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Licensure (Texas)
I.C. Art. 21.07 - Licensing of Agents
Sec. 1. (a) No person shall act as an agent of any insurance company, health maintenance organization, or other type of insurance carrier licensed to do business in the State of Texas and which insurance carrier's agents are required to be licensed under the provisions of this code unless that person shall have first procured a license from the department as provided by this subchapter, and no such insurance carrier shall appoint any person to act as its agent unless such person shall have obtained a license under the provisions of this subchapter, and no such person who obtains a license shall engage in business as an agent until that person shall have been appointed to act as an agent by some duly authorized insurance carrier designated by the provisions of this code and authorized to do business in the State of Texas.
(b) This subchapter does not apply to:
(1) an actual full-time home office salaried employee of an insurance carrier licensed to do business in this state, other than an employee who solicits or receives an application for the sale of insurance through an oral, written, or electronic communication in accordance with Article 21.14 of this code;
(2) an actual attorney in fact or the actual traveling salaried representative of a reciprocal exchange or interinsurance exchange admitted to do business in this state as to business transacted through the attorney in fact or salaried representative;
(3) the actual attorney in fact for a Lloyd's plan insurer;
(4) the group motor vehicle insurance business or the group motor vehicle department of companies engaged in that business; or
(5) a salaried employee who is not involved in the solicitation or negotiation of insurance in the office of a licensed agent who devotes the employee's full time to clerical and administrative services, including the incidental taking of information from customers and receipt of premiums in the office of a licensed agent, if the employee does not receive any commissions and the employee's compensation is not varied by the volume of premiums taken and received.
Sec. 1A. Definitions. Unless the context clearly indicates otherwise, in this subchapter:
(1) "Agent" means a person who is an authorized agent of an insurance company or health maintenance organization, any person who is a subagent of an agent, and any other person who performs the acts of an agent, whether through an oral, written, or electronic communication or otherwise, in the solicitation of, negotiation for, procurement of, or collection of premiums on an insurance or annuity contract, or who represents or purports to represent a health maintenance organization, including a health maintenance organization offering only a single health care service plan, in the solicitation of, negotiation for, procurement of, or effectuation of membership in the health maintenance organization. The term does not include:
(A) a regular salaried officer or employee of an insurance company, health maintenance organization, or insurance agent who:
(i) devotes substantially all of the officer's or employee's time to activities other than the solicitation of applications for insurance, annuity contracts, or memberships;
(ii) does not receive a commission or other compensation directly dependent on the business obtained; and
(iii) does not solicit or accept from the public applications for insurance, annuity contracts, or memberships;
(B) an employer or an employer's officers or employees or the trustees of an employee benefit plan, to the extent that those employers, officers, employees, or trustees are engaged in the administration or operation of any program of employee benefits involving the use of insurance or annuities issued by an insurance company or memberships issued by a health maintenance organization, if those employers, officers, employees, or trustees are not compensated, directly or indirectly, by the insurance company or health maintenance organization issuing the insurance or annuity contracts or memberships;
(C) except as otherwise provided by this code, a depository institution, or the officers and employees of a depository institution, to the extent that the depository institution or officers and employees collect and remit premiums or charges by charging those premiums or charges against accounts of depositors on the orders of those depositors; or
(D) a person or the employee of a person who has contracted to provide administrative, management, or health care services to a health maintenance organization and who is compensated for those services by the payment of an amount computed as a percentage of the revenues, net income, or profit of the health maintenance organization, if that method of compensation is the sole basis for subjecting that person or the employee of the person to this article.
(2) "Control" means the power to direct or cause the direction of the management and policies of a license holder, whether directly or indirectly. For the purposes of this subchapter, a person is considered to control:
(A) a corporate license holder if the person, individually or acting with others, directly or indirectly, holds with the power to vote, owns, or controls, or holds proxies representing, at least 10 percent of the voting stock or voting rights of the corporate license holder; or
(B) a partnership if the person through a right to vote or through any other right or power exercises rights in the management, direction, or conduct of the business of the partnership.
(3) "Corporation" means a legal entity that is organized under the business corporations laws or limited liability company laws of this state, another state, or a territory of the United States and that has as one of its purposes the authority to act as an insurance agent. The licensing and regulation of a limited liability company is subject to all provisions of this subchapter that apply to a corporation licensed under this subchapter.
