the change takes effect.]
81-24 [The term "firm," as that term applies to local recording
81-25 agents in Sections 2, 12, and 16 of this article, includes
81-26 corporations and banks.]
81-27 [(e) The term "partnership" or "agency partnership" as used
82-1 in this Article means a general partnership or a registered limited
82-2 liability partnership domiciled in Texas.]
82-3 [(f) In this Article, the term "corporation" or
82-4 "corporations" shall mean a corporation organized under the Texas
82-5 Business Corporation Act, The Texas Professional Corporation Act
82-6 (Article 1528e, Vernon's Texas Civil Statutes), or a Texas
82-7 domiciled limited liability company organized or existing under the
82-8 Texas Limited Liability Company Act (Article 1528n, Vernon's Texas
82-9 Civil Statutes) having its principal place of business in this
82-10 state and having as one of its purposes the authority to act as an
82-11 insurance agent. Each officer, manager, and member of a limited
82-12 liability company must be licensed under this Article. The
82-13 licensing and regulation of a limited liability company shall be
82-14 subject to the same provisions and requirements of this Article
82-15 that are applicable to corporations licensed under this Article.]
82-16 [(g) In this article, the term "bank" means a national
82-17 banking association organized and existing under the National Bank
82-18 Acts (12 U.S.C. Section 21 et seq.), a state bank organized and
82-19 existing under the Texas Banking Act (Article 342-1.001 et seq.,
82-20 Vernon's Texas Civil Statutes), a state savings bank organized and
82-21 existing under the Texas Savings Bank Act (Article 489e, Vernon's
82-22 Texas Civil Statutes), a bank branch, or a bank operating
82-23 subsidiary, as defined by state or federal law, that is located and
82-24 doing business in this state in a place with a population of 5,000
82-25 or less. A bank operating subsidiary, as defined by state or
82-26 federal law, located and doing business in a place in this state
82-27 with a population of 5,000 or less may own a licensed corporate
83-1 agent that is also located and doing business in a place with a
83-2 population of 5,000 or less, and is subject to Section 3a(5) of
83-3 this Article.]
83-4 [Sec. 3a. PERSONS OTHER THAN LICENSED LOCAL RECORDING AGENTS
83-5 WHO MAY SHARE IN PROFITS OF LOCAL RECORDING AGENT. (1) Upon the
83-6 death of a duly licensed local recording agent who is a member of
83-7 an agency partnership, the surviving spouse and children, if any,
83-8 of such deceased partner, or a trust for such surviving spouse and
83-9 children, may share in the profits of such agency partnership
83-10 during the lifetime of such surviving spouse or such children, as
83-11 the case may be, if and as provided by a written partnership
83-12 agreement, or in the absence of any written agreement, if and as
83-13 agreed by the surviving partner or partners and the surviving
83-14 spouse, the trustee, and the legal representative of the surviving
83-15 child or children. Such surviving spouse and any such surviving
83-16 children or trusts shall not be required to qualify as local
83-17 recording agents to participate in such profits, but shall not do
83-18 or perform any act of a local recording agent on behalf of such
83-19 partnership without having qualified as a local recording agent;
83-20 provided, however, that a duly licensed local recording agent who
83-21 is a member of an agency partnership may, with the approval of the
83-22 other members of the partnership, transfer an interest in the
83-23 agency partnership to his children or a trust for same, and may
83-24 operate such interest for their use and benefit; and such children
83-25 or trusts may share in the profits of such agency partnership.
83-26 Such child or children or trusts shall not be required to qualify
83-27 as a local recording agent to participate in such profits, but
84-1 shall not do or perform any act of a local recording agent on
84-2 behalf of such partnership without having qualified as a local
84-3 recording agent.]
84-4 [(2) Upon the death of a duly licensed local recording
84-5 agent, who is a sole proprietorship, unless otherwise provided by
84-6 the last will of such deceased agent, the surviving spouse and
84-7 children, if any, of such deceased agent, or a trust for such
84-8 spouse or children, may share in the profits of the continuance of
84-9 the agency business of said deceased agent, provided such agency
84-10 business is continued by a duly licensed local recording agent.
84-11 Said surviving spouse, trusts or children, may participate in such
84-12 profits during the lifetime of such surviving spouse and said
84-13 children. Said surviving spouse, trusts or children shall not be
84-14 required to qualify as local recording agents in order to
84-15 participate in the profits of such agency, but shall not do or
84-16 perform any act of a local recording agent in connection with the
84-17 continuance of such agency business without first having been duly
84-18 licensed as a local recording agent; provided, however, that a duly
84-19 licensed local recording agent who is a sole proprietorship may
84-20 transfer an interest in his agency to his children, or a trust for
84-21 same, and may operate such interest for their use and benefit; and
84-22 such children may share in the profits of such local recording
84-23 agency during their lifetime, and during such time shall not be
84-24 required to qualify as a local recording agent in order to
84-25 participate in such profits, but shall not do or perform any act of
84-26 a local recording agent in connection with such agency business
84-27 without first having been duly licensed as a local recording agent.]
85-1 [(3) Upon the death of a shareholder in a corporate licensed
85-2 local recording agency, the surviving spouse and children, if any,
85-3 of such deceased shareholder, or a trust for such surviving spouse
85-4 and children, may share in the profits of such corporate agency
85-5 during the lifetime of such surviving spouse or children, as the
85-6 case may be, if and as provided by a contract entered into by and
85-7 between all of the shareholders and the corporation. Any such
85-8 surviving spouse, surviving children, or trusts shall not be
85-9 required to individually qualify as a local recording agent in
85-10 order to participate in such profits, but shall not do or perform
85-11 any act of a local recording agency on behalf of such corporation
85-12 without having qualified as a local recording agent; provided,
85-13 however, that a shareholder in a corporate licensed local recording
85-14 agent, may, if provided by a contract entered into by and between
85-15 all of the shareholders and the corporation, transfer an interest
85-16 in the agency to his children or a trust for same, and such
85-17 children or trusts may share in the profits of such agency to the
85-18 extent of such interest during their lifetime. Such children or
85-19 trusts shall not be required to qualify as a local recording agent
85-20 to participate in such profits, but shall not do or perform any act
85-21 of a local recording agent on behalf of such corporation without
85-22 having qualified as a local recording agent.]
85-23 [(4) Except as provided in Subsections (1), (2), and (3)
85-24 above, and as may be provided in Section 6a, Article 21.14 of the
85-25 Insurance Code, no person shall be entitled to perform any act of a
85-26 local recording agent nor in any way participate as a partner or
85-27 corporate shareholder in the profits of any local recording agent,
86-1 without first having qualified as a duly licensed local recording
86-2 agent and having successfully passed the examination required by
86-3 the Insurance Code; provided, however, that all persons, or trusts
86-4 for any person, that received licenses before March 1, 1963, as
86-5 silent, inactive, or non-active partners, or who are silent,
86-6 inactive, or non-active partners in an agency which was so
86-7 qualified before such date, shall continue to receive licenses, or
86-8 renewals thereof, as partners in such agency or in any successor
86-9 agency, providing: (a) that such persons are members of an agency
86-10 in which there is at least one partner who has qualified as a duly
86-11 licensed local recording agent; (b) that such non-active partner
86-12 or partners do not actively solicit insurance; and (c) that such
86-13 agency is not a limited partnership.]
86-14 [(5) Notwithstanding any provision of this article or this
86-15 code to the contrary, a bank located and doing business in a place
86-16 with a population of 5,000 or less that owns a licensed bank
86-17 operating subsidiary, as defined by state or federal law, that is
86-18 also located and doing business in a place with a population of
86-19 5,000 or less may receive profits from the licensed bank operating
86-20 subsidiary. To advertise under the bank name or participate in the
86-21 insurance operation other than by receiving profits from the
86-22 insurance business, the bank must hold an agent license. Nothing
86-23 in this section permits a bank or any affiliate to pay commissions
86-24 or other valuable consideration to any nonlicensed employees, and a
86-25 bank may not pay, credit, or otherwise reward particular
86-26 nonlicensed units or geographic locations of the bank or any of its
86-27 affiliates with a portion of the commission.]
87-1 [Sec. 4. ACTING WITHOUT LICENSE FORBIDDEN. (a) It shall be
87-2 unlawful for any person, firm, partnership, corporation or bank, or
87-3 any partner, officer, director, employee, or shareholder of a
87-4 corporation, or any officer, director, or employee of a bank to act
87-5 as a local recording agent or solicitor in procuring business for
87-6 any insurance company, corporation, interinsurance exchange,
87-7 mutual, reciprocal, association, Lloyds or other insurance carrier,
87-8 until that person or entity shall have in force the license
87-9 provided for herein.]
87-10 [(b) No insurer doing business in this state shall pay
87-11 directly or indirectly any commission, or other valuable
87-12 consideration, to any person, firm, partnership, corporation, or
87-13 bank for services as a local recording agent within this state,
87-14 unless such person, firm, partnership, corporation, or bank shall
87-15 hold a currently valid license and appointment to act as a local
87-16 recording agent as required by the laws of this state; nor shall
87-17 any person, firm, partnership, corporation, or bank other than a
87-18 duly licensed and appointed local recording agent accept any such
87-19 commission or other valuable consideration; provided, however, that
87-20 nothing contained in this subsection shall prohibit an assigned
87-21 risk pool or assigned risk plan, duly authorized to operate by the
87-22 laws of this state, from paying commissions, or other valuable
87-23 consideration, to a duly licensed person, firm, partnership,
87-24 corporation, or bank for services as a local recording agent.]
87-25 [(c) No licensed local recording agent, managing general
87-26 agent, or surplus lines agent doing business in this state shall
87-27 pay directly or indirectly any commission, or other valuable
88-1 consideration, to any person, firm, partnership, corporation, or
88-2 bank for services as a local recording agent within this state,
88-3 unless such person, firm, partnership, corporation, or bank shall
88-4 hold a currently valid license to act as a local recording agent as
88-5 required by the laws of this state; nor shall any person, firm,
88-6 partnership, corporation, or bank other than a duly licensed local
88-7 recording agent accept any such commission or other valuable
88-8 consideration.]
88-9 [(d) No local recording agent doing business in this state
88-10 shall pay directly or indirectly any commission, or other valuable
88-11 consideration, to any person for services as a solicitor within
88-12 this state, unless such person shall hold a currently valid license
88-13 and appointment to act as a solicitor for such local recording
88-14 agent as required by the laws of this state; nor shall any person
88-15 other than a duly licensed and appointed solicitor accept any such
88-16 commission or other valuable consideration.]