(4) "Depository institution" means:
(A) a bank or savings association as defined by 12 U.S.C. Section 1813, as amended;
(B) a foreign bank that maintains a branch, agency, or commercial lending company in the United States;
(C) a federal or state credit union as defined by 12 U.S.C. Section 1752, as amended;
(D) a bank branch; or
(E) a bank subsidiary, as defined by state or federal law.
(5) "Individual" means a natural person. The term includes a resident or a nonresident of this state.
(6) "Insurance company," "insurance carrier," or "insurer" means an insurance company regulated by the department. The term includes:
(A) any domestic or foreign, stock and mutual, life, health, or accident insurance company;
(B) any domestic or foreign, stock and mutual, fire and casualty insurance company;
(C) a Mexican casualty company;
(D) a domestic or foreign Lloyd's plan insurer;
(E) a domestic or foreign reciprocal or interinsurance exchange;
(F) a domestic or foreign fraternal benefit society;
(G) a stipulated premium insurance company;
(H) a nonprofit or for-profit legal service corporation;
(I) a statewide mutual assessment company;
(J) a local mutual aid association;
(K) a local mutual burial association;
(L) an exempt association under Article 14.17 of this code;
(M) a nonprofit hospital, medical, or dental service corporation, including a company subject to Chapter 20 of this code;
(N) a health maintenance organization;
(O) a county mutual insurance company; or
(P) a farm mutual insurance company.
(7) "Partnership" means an association of two or more persons organized under the partnership laws or limited liability partnership laws of this state, another state, or a territory of the United States. The term includes a general partnership, limited partnership, limited liability partnership, and limited liability limited partnership.
(8) "Person" means an individual, partnership, corporation, or depository institution.
(9) "Subagent" means any person engaging in activities described under Subdivision (1) of this section who acts for or on behalf of an agent, whether through an oral, written, or electronic communication or otherwise, in the solicitation of, negotiation for, or procurement of an insurance or annuity contract or health maintenance organization membership, or the collection of premiums or charges on an insurance or annuity contract or health maintenance organization membership, whether or not the subagent is designated by the agent as a subagent or by any other title. A subagent is an agent, for all purposes of this subchapter, and wherever the term "agent" is used in this chapter, it includes subagents whether or not a subagent is specifically mentioned.
Sec. 1B, 1C. Repealed. Acts 2001, ch. 703, s 8.01(7)(A), eff. 9-1-2001.
Sec. 2. Application for license; to whom license may be issued. (a) Any person that desires to become an agent for an insurance company or health maintenance organization, the agents of which are required to be licensed under this subchapter, shall submit to the department an application for a license in the form required by the department.
(b) Each applicant for a license to act as an insurance agent in this state shall file with the department a completed application in the format prescribed by the department. The commissioner shall establish by rule the requirements for a properly completed application.
(c) The department may not grant a license as an insurance agent to write any form of insurance unless the department finds that:
(1) the applicant is or intends to be actively engaged in the soliciting or writing of insurance for the public generally and is to be actively engaged in the business of insurance; and
(2) the application is not made to evade the laws against rebating and discrimination, either for the applicant or for some other person.
(d) This section does not prohibit an applicant from insuring property that the applicant owns or in which the applicant has an interest, but it is the intent of this section to prohibit coercion of insurance and to preserve to each individual the right to choose that individual's own agent or insurance company, and to prohibit the licensing of a person to engage in the insurance business principally to handle business that the applicant controls only through ownership, mortgage or sale, family relationship, or employment. An applicant for an original license must have a bona fide intention to engage in business in which, in any calendar year, at least 25 percent of the total volume of premiums is derived from persons other than the applicant and from property other than that on which the applicant controls the placing of insurance through ownership, mortgage, sale, family relationship, or employment.
(e) The department may not deny a license application solely on the ground that the applicant will act only part-time as an agent.
(f) The department shall issue a license to an individual to engage in the business of insurance if the department finds that the individual:
(1) is at least 18 years of age;
(2) has passed the licensing examination required under this code within the past 12 months;
(3) has not committed an act for which a license may be denied under Article 21.01- 2 of this code; and
(4) has submitted the application, appropriate fees, and any other information required by the department.
(g) An individual engaging in the business of insurance as a sole proprietorship under the authority of a license issued under this subchapter may incorporate, but the corporation does not have greater license authority than that granted to the license holder in the holder's individual capacity.
(h) Each individual license holder shall notify the department on a monthly basis of:
(1) a change of the license holder's mailing address;
(2) a conviction of the license holder of a felony; or
(3) an administrative action taken against the license holder by a financial or insurance regulator of this state, another state, or the United States.
(i) The department shall issue a license to a corporation or partnership if the department finds that:
(1) the corporation or partnership is:
(A) organized under the laws of this state or any other state or territory of the United States;
(B) admitted to conduct business in this state by the secretary of state, if so required; and
(C) authorized by its articles of incorporation or its partnership agreement to act as an insurance agent;
(2) the corporation or partnership meets the definition of that entity adopted under Section 1A of this article;
(3) at least one officer of the corporation or one active partner of the partnership and all other persons performing any acts of an agent on behalf of the corporation or partnership in this state are individually licensed by the department separately from the corporation or partnership;
(4) the corporation or partnership will have the ability to pay any sums up to $25,000 which it might become legally obligated to pay on account of any claim made against it by any customer and caused by any negligent act, error, or omission of the corporation or partnership or any person for whose acts the corporation or partnership is legally liable in the conduct of its business under this code. The term "customer" means any person, firm, or corporation to whom such corporation or partnership sells or attempts to sell a policy of insurance, or from whom such corporation or partnership accepts an application for insurance. Such ability shall be maintained in one of the following ways:
(A) an errors and omissions policy insuring such corporation or partnership against errors and omissions in at least the sum of $250,000 with a deductible of not more than 10 percent of the full amount of the policy issued by an insurance company licensed to do business in this state or, if a policy cannot be obtained from a company licensed to do business in this state, a surplus lines insurance policy issued under Article 1.14- 2 of this code; or
(B) a bond executed by such corporation or partnership as principal and a surety company authorized to do business in this state, as surety, in the principal sum of $25,000, payable to the department for the use and benefit of customers of such corporation or partnership, conditioned that such corporation or partnership shall pay any final judgment recovered against it by any customer. A binding commitment to issue such a policy or bond shall be sufficient in connection with any application for license;
(5) the corporation or partnership intends to be actively engaged in the business of insurance as required under Subsection (c) of this section;
(6) each location from which the corporation or partnership will conduct its business in this state under authority of an insurance license is separately registered with the department;
(7) the corporation or partnership has submitted the application, appropriate fees, and any other information required by the department; and
(8) an officer, director, member, manager, partner, or any other person who has the right or ability to control the license holder has not:
(A) had a license suspended or revoked or been the subject of any other disciplinary action by a financial or insurance regulator of this state, another state, or the United States; or
(B) committed an act for which a license may be denied under Article 21.01- 2 of this code.
(j) Nothing contained in this section shall be construed to permit any unlicensed employee or agent of any corporation or partnership to perform any act of an agent under this subchapter without obtaining a license.
(k) Each corporation or partnership licensed as an agent under this subchapter shall file, under oath, on a form developed by the department, biographical information for each of its executive officers and directors or unlicensed partners who administer the entity's operations in this state, and shareholders who are in control of the corporation, or any other partners who have the right or ability to control the partnership. If any corporation or partnership is owned, in whole or in part, by another entity, a biographical form is required for each individual who is in control of the parent entity.
(l) Each corporation or partnership shall notify the department not later than the 30th day after the date of:
(1) a felony conviction of a licensed agent of the entity or any individual associated with the corporation or partnership who is required to file biographical information with the department;
(2) an event that would require notification under Section 81.003 of this code; and
(3) the addition or removal of an officer, director, partner, member, or manager.
(m) The department shall issue a license to a depository institution in the manner provided for the licensing of a corporation under this section.