88-17 [Sec. 5. ACTIVE AGENTS OR SOLICITORS ONLY TO BE LICENSED.
88-18 No license shall be granted to any person, firm, partnership,
88-19 corporation, or bank as a local recording agent or to a person as a
88-20 solicitor, for the purpose of writing any form of insurance, unless
88-21 it is found by the department that such person, firm, partnership,
88-22 corporation, or bank is or intends to be, actively engaged in the
88-23 soliciting or writing of insurance for the public generally; that
88-24 each person or individual of a firm is a resident of Texas and is
88-25 to be actively engaged in good faith in the business of insurance,
88-26 and that the application is not being made in order to evade the
88-27 laws against rebating and discrimination either for the applicant
89-1 or for some other person, firm, partnership, corporation, or bank.
89-2 Nothing herein contained shall prohibit an applicant insuring
89-3 property which the applicant owns or in which the applicant has an
89-4 interest; but it is the intent of this Section to prohibit coercion
89-5 of insurance and to preserve to each citizen the right to choose
89-6 that individual's own agent or insurance carrier, and to prohibit
89-7 the licensing of an individual, firm, partnership, corporation, or
89-8 bank to engage in the insurance business principally to handle
89-9 business which the applicant controls only through ownership,
89-10 mortgage or sale, family relationship or employment, which shall be
89-11 taken to mean that an applicant who is making an original
89-12 application for license shall show the department that the
89-13 applicant has a bona fide intention to engage in business in which,
89-14 in any calendar year, at least twenty-five per cent (25%) of the
89-15 total volume of premiums shall be derived from persons or
89-16 organizations other than applicant and from property other than
89-17 that on which the applicant shall control the placing of insurance
89-18 through ownership, mortgage, sale, family relationship or
89-19 employment. Nothing herein contained shall be construed to
89-20 authorize a partnership, corporation, or bank to receive a license
89-21 as a solicitor.]
89-22 [Sec. 5a. REQUIREMENTS AS TO KNOWLEDGE OR INSTRUCTION FOR
89-23 LOCAL RECORDING AGENT'S LICENSE. (a) Every applicant for local
89-24 recording agent's license from and after October 1, 1971, shall
89-25 upon the successful passage of the examination for local recording
89-26 agent's license as promulgated by the State Board of Insurance
89-27 pursuant to the provisions of this Article 21.14 be issued a
90-1 temporary local recording agent's license. The holder of a
90-2 temporary local recording agent's license shall have the same
90-3 authority and be subject to the same provisions of the law as local
90-4 recording agents until such temporary license shall expire. Each
90-5 such temporary license so issued shall expire upon the happening of
90-6 any one of the following, whichever shall first occur, to wit:]
90-7 [(i) The issuance of a local recording agent's license
90-8 to such person;]
90-9 [(ii) One year from date of issuance of the temporary
90-10 local recording agent's license.]
90-11 [Each such person receiving a temporary license as set out
90-12 above shall within one (1) year from the issue date of such
90-13 temporary license complete to the satisfaction of the State Board
90-14 of Insurance one of the following courses of study:]
90-15 [(i) Classroom courses in insurance satisfactory to
90-16 the State Board of Insurance at a school, college, junior college
90-17 or extension thereof; or]
90-18 [(ii) An insurance company or agents' association
90-19 school approved by the State Board of Insurance; or]
90-20 [(iii) A correspondence course in insurance approved
90-21 by the State Board of Insurance.]
90-22 [Upon the successful completion of any one of the above
90-23 courses of study within the one year period, the temporary agent
90-24 shall then be entitled to receive from the State Board of Insurance
90-25 his local recording agent's license.]
90-26 [(b) Provided, however, none of the provisions of this
90-27 section shall apply to the following:]
91-1 [(1) To any person holding a license as a local
91-2 recording agent upon the effective date of this Act.]
91-3 [(2) To any person applying for an emergency local
91-4 recording agent's license under the provisions of Section 6a of
91-5 Article 21.14 of the Insurance Code of Texas.]
91-6 [(3) To any person who holds the designation Chartered
91-7 Property and Casualty Underwriter (C.P.C.U.) from the American
91-8 Institute for C.P.C.U., the designation Certified Insurance
91-9 Counselor (C.I.C.) from the national Society of Certified Insurance
91-10 Counselors, or the designation Accredited Adviser in Insurance
91-11 (A.A.I.) from the Insurance Institute of America.]
91-12 [(4) To any person who has a bachelor's degree from a
91-13 four-year accredited college or university with a major in
91-14 insurance.]
91-15 [(5) To any person who within two (2) years
91-16 immediately preceding the filing of an application was a licensed
91-17 agent in good standing in the state from which the person moved to
91-18 Texas, provided such state makes similar provision for those agents
91-19 who may move from Texas to such state.]
91-20 [(6) To any person desiring to apply for a license to
91-21 solicit and write exclusively all forms of insurance authorized to
91-22 be solicited and written in Texas covering the ownership,
91-23 operation, maintenance or use of any motor vehicle, its accessories
91-24 and equipment, designed for use upon the public highways, including
91-25 trailers and semitrailers. Such person shall continue to apply for
91-26 and qualify to be licensed under the other provisions of Article
91-27 21.14 of the Insurance Code of Texas. Provided, such applicant
92-1 shall be required to take and pass, to the satisfaction of the
92-2 Texas Department of Insurance, an examination, promulgated by said
92-3 department, covering only those forms of insurance referred to in
92-4 this paragraph. Provided, when such a person so applies and
92-5 qualifies, the person shall be issued a license which shall contain
92-6 on the face of said license the following language: "Motor vehicle
92-7 insurance only." An agent holding such a limited license hereby
92-8 created shall solicit only those forms of insurance hereinabove
92-9 provided, but shall be subject to all other laws relating to local
92-10 recording agents.]
92-11 [(c) There is hereby created an Agents' Education Advisory
92-12 Board whose duties shall be to advise with and make recommendations
92-13 to the State Board of Insurance concerning the curriculum, course
92-14 content and schools to be approved under Subsection (a) above. The
92-15 members of said Advisory Board shall be appointed by the chairman
92-16 of the State Board of Insurance and shall serve for one year, from
92-17 September 1 to August 31, or until their successors are appointed.
92-18 Said Advisory Board shall be composed of the following persons:
92-19 Two (2) members, each of whom shall be a resident of Texas and have
92-20 a minimum of ten (10) years' experience as an executive of a fire
92-21 and casualty company doing business in Texas and whose company
92-22 operates an agents' school; two (2) members, each of whom shall be
92-23 a licensed local recording agent in Texas with a minimum of ten
92-24 (10) years' experience as an agent; and one (1) member who shall be
92-25 a teacher of insurance at a four-year accredited college or
92-26 university in Texas. Said Advisory Board shall meet at the offices
92-27 of the State Board of Insurance upon call of the chairman of the
93-1 State Board of Insurance and the members of said Advisory Board
93-2 shall be paid out of the Recording Agents License Fund for their
93-3 actual and necessary expenses incurred in connection with their
93-4 attendance at said meetings.]
93-5 [Sec. 5b. CONTINUING EDUCATION. (a) The State Board of
93-6 Insurance shall adopt a procedure for certifying and shall certify
93-7 continuing education programs for agents. Participation in the
93-8 programs is mandatory for all agents licensed under this article.
93-9 The State Board of Insurance shall exempt agents who have been
93-10 licensed for 20 years or more on or after September 1, 1992, and
93-11 shall have the rulemaking authority to provide for other reasonable
93-12 exemptions. No agent shall be required to complete more than 15
93-13 hours of continuing education per year. An agent licensed under
93-14 both Articles 21.07-1 and 21.14 of this code and any subsequent
93-15 amendments may elect to satisfy the continuing education
93-16 requirements of either article and shall not be required to
93-17 complete a total of more than 15 hours of continuing education per
93-18 year.]
93-19 [(b) On written request of the agent, the State Board of
93-20 Insurance may extend the time for the agent to comply with the
93-21 continuing education requirements of this section or may exempt the
93-22 agent from some or all of the requirements for a licensing period
93-23 if the board finds that the agent is unable to comply with the
93-24 requirements because of illness, medical disability, or another
93-25 extenuating circumstance beyond the control of the agent. The
93-26 criteria for such exemptions and extensions shall be established by
93-27 rule.]
94-1 [Sec. 5c. ADVISORY COUNCIL. (a) An advisory council of
94-2 nine members shall be appointed by the State Board of Insurance to
94-3 furnish the Board with information and assistance in the conduct of
94-4 the continuing education program for agents licensed under Articles
94-5 21.07-1 and 21.14.]
94-6 [(b) Four of the members of the advisory council must be
94-7 representatives of the general public. A public representative may
94-8 not be:]
94-9 [(1) an officer, director, or employee of an insurance
94-10 company, insurance agency, agent, broker, solicitor, adjuster, or
94-11 any other business entity regulated by the State Board of
94-12 Insurance;]
94-13 [(2) a person required to register with the secretary
94-14 of state under Chapter 305, Government Code; or]
94-15 [(3) related to a person described by Subdivision (1)
94-16 or (2) of this subsection within the second degree of affinity or
94-17 consanguinity.]
94-18 [Sec. 5d. JURISDICTION FOR CONTINUING EDUCATION.
94-19 Notwithstanding the rules or regulations of any other state agency,
94-20 the board has sole jurisdiction for all matters relating to the
94-21 continuing education of insurance agents who are licensed under
94-22 this Article.]
94-23 [Sec. 6. EXAMINATION REQUIRED; EXCEPTIONS. (a) If
94-24 applicant for a local recording agent's license has not prior to
94-25 date of such application, been licensed as a local recording agent,
94-26 or if the applicant for a solicitor's license has not been licensed
94-27 as a local recording agent or as a solicitor prior to date of such
95-1 application, the Board shall require such applicant to submit to a
95-2 written examination covering all kinds of insurance or contracts,
95-3 which license if granted, will permit the applicant to solicit.]
95-4 [(b) Any applicant for local recording agent's license who
95-5 has prior to the date of such application been licensed as a local
95-6 recording agent, shall be entitled to a local recording agent's
95-7 license without examination, provided the other requirements of
95-8 this article are met. Any applicant for solicitor's license who
95-9 has been licensed as a local recording agent or as a solicitor
95-10 prior to date of such application, shall be entitled to a
95-11 solicitor's license without an examination, provided the other
95-12 requirements of this article are met.]
95-13 [(c) The Board by rule shall apply different examination
95-14 standards to a solicitor employed as an insurance service
95-15 representative than those applied to other solicitors.]
95-16 [Sec. 6a. DEATH, DISABILITY OR INSOLVENCY; EMERGENCY LICENSE
95-17 WITHOUT EXAMINATION. In event of death or disability of a local
95-18 recording agent or in event a local recording agent is found to be
95-19 insolvent and unable to pay for premiums coming to his hands as
95-20 such local recording agent, the Board may issue to an applicant for
95-21 local recording agent's license an emergency local recording
95-22 agent's license for a period of ninety (90) days in any twelve (12)
95-23 consecutive months and at the Board's option, an additional period
95-24 up to ninety (90) days without an examination provided the other
95-25 requirements of this article are met and if it is established to
95-26 the satisfaction of the Board that such emergency license is
95-27 necessary for the preservation of the agency assets of a deceased
96-1 or disabled local recording agent or of an insolvent local
96-2 recording agent.]
96-3 [Sec. 7. CONDUCT OF EXAMINATIONS; NOTICE; MANUAL OF
96-4 QUESTIONS AND ANSWERS. Unless the State Board of Insurance accepts
96-5 a qualifying examination administered by a testing service, as
96-6 provided under Article 21.01-1, Insurance Code, as amended, all
96-7 examinations provided by this article shall be conducted by the
96-8 State Board of Insurance, and shall be held not less frequently
96-9 than one each sixty (60) days every year at times and places
96-10 prescribed by the State Board of Insurance, of which applicants
96-11 shall be notified by the State Board of Insurance in writing ten
96-12 (10) days prior to the date of such examinations, and shall be
96-13 conducted in writing in either the English or Spanish language.
96-14 Provided, further, that printed copies of a manual of questions and
96-15 answers thereto pertaining to the examination published under the
96-16 direction of the State Board of Insurance shall be made available
96-17 to all companies, general agents, and managers for the use of their
96-18 prospective agents, to all agents for the use of their prospective
96-19 solicitors in preparing for such examination. The questions to be
96-20 asked on such examination shall be based upon the questions and
96-21 answers contained in the manual.]
96-22 [Sec. 8. EXPIRATION OF LICENSE; RENEWAL. Except as may be
96-23 provided by a staggered renewal system adopted under Article
96-24 21.01-2 of this code, every license issued to a local recording
96-25 agent or a solicitor shall expire two years from the date of its
96-26 issue, unless a completed application to qualify for the renewal of
96-27 any such license shall be filed with the State Board of Insurance
97-1 and a nonrefundable fee paid on or before such date, in which event
97-2 the license sought to be renewed shall continue in full force and
97-3 effect until renewed or renewal is denied.]
97-4 [Sec. 9. FEES PAYABLE BEFORE EXAMINATION. Unless the State
97-5 Board of Insurance accepts a qualifying examination administered by
97-6 a testing service, as provided under Article 21.01-1, Insurance
97-7 Code, as amended, applicants required to be examined shall, at time
97-8 and place of examination, pay prior to being examined the following
97-9 fees: For a local recording agent's license a fee in an amount not
97-10 to exceed $50 as determined by the State Board of Insurance and for
97-11 a solicitor's license a fee in an amount not to exceed $20 as
97-12 determined by the State Board of Insurance. The fees paid under
97-13 this section shall not be returned for any reason other than
97-14 failure to appear and take the examination after the applicant has
97-15 given at least 24 hours' notice of an emergency situation to the
97-16 State Board of Insurance and received board approval. A new fee
97-17 shall be paid before each and every examination.]
97-18 [Sec. 10. RENEWAL FEES. (a) An applicant for the renewal
97-19 of a local recording agent's license shall pay, at the time the
97-20 renewal application is filed, a fee in an amount not to exceed $50
97-21 as determined by the State Board of Insurance. An applicant for
97-22 the renewal of a solicitor's license shall pay, at the time the
97-23 renewal application is filed, a fee in an amount not to exceed $20
97-24 as determined by the State Board of Insurance.]
97-25 [Sec. 11. ISSUANCE OF LICENSE. (a) Whenever the provisions
97-26 of this article have been complied with, the Board shall issue to
97-27 any applicant the license applied for where such applicant shall
98-1 have satisfactorily passed the examination prescribed by the State
98-2 Board of Insurance, and who shall possess the other qualifications
98-3 required by this article.]
98-4 [(b) The Commissioner of Insurance shall collect in advance
98-5 from agents requesting duplicate licenses a fee not to exceed $20.
98-6 The State Board of Insurance shall determine the amount of the fee.]
98-7 [Sec. 12. NOTICE TO COMMISSIONER OF INSURANCE OF APPOINTMENT
98-8 OF LOCAL RECORDING AGENT BY INSURANCE COMPANY. (a) After a person
98-9 or firm shall be granted a license as a local recording agent in
98-10 this state, that person or firm shall be authorized to act as such
98-11 local recording agent in this state, only after and during the time
98-12 such person or firm has been authorized so to do, by an insurance
98-13 company having a permit to do business in this state; and when so
98-14 authorized each company or carrier or its general or state or
98-15 special agent making the appointment shall immediately notify the
98-16 Commissioner of Insurance, on such form as the Commissioner may
98-17 require, of the appointment. If approval of an additional
98-18 appointment is not received from the Commissioner before the eighth
98-19 day after the date on which the completed application and fee were
98-20 received by the Commissioner, the agent and the insurance company
98-21 may assume that the Commissioner approves the application, and the
98-22 agent may act for the insurance company. The agent shall be
98-23 required to pay a nonrefundable fee of $16.00 for each appointment
98-24 applied for, which fee shall accompany the notice, and such person
98-25 or firm shall be presumed to be the agent for such company in this
98-26 state until such company or its general or state or special agent
98-27 shall have delivered written notice to the Commissioner of
99-1 Insurance that such appointment has been withdrawn.]
99-2 [(b) Every insurance carrier shall, upon termination for
99-3 cause of the appointment of any agent, immediately file with the
99-4 State Board of Insurance a statement of the facts relative to the
99-5 termination of the appointment and the date and cause thereof. The
99-6 Board shall thereupon record the termination of the appointment of
99-7 such agent to represent such insurance carrier in this state. The
99-8 agent terminated for cause shall receive from the insurance carrier
99-9 a copy of the notice sent to the State Board of Insurance.]
99-10 [(c) Any information, document, record or statement required
99-11 to be made or disclosed to the Board pursuant to this Article shall
99-12 be deemed confidential and privileged unless or until introduced as
99-13 evidence in an administrative hearing.]
99-14 [(d) No liability may be imposed on any insurance carrier,
99-15 its employees or agents, or any other person, acting without
99-16 malice, providing the information required to be disclosed pursuant
99-17 to this section.]
99-18 [Sec. 13. APPLICATION FOR SOLICITOR'S LICENSE. When any
99-19 local recording agent who has been appointed by an insurance
99-20 carrier having a permit to do business in this State shall desire
99-21 to appoint a solicitor in the operation of his business, he and a
99-22 company jointly shall make application for a license for such
99-23 solicitor to the Board of Insurance Commissioners, in such form as
99-24 the Board may require.]
99-25 [Sec. 14. NOTICE TO INSURANCE COMMISSIONERS OF SOLICITOR'S
99-26 APPOINTMENT; AUTHORITY TO SOLICIT. (a) No solicitor shall be
99-27 authorized to solicit insurance until after the State Board of
100-1 Insurance shall have been notified by a local recording agent of
100-2 his appointment, and no local recording agent shall accept business
100-3 tendered by a solicitor until such local recording agent has given
100-4 notice to the State Board of Insurance of such solicitor's
100-5 appointment as such, and until such solicitor has been licensed by
100-6 the State Board of Insurance. No solicitor shall have outstanding
100-7 at any time a notification of appointment from more than one local
100-8 recording agent, and a solicitor shall solicit insurance only in
100-9 the name of and for the account of the local recording agent by
100-10 whom he has been appointed.]
100-11 [(b) If approval of an appointment of a currently licensed
100-12 solicitor is not received from the Commissioner before the eighth
100-13 day after the date on which the completed application and
100-14 nonrefundable fee were received by the Commissioner, the solicitor
100-15 and local recording agent may assume that the Commissioner approves
100-16 the application, and the solicitor may act for the local recording
100-17 agent.]
100-18 [(c) A licensed solicitor's appointment may be terminated
100-19 either by the local recording agent who appointed the solicitor or
100-20 by the solicitor on the filing of notice with the Board of the
100-21 termination.]
100-22 [(d) Upon termination for cause of the appointment of any
100-23 solicitor, the local recording agent shall immediately file with
100-24 the State Board of Insurance a statement of the facts relative to
100-25 the termination of the appointment and the date and cause thereof.
100-26 The Board shall thereupon record the termination of the appointment
100-27 of such solicitor to represent such local recording agent. The
101-1 solicitor terminated for cause shall receive from the local
101-2 recording agent a copy of the notice sent to the State Board of
101-3 Insurance.]
101-4 [(e) Any information, document, record or statement required
101-5 to be made or disclosed to the Board pursuant to this Article shall
101-6 be deemed privileged and confidential unless or until introduced
101-7 into evidence in an administrative hearing.]
101-8 [(f) No liability may be imposed on any insurance carrier,
101-9 its employees or agents, or any other person, acting without
101-10 malice, providing the information required to be disclosed pursuant
101-11 to this section.]
101-12 [Sec. 15. FIRE INSURANCE IN EXCESS OF VALUE, WRITING OF
101-13 FORBIDDEN. It shall be unlawful for any local recording agent or
101-14 solicitor for an insurance company or insurance carrier knowingly
101-15 to grant, write or permit a greater amount of insurance against
101-16 loss by fire than the reasonable value of the subject of insurance.]
101-17 [Sec. 16. SUSPENSION OR REVOCATION OF LICENSE. (a) The
101-18 license of any local recording agent shall be suspended during a
101-19 period in which the agent does not have outstanding a valid
101-20 appointment to act as an agent for an insurance company. The Board
101-21 shall end the suspension on receipt of evidence satisfactory to the
101-22 board that the agent has a valid appointment. The Board shall
101-23 cancel the license of a solicitor if the solicitor does not have
101-24 outstanding a valid appointment to act as a solicitor for a local
101-25 recording agent, and shall suspend the license during a period that
101-26 the solicitor's local recording agent does not have outstanding a
101-27 valid appointment to act as an agent under this Article.]