(n) A person may not acquire in any manner any ownership interest in an entity licensed as an agent under this subchapter if the person is, or after the acquisition would be, directly or indirectly, in control of the license holder, or otherwise acquire control of or exercise any control over the license holder, unless the person has filed the following information with the department under oath:
(1) a biographical form for each person by whom or on whose behalf the acquisition of control is to be effected;
(2) a statement certifying that no person who is acquiring an ownership interest in or control of the license holder has been the subject of a disciplinary action taken by a financial or insurance regulator of this state, another state, or the United States;
(3) a statement certifying that, immediately on the change of control, the license holder will be able to satisfy the requirements for the issuance of the license to solicit the line or lines of insurance for which it is licensed; and
(4) any additional information that the commissioner may by rule prescribe as necessary or appropriate to the protection of the insurance consumers of this state or as in the public interest.
(o) If a person required to file a statement under Subsection (n) of this section is a partnership, limited partnership, syndicate, or other group, the commissioner may require that the information required by Subdivisions (1) -- (4) of that subsection for an individual be provided regarding each partner of the partnership or limited partnership, each member of the syndicate or group, and each person who controls the partner or member. If the partner, member, or person is a corporation or the person required to file the statement under Subsection (n) of this section is a corporation, the commissioner may require that the information required by Subdivisions (1) -- (4) of that subsection be provided regarding:
(1) the corporation;
(2) each individual who is an executive officer or director of the corporation; and
(3) each person who is directly or indirectly the beneficial owner of more than 10 percent of the outstanding voting securities of the corporation.
(p) The department may disapprove an acquisition of control if, after notice and opportunity for hearing, the commissioner determines that:
(1) immediately on the change of control the license holder would not be able to satisfy the requirements for the issuance of the license to solicit the line or lines of insurance for which it is presently licensed;
(2) the competence, trustworthiness, experience, and integrity of the persons who would control the operation of the license holder are such that it would not be in the interest of the insurance consumers of this state to permit the acquisition of control; or
(3) the acquisition of control would violate this code or another law of this state, another state, or the United States.
(q) Notwithstanding Subsection (o) of this section, a change in control is considered approved if the department has not proposed to deny the requested change before the 61st day after the date of receipt by the department of all information required by this section.
(r) The commissioner is the corporation's or partnership's agent for service of process in the manner provided by Section 3, Article 1.36, of this code in a legal proceeding against the corporation or partnership if:
(1) the corporation or partnership licensed to transact business in this state fails to appoint or maintain an agent for service in this state;
(2) an agent for service cannot with reasonable diligence be found; or
(3) the license of a corporation or partnership is revoked.
(s) If a license holder does not maintain the qualifications necessary to obtain the license, the department shall revoke or suspend the license or deny the renewal of the license under Article 21.01- 2 of this code.
(t) A person licensed under this subchapter shall maintain all insurance records, including all records relating to customer complaints, separate from the records of any other business in which the person may be engaged.
(u) A subagent must be licensed to write each type of insurance that the subagent is employed to write, but the subagent is not required to hold each type of license issued to the agent for whom the subagent acts.
(v) An entity chartered by the federal Farm Credit Administration under the farm credit system established under 12 U.S.C. Section 2001 et seq., as amended, may be licensed by the department to solicit insurance in this state, as provided by 12 U.S.C. Section 2218, as amended, and in the manner provided for the licensing of a corporation under this section.
Sec. 2A. Persons other than licensed agents who may share in profits of an agent. (a) On the death of a licensed agent who is a member of an agency partnership, the surviving spouse and children, if any, of the deceased partner, or a trust for the surviving spouse and children may share in the profits of such agency partnership during the lifetime of the surviving spouse or children, as the case may be, as provided by a written partnership agreement, or in the absence of any written agreement, as agreed by the surviving partner or partners and the surviving spouse, the trustee, and the legal representative of the surviving child or children.
(b) On the death of a licensed agent, who is a sole proprietorship, unless otherwise provided by the will admitted to probate of that deceased agent, the surviving spouse and children, if any, of the deceased agent, or a trust for the surviving spouse or children, may share in the profits of the continuance of the agency business of the deceased agent, if the agency business is continued by a licensed agent. The surviving spouse, trusts, or children may participate in the profits during the lifetime of the surviving spouse and children. The surviving spouse, trusts, or children are not required to qualify as agents in order to participate in the profits of the agency, but may not do or perform any act of an agent in connection with the continuance of the agency business without first having been licensed as an agent. A licensed agent who is a sole proprietorship may transfer an interest in his agency to his children, or a trust for his children, and may operate that interest for their use and benefit. The children may share in the profits of the agency during their lifetime, and during that time may not be required to qualify as an agent in order to participate in those profits, but may not perform any act of an agent in connection with the agency business without first having been licensed as an agent.