102-1 [(b) The department may discipline any local recording agent
102-2 or solicitor or deny an application under Section 5, Article
102-3 21.01-2, of this code if it finds that the applicant, individually
102-4 or through any officer, director, or shareholder, for or holder of
102-5 such license:]
102-6 [(1) Has wilfully violated any provision of the
102-7 insurance laws of this state;]
102-8 [(2) Has intentionally made a material misstatement in
102-9 the application for such license;]
102-10 [(3) Has obtained, or attempted to obtain, such
102-11 license by fraud or misrepresentation;]
102-12 [(4) Has misappropriated or converted to the
102-13 applicant's or licensee's own use or illegally withheld money
102-14 belonging to an insurer or an insured or beneficiary;]
102-15 [(5) Has been guilty of fraudulent or dishonest acts;]
102-16 [(6) Has materially misrepresented the terms and
102-17 conditions of any insurance policies or contracts;]
102-18 [(7) Has made or issued, or caused to be made or
102-19 issued, any statement misrepresenting or making incomplete
102-20 comparisons regarding the terms or conditions of any insurance
102-21 contract legally issued by an insurance carrier for the purpose of
102-22 inducing or attempting to induce the owner of such contract to
102-23 forfeit or surrender such contract or allow it to expire for the
102-24 purpose of replacing such contract with another;]
102-25 [(8) Is convicted of a felony;]
102-26 [(9) Is guilty of rebating any insurance premium or
102-27 discriminating as between insureds;]
103-1 [(10) Is not engaged in the soliciting or writing of
103-2 insurance for the public generally as required by Section 5 of this
103-3 Article; or]
103-4 [(11) Is afflicted with a disability as that term is
103-5 defined by Subsection (a) of Article 21.15-6 of this code.]
103-6 [(c) The State Board of Insurance may order that a local
103-7 recording agent or solicitor who is afflicted with a disability be
103-8 placed on disability probation under the terms and conditions
103-9 specified under Article 21.15-6 of this code instead of taking
103-10 disciplinary action under Subsection (b) of this section.]
103-11 [(d) A license applicant or licensee whose license
103-12 application or license has been denied, refused, or revoked under
103-13 this section may not apply for any license as an insurance agent
103-14 before the first anniversary of the effective date of the denial,
103-15 refusal, or revocation, or, if the applicant or licensee seeks
103-16 judicial review of the denial, refusal, or revocation before the
103-17 first anniversary of the date of the final court order or decree
103-18 affirming that action. The Commissioner may deny an application
103-19 timely filed if the applicant does not show good cause why the
103-20 denial, refusal, or revocation of the previous license application
103-21 or license should not be considered a bar to the issuance of a new
103-22 license. This subsection does not apply to an applicant whose
103-23 license application was denied for failure to pass a required
103-24 written examination.]
103-25 [Sec. 18. APPEAL. If the Commissioner refuses an
103-26 application for license as provided by this article, or suspends,
103-27 revokes, or refuses to renew any license at a hearing as provided
104-1 by this article, and if the applicant or accused is dissatisfied
104-2 with the action of the Commissioner, the applicant or accused may
104-3 appeal from the action in accordance with Article 1.04 of this
104-4 Code.]
104-5 [Sec. 19. NOTICE TO LAST ADDRESS. Where notice to the
104-6 applicant or accused is provided for in any part of this article,
104-7 notice by registered mail to his last known address shall be
104-8 sufficient.]
104-9 [Sec. 20. LIFE, HEALTH AND ACCIDENT INSURANCE, INAPPLICABLE
104-10 TO; OTHER EXCEPTIONS. The provisions of this article do not apply
104-11 to the Life, Health and Accident Insurance business or the Life,
104-12 Health and Accident Department of the companies engaged therein,
104-13 nor shall it apply to any of the following, namely:]
104-14 [(a) Any actual full-time home office salaried
104-15 employee of any insurance carrier licensed to do business in Texas,
104-16 other than an employee who solicits or receives an application for
104-17 the sale of insurance through an oral, written, or electronic
104-18 communication in accordance with Section 20A of this article.]
104-19 [(b) Any actual attorney in fact and its actual
104-20 traveling salaried representative as to business transacted through
104-21 such attorney in fact or salaried representative of any reciprocal
104-22 exchange or interinsurance exchange admitted to do business in
104-23 Texas.]
104-24 [(c) Any adjuster of losses, and/or inspector of
104-25 risks, for an insurance carrier licensed to do business in Texas.]
104-26 [(d) Any General Agent or State Agent or Branch
104-27 Manager representing an admitted and licensed insurance company or
105-1 carrier, or insurance companies or carriers, in a supervisory
105-2 capacity.]
105-3 [(e) The actual attorney in fact for any Lloyds.]
105-4 [(f) All incorporated or unincorporated mutual
105-5 insurance companies, their agents and representatives, organized
105-6 and/or operating under and by authority of Chapters 16 and 17 of
105-7 this code.]
105-8 [(g) Nothing in this entire article shall ever be
105-9 construed to apply to any member, agent, employee, or
105-10 representative of any county or farm mutual insurance company as
105-11 exempted under Chapters 16 and 17 of this code.]
105-12 [(h) Nothing in this article shall apply to the group
105-13 motor vehicle insurance business or the group motor vehicle
105-14 department of the companies engaged in that business.]
105-15 [(i) Salaried employees not involved in solicitation
105-16 or negotiation of insurance in the office of a local recording
105-17 agent who devote their full time to clerical and administrative
105-18 services, including the incidental taking of information from
105-19 customers and receipt of premiums in the office of a local
105-20 recording agent, provided the employees do not receive any
105-21 commissions and their compensation is not varied by the volume of
105-22 premiums taken and received.]
105-23 [Sec. 20A. FULL-TIME HOME OFFICE SOLICITORS: MANDATORY
105-24 REGISTRATION, CONTINUING EDUCATION, AND NOTIFICATION TO CONSUMERS;
105-25 DISCIPLINARY ACTIONS. (a) Any actual full-time home office
105-26 salaried employee of any insurance carrier licensed to do business
105-27 in Texas who solicits or receives an application for the sale of
106-1 insurance through an oral, written, or electronic communication
106-2 shall register with the commissioner.]
106-3 [(b) Any insurance carrier licensed to do business in Texas
106-4 whose general plan of operation includes the use of employees
106-5 described in Subsection (a) of this section shall certify to the
106-6 commissioner that such employees receive continuing education of
106-7 not less than 15 hours per year designed to give such employees:]
106-8 [(1) reasonable familiarity with the broad principles
106-9 of insurance, with licensing and regulatory laws, and with
106-10 provisions, terms, and conditions of the insurance which the
106-11 registrant transacts; and]
106-12 [(2) a fair and general understanding of the
106-13 obligations and duties of an insurer to an insured, including
106-14 training in ethical considerations.]
106-15 [(c) The registration of any actual full-time home office
106-16 salaried employee shall be suspended and the employer insurance
106-17 carrier may be disciplined in accordance with the insurance laws of
106-18 this state, if the commissioner finds that the registrant:]
106-19 [(1) has wilfully violated any provision of this code,
106-20 the laws of this state, or a rule of the commissioner;]
106-21 [(2) has been guilty of fraudulent or dishonest acts;]
106-22 [(3) has materially misrepresented the terms and
106-23 conditions of any insurance policies or contracts;]
106-24 [(4) has made or issued, or caused to be made or
106-25 issued, any statement misrepresenting or making incomplete
106-26 comparisons regarding the terms or conditions of any insurance
106-27 contract legally issued by an insurance carrier for the purpose of
107-1 inducing or attempting to induce the owner of such contract to
107-2 forfeit or surrender such contract or allow it to expire for the
107-3 purpose of replacing such contract with another;]
107-4 [(5) is guilty of rebating any insurance premium or
107-5 discriminating as between insureds; or]
107-6 [(6) has been convicted of a felony involving fraud or
107-7 breach of fiduciary duty.]
107-8 [(d) Registrants under this section shall disclose such
107-9 registration when making an oral, written, or electronic
107-10 communication to solicit or receive an application for the sale of
107-11 insurance.]
107-12 [(e) The commissioner shall adopt rules to implement the
107-13 provisions of this section.]
107-14 [Sec. 21. FEES, DISPOSITION OF; APPROPRIATIONS. The fees
107-15 herein provided for, when collected, shall be deposited in the
107-16 State Treasury to the credit of the State Board of Insurance
107-17 operating fund; provided that no expenditures shall be made from
107-18 said fund except under authority of the Legislature as set forth in
107-19 the General Appropriation Bill; provided further that no
107-20 appropriation shall ever be made out of the General Revenue Fund
107-21 for the purpose of administering this article or any provision
107-22 thereof.]
107-23 [Sec. 22. REBATES OR INDUCEMENTS FORBIDDEN. It shall be
107-24 unlawful for any local recording agent to pay, allow, give or offer
107-25 to pay, allow or give, directly or indirectly, any rebate of
107-26 premiums payable, any commission, or any paid employment or
107-27 contract for service of any kind or anything of value whatsoever,
108-1 or any valuable consideration or inducement whatever, not specified
108-2 in the policy or contract of insurance for or on account of the
108-3 solicitation or negotiation of contracts of insurance on property
108-4 or risks in this State to any person, firm or corporation, other
108-5 than a duly licensed solicitor appointed by such local recording
108-6 agent, or to another local recording agent.]
108-7 [It shall be unlawful for any solicitor to pay, allow or give
108-8 or offer to pay, allow or give, directly or indirectly, any rebate
108-9 of premiums payable, any commission, or any paid employment or
108-10 contract for service of any kind, or anything of value whatsoever,
108-11 or any valuable consideration or inducement whatever, not specified
108-12 in the policy or contract of insurance, for or on account of the
108-13 solicitation or negotiation of contracts of insurance on property
108-14 or risks in this State to any person, firm or corporation.]
108-15 [Sec. 23. REPEAL; LAWS NOT IN CONFLICT NOT AFFECTED; ACT
108-16 CUMULATIVE. All laws or parts of laws pertaining to any phase of
108-17 the insurance business, which are in conflict with this article,
108-18 shall be and the same are hereby repealed; but all laws, Civil and
108-19 Criminal, affecting insurance agents, and/or insurance companies or
108-20 insurance carriers or the insurance business, which are not in
108-21 conflict herewith, shall not be affected by the provisions of this
108-22 article; but this article shall be deemed cumulative of such laws.]