(c) On the death of a shareholder in a corporate licensed agency, the surviving spouse and children, if any, of the deceased shareholder, or a trust for the surviving spouse and children may share in the profits of the corporate agency during the lifetime of the surviving spouse or children as provided by a contract entered into by and between all of the shareholders and the corporation. A surviving spouse, surviving children, or trusts are not required to individually qualify as an agent in order to participate in the profits, but may not perform any act of an agent on behalf of the corporation without having qualified as an agent. A shareholder in a corporate licensed agency may, if provided by a contract entered into by and between all of the shareholders and the corporation, transfer an interest in the agency to his children or a trust for his children. The children or trusts may share in the profits of the agency to the extent of that interest during their lifetime. The children or trusts may not be required to qualify as an agent to participate in those profits, but may not perform any act of an agent on behalf of the corporation without having qualified as an agent.
Sec. 3. Repealed. Acts 2001, ch. 703, s 8.01(7)(B), eff. 9-1-2001.
Sec. 3A. Temporary license. (a) The department may issue a temporary agent's license to an applicant for a license under Section 2 of this article who is being considered for appointment as an agent by another license holder, an insurer, or a health maintenance organization. An applicant for a temporary license is not required to pass a written examination. A temporary license is valid for the 90 days after the date of issuance. The department shall issue a temporary license immediately on receipt by the department of a properly completed application executed by the person in the form required by Section 2 of this article, accompanied by the nonrefundable filing fee set by the department and a certificate signed by an officer or properly authorized representative of the agent, insurer, or health maintenance organization stating that:
(1) the applicant is being considered for appointment by the agent, insurer, or health maintenance organization as its full-time agent;
(2) the agent, insurer, or health maintenance organization desires that the applicant be issued a temporary license; and
(3) the applicant will complete, under the agent's, insurer's, or health maintenance organization's supervision, at least 40 hours of training as prescribed by Subsection (h) of this section not later than the 14th day after the date on which the application, certificate, and nonrefundable fee are delivered or mailed to the department.
(b) If the temporary license is not received from the department before the eighth day after the date on which the application, certificate, and nonrefundable fee are delivered or mailed to the department and the agent, insurer, or health maintenance organization has not been notified that the application is denied, the agent, insurer, or health maintenance organization may assume that the temporary license will be issued and the applicant may proceed to act as an agent.
(c) A temporary license may not be renewed or issued more than once in a consecutive six-month period to the same applicant.
(d) A temporary license may not be granted to a person who does not intend to apply for a license to sell insurance or memberships to the public generally.
(e) A temporary license may not be used to obtain commissions from sales made to persons who have family, employment, or business relationships with the temporary license holder. An agent, insurer, or health maintenance organization may not knowingly pay, directly or indirectly, to the holder of a temporary license under this section, and a temporary license holder may not receive or accept, a commission on the sale of a contract of insurance or membership covering:
(1) the temporary license holder;
(2) a person related to the temporary license holder by consanguinity or affinity;
(3) a person who is or has been during the past six months the temporary license holder's employer, either as an individual or as a member of a partnership, association, firm, or corporation; or
(4) a person who is or who has been during the past six months the employee of the temporary license holder.
(f) A person who has been issued a temporary license under this section and is acting under the authority of the temporary license may not engage in any insurance solicitation, sale, or other agency transaction that results in or is intended to result in the replacement of any existing individual life insurance policy form or annuity contract that is in force, or receive, directly or indirectly, any commission or other compensation that may or does result from such a solicitation, sale, or other agency transaction. A person who holds a permanent license may not circumvent or attempt to circumvent the intent of this subsection by acting for or with a person holding a temporary license. As used in this subsection, "replacement" means a transaction in which a new life insurance or annuity contract is to be purchased, and it is known or should be known to the temporary agent that by reason of the solicitation, sale, or other transaction the existing life insurance or annuity contract has been or is to be:
(1) lapsed, forfeited, surrendered, or otherwise terminated;
(2) converted to reduced paid-up insurance, continued as extended term insurance, or otherwise reduced in value by the use of nonforfeiture benefits or other policy values;
(3) amended so as to effect either a reduction in benefits or in the term for which coverage would otherwise remain in force or for which benefits would be paid;
(4) reissued with any reduction in cash value; or
(5) pledged as collateral or subjected to borrowing, whether in a single loan or under a schedule of borrowing over a period of time, for amounts in the aggregate exceeding 25 percent of the loan value set forth in the policy.
(g) The department may cancel, suspend, or revoke the temporary appointment powers of an agent, insurer, or health maintenance organization if, after notice and opportunity for hearing, the commissioner finds that that agent, insurer, or health maintenance organization has abused the temporary appointment powers. An appeal from the department's decision is subject to Chapter 36 of this code. In considering whether abuse has occurred, the department may consider:
(1) the number of temporary appointments made;
(2) the percentage of appointees sitting for examination as agents under this article, as provided by Subsection (j) of this section; and
(3) the number of appointees who pass the examination.
(h) The agent, insurer, or health maintenance organization shall administer at least 40 hours of training to each applicant for a temporary license not later than the 14th day after the date on which the application, certificate, and nonrefundable fee are delivered or mailed to the department. At least 10 hours must be taught in a classroom setting, including an accredited college, university, junior college, or community college, a business school, or a private institute or classes sponsored by the agent, insurer, or health maintenance organization and especially established for this purpose. The training program must be designed to provide an applicant with basic knowledge of:
(1) the broad principles of insurance, including the licensing and regulatory laws of this state;
(2) the broad principles of health maintenance organizations, including membership requirements and related licensing and regulatory laws of this state; and
(3) the ethical obligations and duties of an agent.
(i) If the commissioner finds under Subsection (g) of this section that an abuse of temporary appointment powers has occurred, the commissioner may require the affected agent, insurer, or health maintenance organization to file with the department a description of the agent's, insurer's, or health maintenance organization's training program and may require the agent, insurer, or health maintenance organization to obtain the approval of the department before continuing to use the training program.
(j) Each agent, insurer, or health maintenance organization shall ensure that, during any two consecutive calendar quarters, at least 70 percent of the agent's, insurer's, or health maintenance organization's applicants for temporary licenses sit for the required licensing examination. At least 50 percent of the applicants taking the examination must pass during that period.
(k) An agent, insurer, or health maintenance organization may not make more than 250 appointments of temporary license holders during a calendar year.
Sec. 3B to Sec. 5. Repealed. Acts 2001, ch. 703, s 8.01(7)(B), eff. 9-1-2001.
Sec. 6. Filing of additional appointments. (a) Except as specifically prohibited by another provision of this code, an agent licensed under this subchapter may represent and act as an agent for more than one insurance carrier at any time while the agent's license is in force, if the agent so desires. Any such agent and the insurance carrier involved shall notify the department, in a form prescribed by the department, of any additional appointment authorizing the agent to act as agent for an additional insurance carrier or carriers not later than the 30th day after the effective date of the appointment. The filing must include a nonrefundable fee in an amount determined by the commissioner for each additional appointment for which the insurance carrier applies.
(b) An appointment made under this Article to authorize an agent to act as an agent for an insurance carrier continues in effect without the necessity of renewal until it is terminated or withdrawn by the insurance carrier or agent. If the agent is terminated for cause, the insurance carrier shall follow the procedures established under Section 6B of this Article. Each renewal license issued to the agent authorizes the agent to represent and act for the insurance carriers for which the agent holds an appointment until the appointment is terminated or withdrawn, and that agent is considered to be the agent of the appointing insurance carriers for the purposes of this code.
(c) An agent appointed under this section may act on behalf of the appointing carrier before the department receives the filing made under this section.
(d) If a general life, accident, and health agent or general property and casualty agent who has been appointed by an insurance carrier authorized to engage in the business of insurance in this state appoints a subagent, the general agent shall notify the department about the appointment in writing on a form prescribed by the department. The notice must be accompanied by a nonrefundable fee in an amount determined by the commissioner.
(e) An insurance carrier is not required to separately appoint a subagent who has been designated in writing to the department as a subagent by an agent.