108-23 [Sec. 24. VIOLATION OF ACT. Any person or any member of any
108-24 firm, or any corporation or bank, or any officer, director,
108-25 shareholder or employee of any corporation or bank who violates any
108-26 of the provisions of Sections 4, 15 and 22 of this Article shall be
108-27 guilty of a misdemeanor, and on conviction in a court of competent
109-1 jurisdiction, shall be punished by a fine of not less than One
109-2 Dollar ($1.00) nor more than One Hundred Dollars ($100.00).]
109-3 [Sec. 25. ENFORCEMENT OF ARTICLE. The Attorney General, or
109-4 any District or County Attorney, or the Board of Insurance
109-5 Commissioners, may institute any injunction proceeding or such
109-6 other proceeding to enforce the provisions of this article, and to
109-7 enjoin any person, firm or corporation from engaging or attempting
109-8 to engage in any of the business in violation of this article or
109-9 any of the provisions thereof. The provisions of this section are
109-10 cumulative of the other penalties or remedies provided for in this
109-11 article.]
109-12 [Sec. 26. ADMINISTRATION OF ARTICLE. The administration of
109-13 the provision of this article shall be vested in the Board of
109-14 Insurance Commissioners, and of the administrative officer of the
109-15 various counties in which the violation of any provision of this
109-16 article may occur; and the personnel charged with the direct
109-17 supervision of the article, except the regularly elected law
109-18 enforcement officers and their appointees, shall be responsible to
109-19 and serve at the will of the Board of Insurance Commissioners. It
109-20 shall be the duty of the Board of Insurance Commissioners and the
109-21 Attorney General, and of the District and County Attorneys in
109-22 counties where violations of this article may occur, to see that
109-23 its provisions are at all times obeyed, and to make such
109-24 investigations as will prevent or detect the violation of any
109-25 provision thereof. The Board of Insurance Commissioners shall at
109-26 once lay before the District or County Attorney of the proper
109-27 county, any evidence which shall come to its knowledge, of
110-1 criminality or threatened criminality under this article. In the
110-2 event of the neglect or refusal of such Attorney to institute and
110-3 prosecute such violation, or to enforce the other remedies provided
110-4 by this article, the Board shall submit such evidence to the
110-5 Attorney General, who is hereby authorized to proceed therein with
110-6 all the rights, privileges and powers conferred by law upon
110-7 District or County Attorneys. Provided, any person having
110-8 knowledge of the violation of the provisions of this article may
110-9 file a complaint for such violation with the proper officers as in
110-10 other misdemeanor cases. The Board of Insurance Commissioners is
110-11 given the power and authority, as a requisite for granting or
110-12 renewing a license to insurance companies or insurance carriers,
110-13 their local recording agents or solicitors, to require answers
110-14 under oath to any questions propounded by the said Board or under
110-15 its authority, and touching any phase of insurance business in the
110-16 State of Texas in which said insurance company or insurance
110-17 carrier, or such person or firm, shall be engaged, and to require
110-18 such person or firm seeking appointment as local recording agent to
110-19 submit his books, records, and accounts, insofar as they may be
110-20 material to any phase of insurance business, to examination and
110-21 inspection by the Board or any person acting under its authority.]
110-22 [Sec. 27. RULES. In addition to other rules required or
110-23 authorized by this article, the commissioner may adopt rules in
110-24 accordance with federal law applicable to the regulation of the
110-25 sale of insurance that are necessary and proper to carry out the
110-26 provisions of this article.]
111-1 ARTICLE 4. NONRESIDENT AGENT LICENSE
111-2 SECTION 4.01. Section 1, Article 21.11, Insurance Code, is
111-3 amended to read as follows:
111-4 Sec. 1. NONRESIDENT AGENT LICENSE. (a) The
111-5 [Notwithstanding Sections 3(a) and (b), Article 21.14, of this
111-6 code, the] department shall license a person who is not a resident
111-7 of this state to act as a nonresident agent if the department finds
111-8 that:
111-9 (1) the state in which the person resides accords the
111-10 same privilege to a person who is a resident of this state;
111-11 (2) the applicant for the nonresident license:
111-12 (A) if an individual:
111-13 (i) holds a license as an agent in the
111-14 state of residence and either obtained the license by passing a
111-15 written examination or held the license before the time a written
111-16 examination was required to obtain the license; or
111-17 (ii) subject to Subsection (b) of this
111-18 section, has passed the examination for an agent's license required
111-19 under Article 21.01-1 of this code and satisfies the requirements
111-20 adopted under Section 2, Article 21.07, of this code for licensing
111-21 of an individual; or
111-22 (B) if a corporation or partnership:
111-23 (i) has provided evidence of the authority
111-24 or ability to act as an agent in the entity's state of domicile;
111-25 (ii) has satisfied the requirements
111-26 adopted under Section 2, Article 21.07, of this code for licensing
111-27 of a corporation or partnership; and
112-1 (iii) is domiciled in a state that has
112-2 entered into a reciprocal agreement with the commissioner as
112-3 provided by Subsection (b) of this section; and
112-4 (3) the applicant or any officer, director,
112-5 shareholder, member, or partner of an applicant that is a business
112-6 entity, required to file biographical information with the
112-7 department under Article 21.07 of this code, has not:
112-8 (A) committed an act that constitutes grounds
112-9 for denial, suspension, or revocation of a license under Article
112-10 21.01-2 of this code; or
112-11 (B) had an insurance license suspended or
112-12 revoked by the department or the insurance regulator of another
112-13 state.
112-14 (b) The commissioner may enter into a reciprocal agreement
112-15 with the appropriate official of another state waiving the written
112-16 examination requirement for an applicant who is a resident of that
112-17 state if:
112-18 (1) a written examination is required of applicants
112-19 for an agent's license in the other state;
112-20 (2) the appropriate official of the other state
112-21 certifies that the applicant holds a license as an agent in the
112-22 other state and either passed a written examination to obtain the
112-23 license or was the holder of an agent's license before the time a
112-24 written examination was required; and
112-25 (3) in the other state, a resident of this state is
112-26 entitled to obtain an agent's license under the same conditions and
112-27 without discrimination as to fees or otherwise in favor of the
113-1 residents of the other state.
113-2 (c) A person who resides in a town through which the state
113-3 line runs and whose residence is located in the town in the
113-4 adjoining state may be licensed as a resident agent if the person
113-5 maintains the person's business office in this state [in accordance
113-6 with Article 21.14 of this code, subject to the limitations of this
113-7 article].
113-8 (d) The [(b) An applicant for issuance of a license under
113-9 this section must meet the requirements for issuance of a license
113-10 under Article 21.14 of this code, except that the] department may
113-11 [shall] waive any [of those] license requirements for an applicant
113-12 with a valid license from another state or jurisdiction that has
113-13 license requirements substantially equivalent to those of this
113-14 state.
113-15 (e) The commissioner shall be the attorney for service of
113-16 process on whom all lawful process, notice, or demand may be served
113-17 in any legal proceeding against a nonresident agent licensed to
113-18 transact business in this state if:
113-19 (1) the nonresident agent fails to appoint or maintain
113-20 an attorney for service in this state;
113-21 (2) an attorney for service is appointed but cannot
113-22 with reasonable diligence be found; or
113-23 (3) the license of the nonresident agent is revoked.
113-24 SECTION 4.02. Subsections (a) and (b), Section 2, Article
113-25 21.11, Insurance Code, are amended to read as follows:
113-26 (a) Except as otherwise specifically provided by this code
113-27 [section], a license issued under this article to an individual who
114-1 is not a resident of this state grants the same rights and
114-2 privileges afforded to a resident license holder [under a license
114-3 issued under Article 21.14 of this code].
114-4 (b) A person who holds a license issued under this article
114-5 and who is in compliance with the continuing education requirements
114-6 of the person's state of residence is exempt from the continuing
114-7 education requirements imposed under Article 21.01-1 of this code
114-8 [may not:]
114-9 [(1) maintain an office in this state;]
114-10 [(2) solicit insurance business in this state by any
114-11 method, including an oral, written, or electronic communication; or]
114-12 [(3) employ solicitors or others to directly or
114-13 indirectly solicit insurance in this state].
114-14 SECTION 4.03. Section 3, Article 21.11, Insurance Code, is
114-15 amended to read as follows:
114-16 Sec. 3. LIMITATIONS. (a) This article does not permit:
114-17 (1) any person or firm licensed solely as a broker in
114-18 the person's or firm's state of residence to be granted a license
114-19 under this article; or
114-20 (2) a holder of a license issued under this article to
114-21 act as a surplus lines agent under Article 1.14-2 of this code or
114-22 to perform any of the acts permitted under Article 1.14-2 of this
114-23 code, except as provided under Section 10, Article 21.54, of this
114-24 code[; or]
114-25 [(3) any person or firm who holds a license issued
114-26 under this article to engage in any form of direct solicitation of
114-27 insurance within this state].
115-1 (b) This subchapter [The commissioner shall revoke a
115-2 nonresident agent's license issued under this article if the
115-3 commissioner finds that the license was obtained or is being used
115-4 for the purpose of transacting insurance through a local recording
115-5 agent in a manner that permits the individual licensed under this
115-6 article, by subterfuge, to transact insurance as a local recording
115-7 agent.]
115-8 [(c) In the circumstances described by Subsection (b) of
115-9 this section, the commissioner shall also revoke the license of the
115-10 affected local recording agent.]
115-11 [(d) A license revoked under Subsection (b) or (c) of this
115-12 section is not subject to reissuance before the fifth anniversary
115-13 of the date the revocation is effective.]
115-14 [(e) The commissioner shall order that any insurance
115-15 transacted under an arrangement described by Subsection (b) of this
115-16 section be cancelled.]
115-17 [(f) Article 21.01-2 of this code] applies to licensing of a
115-18 nonresident agent under this article.
115-19 SECTION 4.04. Sections 4 and 5, Article 21.11, Insurance
115-20 Code, are amended to read as follows:
115-21 Sec. 4. HOME OFFICE EMPLOYEE. This article does not affect
115-22 the authority established under Section 7 [20], Article 21.14, of
115-23 this code of an actual full-time home office salaried employee of
115-24 an insurance carrier licensed to do business in this state.
115-25 Sec. 5. RULES. The commissioner may adopt rules as
115-26 necessary to implement this article and to meet the minimum
115-27 requirements of federal law and regulations.
116-1 ARTICLE 5. CONFORMING AMENDMENTS
116-2 SECTION 5.01. Section 1, Article 3.71, Insurance Code, is
116-3 amended to read as follows:
116-4 Sec. 1. Notwithstanding any contrary or inconsistent
116-5 provision of any law, two or more insurance companies authorized to
116-6 separately do such an insurance business in this state, including
116-7 stock companies, reciprocals, or inter-insurance exchanges, Lloyds'
116-8 associations, fraternal benefit societies and mutual companies of
116-9 all kinds, including state-wide mutual assessment corporations and
116-10 local mutual aid associations, and stipulated premium companies,
116-11 may join together to offer, sell and administer hospital, surgical
116-12 and medical expense insurance plans under a group policy covering
116-13 residents of this state who are sixty-five (65) years of age and
116-14 older and their spouses on which policy each insurance carrier
116-15 shall be severally liable, and such companies may agree with
116-16 respect to premium rates, policy provisions, sales, administrative,
116-17 technical and accounting procedures and other matters within the
116-18 scope of this Article. Such companies may issue such insurance
116-19 policies in their own names or in the name of an unincorporated
116-20 association, trust, or other organization formed for the sole
116-21 purposes of this Article and evidenced by a contract in writing
116-22 executed by the participating insurance companies, and any
116-23 unincorporated associations, trusts, or other organizations
116-24 heretofore formed for the sole purpose of this Article and
116-25 evidenced by a contract in writing executed by the participating
116-26 insurance companies is hereby ratified, confirmed and approved and
116-27 validated from the date of its formation. Any such policy may be
117-1 executed on behalf of the insurance companies by a duly authorized
117-2 person and need not be countersigned on behalf of any such company
117-3 by a resident agent. Any person who is licensed as a general life,
117-4 accident, and health [insurance] agent or as a general property and
117-5 casualty [local recording] agent [or as a solicitor] under Article
117-6 [the provisions of Articles 21.07,] 21.07-1[,] or [Article] 21.14
117-7 of this code [the Insurance Code of the State of Texas,] may act as
117-8 such agent in connection with policies of insurance or certificates
117-9 of insurance issued by any unincorporated association, trust or
117-10 other organization formed for the sole purposes of this Article
117-11 without the necessity of notifying the department [State Board of
117-12 Insurance] that such person is appointed to so act.
117-13 SECTION 5.02. Section 7, Article 3.75, Insurance Code, is
117-14 amended to read as follows:
117-15 Sec. 7. VARIABLE CONTRACT AGENTS LICENSE.
117-16 (a) Notwithstanding any other law of this state, no person shall
117-17 sell or offer for sale within this state a variable contract or do
117-18 or perform any act or thing in the sale, negotiation, making, or
117-19 consummating of any variable contract other than for himself,
117-20 unless such person shall have a valid and current license issued
117-21 under Article 21.07-1 of this code [certificate from the State
117-22 Board of Insurance] authorizing such person to act within this
117-23 state as a general life, accident, and health [variable] agent.
117-24 [No such certificate shall be issued unless and until said board is
117-25 satisfied, after examination, that such person is by training,
117-26 knowledge, ability, and character qualified to act as such agent.
117-27 Any such certificate may be withdrawn and cancelled by said board,
118-1 after notice and hearing, if it shall find that the holder thereof
118-2 does not then have the qualifications required for issue of such
118-3 certificate.]
118-4 (b) The licensing and regulation of a person acting as a
118-5 variable agent is subject to the same provisions applicable to the
118-6 licensing and regulation of other agents under Subchapter A,
118-7 Chapter 21, of this code. [The Commissioner of Insurance shall
118-8 collect in advance from variable agent applicants a nonrefundable
118-9 license fee in an amount not to exceed $50. Unless the State Board
118-10 of Insurance accepts a qualifying examination administered by a
118-11 testing service, as provided under Article 21.01-1, Insurance Code,
118-12 as amended, the Commissioner of Insurance shall collect in advance
118-13 from variable agent applicants an examination fee in an amount not
118-14 to exceed $20. The State Board of Insurance shall determine the
118-15 amount of the fees. A new examination fee shall be paid for each
118-16 and every examination. The examination fee shall not be returned
118-17 under any circumstance other than for failure to appear and take
118-18 the examination after the applicant has given at least 24 hours
118-19 notice of an emergency situation to the Commissioner of Insurance
118-20 and received the Commissioner's approval. All fees collected
118-21 pursuant to this section shall be deposited in the State Treasury
118-22 to the credit of the State Board of Insurance operating fund to be
118-23 used to administer the provisions of this section and Article
118-24 21.07-1, Insurance Code, as amended.]
118-25 [(c) Each license issued to a variable contract agent shall
118-26 expire two years following the date of issue, unless prior thereto
118-27 it is suspended or revoked by the Commissioner of Insurance.]
119-1 [(d) The Commissioner of Insurance shall suspend the license
119-2 of a variable agent during any period in which the agent does not
119-3 have an outstanding valid appointment. The Commissioner of
119-4 Insurance shall lift the suspension on receipt by the State Board
119-5 of Insurance of acceptable notice of a valid appointment.]
119-6 [(e) A license applicant or licensee whose license
119-7 application or license has been denied, refused, or revoked under
119-8 this section may not apply for any license as an insurance agent
119-9 before the first anniversary of the effective date of the denial,
119-10 refusal, or revocation, or, if the applicant or licensee seeks
119-11 judicial review of the denial, refusal, or revocation, before the
119-12 first anniversary of the date of the final court order or decree
119-13 affirming that action. The Commissioner of Insurance may deny an
119-14 application timely filed if the applicant does not show good cause
119-15 why the denial, refusal, or revocation of the previous license
119-16 application or license should not be considered a bar to the
119-17 issuance of a new license.]
119-18 [(f) Licenses which have not expired or which have not been
119-19 suspended or revoked may be renewed by filing with the State Board
119-20 of Insurance a completed renewal application and paying the
119-21 nonrefundable renewal fee set by the board in an amount not to
119-22 exceed $50 on or before the expiration date of the license in
119-23 accordance with Article 21.01-2 of this code.]
119-24 [(g) Any agent licensed under this article may represent and
119-25 act as an agent for more than one insurance carrier any time while
119-26 the license is in force, if the agent so desires. Any such agent
119-27 and the insurance carrier involved must give notice to the State
120-1 Board of Insurance of any additional appointment or appointments
120-2 authorizing the agent to act as agent for an additional insurance
120-3 carrier or carriers. Such notice shall be accompanied by a
120-4 certificate from each insurance carrier to be named in each
120-5 additional appointment that said insurance carrier desires to
120-6 appoint the applicant as its agent. This notice shall also contain
120-7 such other information as the State Board of Insurance may require.
120-8 The agent or company shall be required to pay a nonrefundable fee
120-9 in an amount not to exceed $16 as determined by the State Board of
120-10 Insurance for each additional appointment applied for, which fee
120-11 shall accompany the notice. If approval of the additional
120-12 appointment is not received from the board before the eighth day
120-13 after the date on which the completed application and fee were
120-14 received by the board, the agent and the insurance carrier, in the
120-15 absence of notice of disapproval, may assume that the board
120-16 approves the application, and the agent may act for the insurance
120-17 carrier. All fees collected pursuant to this section shall be
120-18 deposited in the State Treasury to the credit of the State Board of
120-19 Insurance operating fund to be used to administer the provisions of
120-20 this article and Article 21.07-1, Insurance Code, as amended.]
120-21 [(h) Duplicate License; Fee. The Commissioner of Insurance
120-22 shall collect in advance from agents requesting duplicate licenses
120-23 a fee not to exceed $20. The State Board of Insurance shall
120-24 determine the amount of the fee.]
120-25 SECTION 5.03. Subsection (c), Article 5.13-1, Insurance
120-26 Code, is amended to read as follows:
120-27 (c) The right of such insurers to issue prepaid legal
121-1 services contracts on individual, group, or franchise bases is
121-2 hereby recognized, and qualified agents of such insurers who are
121-3 licensed under Article 21.07-1 or [Articles 21.07 and] 21.14 of
121-4 this code [the Insurance Code, as amended, and Chapter 213, Acts of
121-5 the 54th Legislature, 1955, as amended (Article 21.07-1, Vernon's
121-6 Texas Insurance Code),] shall be authorized to write such coverages
121-7 under such rules [and regulations] as the commissioner [State Board
121-8 of Insurance] may prescribe.
121-9 SECTION 5.04. Chapter 10, Insurance Code, is amended by
121-10 adding Article 10.37-3 to read as follows:
121-11 Art. 10.37-3. AGENT'S LICENSE REQUIRED. (a) A person may
121-12 not solicit or procure insurance contracts on behalf of a fraternal
121-13 benefit society unless the person holds a license issued by the
121-14 department under this code or is specifically exempted from the
121-15 license requirement as provided by Section 2, Article 21.07-1, of
121-16 this code.
121-17 (b) The licensing and regulation of agents for fraternal
121-18 benefit societies under this chapter is subject to the requirements
121-19 adopted under Subchapter A, Chapter 21, of this code and other
121-20 existing or subsequent applicable laws governing the licensing of
121-21 those agents. A provision of such a law is applicable to a license
121-22 applicant and license holder under this chapter.
121-23 SECTION 5.05. Article 16.24A, Insurance Code, is amended to
121-24 read as follows:
121-25 Art. 16.24A. LICENSING OF AGENTS [FOR CROP INSURANCE].
121-26 (a) No person or firm shall solicit, write, sign, execute or
121-27 deliver insurance policies, bind insurance risks, collect premiums,
122-1 or otherwise act in the capacity of an insurance agent [a local
122-2 recording agent] in the solicitation or sale of [crop] insurance
122-3 for a farm mutual insurance company unless the person or firm holds
122-4 a license issued [is licensed] under Subchapter A, Chapter 21,
122-5 [Article 21.14] of this code.
122-6 (b) A farm mutual insurance company may not appoint and act
122-7 through an agent [who qualifies for a license as an agricultural
122-8 insurance agent] under Article 21.14-2 of this code.
122-9 SECTION 5.06. Section 9, Article 17.25, Insurance Code, is
122-10 amended to read as follows:
122-11 Sec. 9. AGENTS' LICENSE. Agents [or solicitors] for such
122-12 companies shall be licensed and appointed as provided by Subchapter
122-13 A, Chapter 21, [in Article 21.07 or 21.14] of this Code.