(f) If an agent terminates a subagent for any reason other than for cause, the agent shall promptly report the termination to the department. The termination ends the subagent's authority to act for the licensed agent or the insurance carrier for whom the agent is acting. If the subagent is terminated for cause, Section 6B of this article applies.
Sec. 6A. Repealed. Acts 2001, ch. 703, s 8.01(7)(B), eff. 9-1-2001.
Sec. 6B. Insurance carrier to notify department of termination of contract for cause; communication privileged. (a) Each insurance carrier or agent shall, on termination of the appointment of an agent for cause, immediately file with the department a statement of the facts relating to the termination of the appointment and the date and cause of the termination. On receipt of the statement the department shall record the termination of the appointment of that agent to represent the insurance carrier in this state.
(b) A document, record, statement, or other information required to be made or disclosed to the department under this section is a privileged and confidential communication and is not admissible in evidence in any court action or proceeding except under a subpoena issued by a court of record.
(c) An insurance agent, insurance carrier, an employee or agent of the carrier, or any other person, acting without malice, is not liable for providing the information required to be disclosed under this section.
Sec. 6C. Fees; use of funds. (a) The department shall collect from each agent of an insurance carrier writing insurance in this state under this code a nonrefundable license fee and a nonrefundable appointment fee for each appointment by an insurance carrier. These fees, together with examination fees, license fees, and license renewal fees, shall be deposited to the credit of the Texas Department of Insurance operating fund.
(b) The department may use any portion of the fees collected to enforce this subchapter, may employ persons as it considers necessary to investigate and make reports regarding alleged violations of this code and misconduct on the part of agents, and may pay the salaries and expenses of those persons and office employees and other expenses necessary to enforce this subchapter from the fees collected. A person employed by the department under this section may administer the oath and examine under oath any person considered necessary in gathering information and evidence and may have that information and evidence reduced to writing if considered necessary, and all related expenses shall be paid from the fees.
(c) The department shall set the fees in amounts reasonable and necessary to implement this subchapter.
Sec. 7 to 20. Repealed. Acts 2001, ch. 703, s 8.01(7)(B), eff. 9-1-2001.
Sec. 21. Repealed. Acts 1999, ch. 1530, s 6.01(1), (2), eff. 9-1-99.
I.C. Art. 21.07-1
Texas life, accident, and health agents license act
Text of article as enacted by Acts 2001, ch. 703, s 2.01
Sec. 1. Short Title; Application. (a) This article may be cited as the Texas Life, Accident, and Health Agents License Act.
(b) Each agent of an insurance company authorized to provide life, accident, and health insurance coverage in this state is subject to this article. This article applies to each person who:
(1) performs the acts of an agent, as defined by Article 21.02 of this code, whether through oral, written, or electronic communications or otherwise, by the solicitation of, negotiation for, procurement of, or collection of premiums on an insurance or annuity contract offered by any type of insurance carrier authorized to sell life, accident, and health insurance products in this state; or
(2) represents or purports to represent a health maintenance organization in the solicitation, negotiation, procurement, or effectuation of membership in the health maintenance organization.
Sec. 2. General Life, Accident, and Health License; License Required. (a) A general life, accident, and health license is required for each person who acts as:
(1) an agent writing life, accident, and health insurance for a life insurance company;
(2) an agent writing only accident and health insurance;
(3) an agent representing a health maintenance organization;
(4) an agent writing fixed or variable annuity contracts or variable life contracts;
(5) an industrial life insurance agent for an industrial company that writes only weekly premium life insurance on a debit basis under Article 3.52 of this code;
(6) an agent writing:
(A) only life insurance in excess of $15,000 on any one life for a stipulated premium insurance company;
(B) only accident and health insurance for a stipulated premium insurance company; or
(C) both types of insurance described by Paragraphs (A) and (B) of this subdivision;
(7) an agent writing life, accident, and health insurance for any type of authorized life insurance company, including a legal reserve life insurance company, domiciled in this state, representing the insurer in a foreign country or territory and either on a United States military installation or with United States military personnel;
(8) an agent writing life, accident, and health insurance for a fraternal benefit society except as provided by Article 10.37- 3 of this code; or
(9) an agent writing any other type of insurance as required by the commissioner for the protection of the insurance consumers of this state.