122-14 SECTION 5.07. Sections 4, 19, and 21, Managing General
122-15 Agents' Licensing Act (Article 21.07-3, Vernon's Texas Insurance
122-16 Code), are amended to read as follows:
122-17 Sec. 4. REDEMPTION OF SHARES [APPLICATION FOR LICENSE; TO
122-18 WHOM LICENSE MAY BE ISSUED]. [(a) Each applicant for license
122-19 shall be a resident of Texas and file a written sworn application
122-20 on forms furnished by the Commissioner. The applicant shall
122-21 include in the application the names and addresses of the
122-22 applicant's officers, directors, shareholders, or partners, if
122-23 applicable, and affiliates.]
122-24 [(b) The Commissioner shall issue a license to an individual
122-25 applicant upon successful completion of the examination and
122-26 compliance with the other requirements of this Act.]
122-27 [(c) The Commissioner shall issue a license to a general
123-1 partnership, or to a limited liability partnership registered with
123-2 the Secretary of State under Section 3.08, Texas Revised
123-3 Partnership Act (Article 6132b-3.08, Vernon's Texas Civil
123-4 Statutes), engaging in the business of insurance if each of the
123-5 partners is licensed as an agent under this Act. The term
123-6 "partnership" or "agency partnership" as used in this Act means a
123-7 general partnership or a registered limited liability partnership.]
123-8 [(d) The Commissioner shall issue a license to a corporation
123-9 on finding:]
123-10 [(1) that the corporation is a Texas corporation
123-11 having its principal place of business in the State of Texas and
123-12 having as one of its purposes the authority to act as a managing
123-13 general agent; and]
123-14 [(2) that every officer, director, and shareholder of
123-15 the corporation is individually licensed as a managing general
123-16 agent under the provisions of this Insurance Code; provided,
123-17 however, that in the event ownership of the shares of such
123-18 corporation is acquired through devise or descent by an unlicensed
123-19 shareholder, the corporation shall still be entitled to a license
123-20 if such unlicensed shareholder qualifies as a licensed managing
123-21 general agent or disposes of the shares to a licensed managing
123-22 general agent within 90 days after the date of such stock
123-23 acquisition. If an unlicensed person acquires shares in such a
123-24 corporation and does not qualify to be licensed as a managing
123-25 general agent and the person does not dispose of the shares within
123-26 the 90-day period to a licensed managing general agent, the shares
123-27 must be purchased by the corporation for the value of the shares of
124-1 stock as reflected by the regular books and records of the
124-2 corporation on the date of the acquisition of the shares by the
124-3 unlicensed person. If the corporation fails or refuses to purchase
124-4 the shares, the corporation's license shall be cancelled.]
124-5 [(e)] A corporation may redeem the shares of any shareholder
124-6 or the shares of a deceased shareholder, on terms agreed on by the
124-7 board of directors and the shareholder or the shareholder's
124-8 personal representative or at a price and on terms provided in the
124-9 articles of incorporation, the bylaws, or an existing contract
124-10 entered into between the shareholders of the corporation.
124-11 [(f) Nothing contained herein shall be construed to permit
124-12 any unlicensed shareholder or any employee or agent of any
124-13 corporation licensed as a managing general agent to perform any act
124-14 of a managing general agent without obtaining a managing general
124-15 agent's license.]
124-16 [(g) If at any time, any person holding a managing general
124-17 agent's license does not maintain the qualifications necessary to
124-18 obtain a license, the license of such person to act as a managing
124-19 general agent shall be cancelled or denied in accordance with the
124-20 other provisions of this Act.]
124-21 [(h) Nothing in this section shall prevent any shareholder
124-22 from selling or otherwise transferring stock in any corporation to
124-23 a company or managing general agent licensed to do business in
124-24 Texas, nor prevent any such company or managing general agent from
124-25 owning all or any portion of the stock of such corporation.]
124-26 [(i) Each corporation licensed as a managing general agent
124-27 shall notify the Commissioner of any change in its officers,
125-1 directors, or shareholders not later than the 30th day after the
125-2 date on which the change takes effect.]
125-3 [(j) In this Act the term "corporation" shall mean a
125-4 corporation organized under the Texas Business Corporation Act or a
125-5 Texas domiciled limited liability company organized or existing
125-6 under the Texas Limited Liability Company Act (Article 1528n,
125-7 Vernon's Texas Civil Statutes) having its principal place of
125-8 business in this state and having as one of its purposes the
125-9 authority to act as a managing general insurance agent. Each
125-10 officer, manager, and member of a limited liability company must be
125-11 licensed under this Act. The licensing and regulation of a limited
125-12 liability company shall be subject to the same provisions and
125-13 requirements of this Act that are applicable to corporations
125-14 licensed under this Act.]
125-15 Sec. 19. ADMINISTRATION AND REGULATION OF MANAGING GENERAL
125-16 AGENTS; VIOLATIONS OF ACT. (a) The licensing and regulation of a
125-17 person acting as a managing general agent is subject to the laws
125-18 and requirements applicable to the licensing and regulation of
125-19 other agents under Subchapter A, Chapter 21, Insurance Code.
125-20 (b) Any person, firm, or corporation who violates any of the
125-21 provisions of this Act or any rule, regulation, or order adopted
125-22 under this Act or Subchapter A, Chapter 21, Insurance Code, shall
125-23 be subject to:
125-24 (1) Sections 2A, 3A, 4A, 5A, and 6A, Article 21.01-2,
125-25 Insurance Code; and
125-26 (2) [sanctions under] Section 7, Article 1.10,
125-27 Insurance Code.
126-1 Sec. 21. ADMINISTRATION OF ACT. The administration of this
126-2 Act shall be vested in the commissioner, [State Board of Insurance]
126-3 who may establish, and from time to time amend, reasonable rules
126-4 [and regulations] for the administration of this Act.
126-5 SECTION 5.08. Article 22.14, Insurance Code, is amended to
126-6 read as follows:
126-7 Art. 22.14. LICENSING OF AGENTS. All agents of stipulated
126-8 premium companies shall be licensed in accordance with the
126-9 provisions of Subchapter A [Art. 21.07] of Chapter 21 of this Code.
126-10 SECTION 5.09. Chapter 23, Insurance Code, is amended by
126-11 adding Article 23.23A to read as follows:
126-12 Art. 23.23A. REGULATION OF AGENTS. The licensing and
126-13 regulation of an agent authorized to solicit prepaid legal services
126-14 contracts for corporations complying with this chapter is subject
126-15 to Subchapter A, Chapter 21, of this code.
126-16 ARTICLE 6. SURPLUS LINES
126-17 SECTION 6.01. Subdivision (1), Subsection (a), Section 2,
126-18 Article 1.14-2, Insurance Code, is amended to read as follows:
126-19 (1) "Surplus lines agent" means:
126-20 (A) [(i) is] an agent authorized under Article
126-21 21.14 who is granted a surplus lines license in accordance with
126-22 this Article; or
126-23 (B) [, (ii) is] a managing general agent who is
126-24 [(authorized to be licensed and] licensed under the Managing
126-25 General Agents' Licensing Act[, Acts, 1967, 60th Legislature,
126-26 Chapter 727, codified by Vernon as] (Article 21.07-3, Vernon's
126-27 Texas Insurance Code) who is granted a surplus lines license in
127-1 accordance with this Article and who complies with the provisions
127-2 of this Article, except it is not necessary that the managing
127-3 general agent be licensed as a general property and casualty
127-4 [recording] agent[, or (iii) is a nonresident insurance agent
127-5 authorized under Article 21.11 and who is granted a surplus lines
127-6 license for the limited purpose of acting on behalf of a purchasing
127-7 group operating in this state in the placement of liability
127-8 insurance for risks located in this state].
127-9 SECTION 6.02. Subdivision (2), Subsection (a), Section 2,
127-10 Article 1.14-2, Insurance Code, is amended to read as follows:
127-11 (2) A [Each "]surplus lines agent,["] as a condition
127-12 of being licensed as a surplus lines agent and as a condition of
127-13 continuing to be licensed as a surplus lines agent, shall offer the
127-14 proof of financial responsibility [solvency and demonstrate
127-15 capacity in respect of responsibility to insureds under policies of
127-16 surplus lines insurance, or in the alternative show proof of
127-17 adequate bond and surety] in respect of [his] transactions with
127-18 insureds under policies of surplus lines insurance [and] as
127-19 required by [the] reasonable rules [and regulations] of the
127-20 department [State Board of Insurance shall provide].
127-21 SECTION 6.03. Subdivision (3), Subsection (a), Section 2,
127-22 Article 1.14-2, Insurance Code, is amended to read as follows:
127-23 (3) Any surplus lines license granted to an agency
127-24 authorized under the Managing General Agents' Licensing Act
127-25 (Article 21.07-3, Vernon's Texas Insurance Code), but[, Acts, 1967,
127-26 60th Legislature, Chapter 727, that is] not [also] licensed under
127-27 Article 21.14 of this code, [the Insurance Code] shall be limited
128-1 to the acceptance of business originating through a regularly
128-2 licensed general property and casualty [recording] agent and does
128-3 [shall] not authorize the [such] surplus lines agency to transact
128-4 business directly with the applicant for insurance.
128-5 SECTION 6.04. Subsection (b), Section 4, Article 1.14-2,
128-6 Insurance Code, is amended to read as follows:
128-7 (b) The department [Texas Department of Insurance] may issue
128-8 a surplus lines license to an applicant if the applicant submits a
128-9 properly completed license application and an application fee as
128-10 determined by the department and the department determines that the
128-11 applicant [an agent as defined by Subdivision (1) of Subsection (a)
128-12 of Section 2 of this article after the agent has]:
128-13 (1) is an individual who:
128-14 (A) is a resident of this state;
128-15 (B) is currently licensed as a general property
128-16 and casualty agent under Article 21.14 of this code or as a
128-17 managing general agent under the Managing General Agents' Licensing
128-18 Act (Article 21.07-3, Vernon's Texas Insurance Code);
128-19 (C) has passed the surplus lines license
128-20 examination administered under Article 21.01-1 of this code and
128-21 department rules; and
128-22 (D) provides proof of financial responsibility
128-23 as required under Section 2 of this article [remitted the
128-24 application fee set by the Texas Department of Insurance in an
128-25 amount not to exceed $50];
128-26 (2) is a corporation or partnership that:
128-27 (A) has at least one officer or director or at
129-1 least one active partner who:
129-2 (i) is a resident of this state; and
129-3 (ii) has passed the surplus lines license
129-4 examination required under this article;
129-5 (B) is currently licensed as a general property
129-6 and casualty agent under Article 21.14 of this code or as a
129-7 managing general agent under the Managing General Agents' Licensing
129-8 Act (Article 21.07-3, Vernon's Texas Insurance Code); and
129-9 (C) provides proof of financial responsibility
129-10 as required under Section 2 of this article [submitted a completed
129-11 license application on a form approved by the Texas Department of
129-12 Insurance]; or [and]
129-13 (3) is a nonresident insurance agent authorized under
129-14 Article 21.11 of this code who holds a general property and
129-15 casualty license from the department and whose authority as a
129-16 surplus lines agent is limited to acting on behalf of a purchasing
129-17 group operating in this state in the placement of liability
129-18 insurance for risks located in this state [passed a qualifying
129-19 examination approved by the Texas Department of Insurance. If the
129-20 agent is a general partnership or a registered limited liability
129-21 partnership, this examination must be met by each natural person
129-22 acting as a partner in that partnership. If the agent is a
129-23 corporation, this examination requirement must be met by each
129-24 natural person acting as an officer, director, or shareholder of
129-25 that corporation. If the agent is a limited liability company,
129-26 this examination requirement must be met by each natural person
129-27 acting as an officer, manager, and member of that limited liability
130-1 company].
130-2 SECTION 6.05. Subsection (c), Section 4, Article 1.14-2,
130-3 Insurance Code, is amended to read as follows:
130-4 (c) In addition to the requirements of this article, the
130-5 administration and regulation of a surplus lines agent's license
130-6 is governed by Subchapter A, Chapter 21, of this code, except that
130-7 Article 21.07 of this code does not apply to a license issued under
130-8 this article. [Unless the State Board of Insurance adopts a system
130-9 for staggered renewal of licenses, as provided by Article 21.01-2
130-10 of this code, each license issued under this section is for a
130-11 two-year term that expires on December 31; however, the term of the
130-12 initial licensing period shall expire on December 31 of the year
130-13 following the year in which the license is issued. A license may
130-14 be renewed for periods of two years.]
130-15 SECTION 6.06. Subsection (d), Section 4, Article 1.14-2,
130-16 Insurance Code, is amended to read as follows:
130-17 (d) If a license holder does not maintain the qualifications
130-18 necessary to obtain the license, the department may revoke or
130-19 suspend the license or deny the renewal of that license in
130-20 accordance with Article 21.01-2 of this code. [By filing a
130-21 completed written application in the form prescribed by the State
130-22 Board of Insurance and paying the nonrefundable renewal fee set by
130-23 the board in an amount not to exceed $50, an unexpired license may
130-24 be renewed on or before the expiration date of the license.]
130-25 ARTICLE 7. REPEALER
130-26 SECTION 7.01. The following laws are repealed:
130-27 (1) Subsections (f), (g), and (h), Section 4, Article
131-1 1.14-2, Insurance Code;
131-2 (2) Section 15, Article 17.25, Insurance Code;
131-3 (3) Sections 15 and 15A, Texas Health Maintenance
131-4 Organization Act (Sections 20A.15 and 20A.15A, Vernon's Texas
131-5 Insurance Code);
131-6 (4) Sections 1, 3, 4, and 6, Article 21.01-2,
131-7 Insurance Code;
131-8 (5) Article 21.02-1, Insurance Code;
131-9 (6) Article 21.05, Insurance Code;
131-10 (7) the following sections of Article 21.07, Insurance
131-11 Code:
131-12 (A) Sections 1B and 1C;
131-13 (B) Section 3, as amended by Chapters 596 and
131-14 972, Acts of the 75th Legislature, Regular Session, 1997;
131-15 (C) Sections 3B, 4, 4A, 5, 7, 8, 9, 10, 10A, 11,
131-16 12, 13, 14, 15, 15A, 16, 17, 18, 19, and 20;
131-17 (D) Section 21, as added by Chapter 820, Acts of
131-18 the 75th Legislature, Regular Session, 1997; and
131-19 (E) Section 21, as added by Chapter 1196, Acts
131-20 of the 75th Legislature, Regular Session, 1997;
131-21 (8) Article 21.07A, Insurance Code;
131-22 (9) Chapter 213, Acts of the 54th Legislature, Regular
131-23 Session, 1955 (Article 21.07-1, Vernon's Texas Insurance Code);
131-24 (10) the following sections of the Managing General
131-25 Agents' Licensing Act (Article 21.07-3, Vernon's Texas Insurance
131-26 Code):
131-27 (A) Sections 4A, 4B, and 4C;
132-1 (B) Subsection (h), Section 5;
132-2 (C) Sections 6 and 6A;
132-3 (D) Sections 8, 9, and 10;
132-4 (E) Sections 12, 13, 14, and 15;
132-5 (F) Section 17; and
132-6 (G) Section 20;
132-7 (11) Section 14, Article 21.14-1, Insurance Code;
132-8 (12) Article 21.15, Insurance Code;
132-9 (13) Article 21.15-2, Insurance Code;
132-10 (14) Article 21.15-3, Insurance Code;
132-11 (15) Article 21.15-4, Insurance Code;
132-12 (16) Article 21.15-7, Insurance Code;
132-13 (17) Section 10, Article 21.58A, Insurance Code; and
132-14 (18) Article 23.23, Insurance Code.
132-15 ARTICLE 8. GRANDFATHER CLAUSE; TRANSITION
132-16 SECTION 8.01. On the effective date of this Act, a person
132-17 who holds a license issued by the Texas Department of Insurance
132-18 that is in good standing is:
132-19 (1) considered licensed under the applicable licensing
132-20 law as amended by this Act;
132-21 (2) entitled to act as an agent under the new license
132-22 type, subject to this article; and
132-23 (3) subject to the provisions of the Insurance Code as
132-24 amended by this Act.
132-25 SECTION 8.02. (a) A person who, immediately before the
132-26 effective date of this Act, holds an agent license issued by the
132-27 Texas Department of Insurance and who obtained that license by
133-1 passing a written examination, whether administered by the
133-2 insurance carrier, company, or state testing contractor, is
133-3 entitled to the appropriate license as provided by Subchapter A,
133-4 Chapter 21, Insurance Code, as amended by this Act, without further
133-5 examination.
133-6 (b) A person who, immediately before the effective date of
133-7 this Act, holds an agent license issued by the Texas Department of
133-8 Insurance before January 1, 1999, and who obtained that license
133-9 without taking a written examination or who actually solicited
133-10 insurance on behalf of a stipulated premium company, farm mutual
133-11 company, or county mutual insurance company before January 1, 1999,
133-12 is entitled to the appropriate license as provided by Subchapter A,
133-13 Chapter 21, Insurance Code, as amended by this Act, but must pass
133-14 the appropriate license examination not later than the second
133-15 anniversary of the date of issuance, to retain the license. The
133-16 license of a person who does not pass the license examination as
133-17 required by this subsection expires on the second anniversary of
133-18 the date of issuance and may not be renewed.
133-19 (c) A person who, immediately before the effective date of
133-20 this Act, holds an agent license issued by the Texas Department of
133-21 Insurance on or after January 1, 1999, and who obtained that
133-22 license without taking a written examination or who actually
133-23 solicited insurance on behalf of a stipulated premium company, farm
133-24 mutual company, or county mutual insurance company on or after
133-25 January 1, 1999, but before the effective date of this Act, is
133-26 entitled to the appropriate license as provided by Subchapter A,
133-27 Chapter 21, Insurance Code, as amended by this Act, but must pass
134-1 the appropriate license examination not later than May 31, 2000, to
134-2 retain the license. The license of a person who does not pass the
134-3 license examination as required by this subsection expires on May
134-4 31, 2000.
134-5 (d) A person who has actually solicited insurance on behalf
134-6 of a stipulated premium company, farm mutual company, or county
134-7 mutual insurance company for at least 24 months preceding the
134-8 effective date of this Act is entitled to the appropriate license
134-9 and any renewal license as provided by Subchapter A, Chapter 21,
134-10 Insurance Code, as amended by this Act, without further
134-11 examination.
134-12 SECTION 8.03. (a) The Texas Department of Insurance may
134-13 issue a life, accident, and health license to a person who
134-14 solicited insurance on behalf of a fraternal benefit society
134-15 immediately before the effective date of this Act on submission to
134-16 the department by the person of the following:
134-17 (1) a certified statement from the fraternal benefit
134-18 society indicating the period of time the person has solicited
134-19 insurance on behalf of the fraternal benefit society;
134-20 (2) a completed license application form; and
134-21 (3) a nonrefundable application fee in an amount
134-22 determined by the department.
134-23 (b) To retain the license issued under Subsection (a) of
134-24 this section, a person who has solicited insurance on behalf of a
134-25 fraternal benefit society for less than two years as of the
134-26 effective date of this Act must pass the license examination
134-27 required under Subchapter A, Chapter 21, Insurance Code, not later
135-1 than the 180th day after the date of issuance of the license. The
135-2 license of a person who does not pass the license examination as
135-3 required by this subsection expires on the 180th day after the date
135-4 of issuance of the license and may not be renewed.
135-5 SECTION 8.04. Notwithstanding any other law, the contract of
135-6 a surety who guarantees the promise of a bonded principal to appear
135-7 in court as directed by the court must provide that:
135-8 (1) the surety is not liable based on a default by the
135-9 principal until the first anniversary of the date on which the
135-10 court declares that the principal is in default; and
135-11 (2) the liability of the surety is fully discharged
135-12 if:
135-13 (A) it is shown that, before the first
135-14 anniversary of the date on which the court declares that the
135-15 principal is in default, the principal is placed in custody in any
135-16 jurisdiction; or
135-17 (B) the surety presents evidence satisfactory to
135-18 the court of any other good cause for the principal not being
135-19 present in court as directed.
135-20 ARTICLE 9. EFFECTIVE DATE; TRANSITION; EMERGENCY
135-21 SECTION 9.01. (a) This Act takes effect September 1, 1999.
135-22 (b) Section 3, Article 21.01-1, Insurance Code, as amended
135-23 by this Act, applies to continuing education requirements for
135-24 insurance agents for a renewal of a license that occurs on or after
135-25 January 1, 2001.
135-26 SECTION 9.02. The importance of this legislation and the
135-27 crowded condition of the calendars in both houses create an
136-1 emergency and an imperative public necessity that the
136-2 constitutional rule requiring bills to be read on three several
136-3 days in each house be suspended, and this rule is hereby suspended.