(b) For the purposes of this subsection, a "combination company" is an insurer that writes weekly premium life insurance or monthly ordinary life insurance on a debit basis. A general life, accident, and health license is required for each person who acts as a combination life insurance agent for a combination company. A combination company and a combination life insurance agent may also write ordinary contracts of life insurance.
Sec. 3. Authority to Write Additional Product Lines. A person who holds a general life, accident, and health license issued under the requirements of this subchapter may, without obtaining an additional license, write additional types of insurance contracts as provided under:
(1) Sections 4, 5, and 6 of this article; or
(2) Article 21.09 of this code.
Sec. 4. Limited Life, Accident, and Health License. (a) An agent must hold a limited life, accident, and health license if the agent writes:
(1) a policy or rider to a policy that provides only:
(A) lump-sum cash benefits in the event of accidental death, death by accidental means, or dismemberment; or
(B) ambulance expense benefits in the event of accident or sickness;
(2) a prepaid legal services contract under Article 5.13- 1 or Chapter 23 of this code;
(3) credit insurance except as otherwise provided under Article 21.09 of this code; or
(4) any other type of insurance, if determined necessary by the commissioner to protect insurance consumers in this state.
(b) A person who holds a limited life, accident, and health license issued under this section may write only the types of insurance products designated on the license by the department.
(c) An applicant for a limited life, accident, and health license is eligible for a temporary license under Section 3A, Article 21.07, of this code.
Sec. 5. Funeral Prearrangement Life Insurance Agent. (a) In this section, "funeral prearrangement life insurance agent" means a life insurance agent who, subject to the limitations of this section, writes only life insurance policies and fixed annuity contracts to secure the delivery of funeral services and merchandise under prepaid funeral contracts regulated by the Texas Department of Banking under Chapter 154, Finance Code.
(b) The department shall issue a license to act as a funeral prearrangement life insurance agent to an individual after receiving certification from an insurance company authorized to write life insurance and annuities in this state that the applicant has completed a course of study and instruction on life insurance and fixed annuities for applicants offered by the insurance company and passed without aid a written examination administered by the insurance company. The course of study and instruction must be at least a five-hour course and must include instruction on:
(1) the policies to be sold; and
(2) the laws relating to funeral prearrangement.
(c) The commissioner shall authorize an insurance company to administer a funeral prearrangement life insurance agent examination as provided by Subsection (b) of this section after approval by the commissioner of a complete outline and explanation of the course of study and instruction and the nature and manner of conducting the examination for applicants. The commissioner shall prescribe a uniform examination for applicants that fairly addresses the information contained in the approved course of study and instruction.
(d) The commissioner may investigate as necessary the manner of instruction and the examination administered by an insurance company under this section. The commissioner may withdraw from an insurance company the authority under this section to offer instruction and administer an examination.
(e) A funeral prearrangement life insurance agent licensed under this section may not:
(1) write any coverage or combination of coverages with an initial guaranteed death benefit that exceeds $15,000 on any life; or
(2) act as an agent for more than one insurance company.
(f) A license issued under this section to act as an agent for an insurance company is canceled when the license holder ceases to act as an agent for an insurance company. Not later than the 15th day after the date on which the license holder ceases to act as an agent for an insurance company, the insurance company or agent shall send written notification to the department.
(g) Except as specifically provided by this section, the provisions of this subchapter that apply to a limited license apply to a license issued under this section.
Sec. 6. Life Insurance Not Exceeding $15,000. (a) The department shall issue a license to act as an agent to an individual who writes only life insurance not to exceed $15,000 on any one life after receiving certification from a stipulated premium insurance company, a statewide mutual assessment company, a local mutual aid association, or a local mutual burial association, that the applicant has completed a course of study and instruction on life insurance and fixed annuities offered by the insurer and passed without aid a written examination administered by the insurer. The course of study and instruction must be at least a five-hour course and must include instruction on:
(1) the policies to be sold; and
(2) the laws relating to the regulation of insurance in this state.
(b) The commissioner shall authorize an insurer described by Subsection (a) of this section to administer an agent examination as provided by Subsection (a) of this section after approval by the commissioner of a complete outline and explanation of the course of study and instruction and the nature and manner of conducting the examination for applicants. The commissioner shall prescribe a uniform examination for applicants that fairly addresses the information contained in the approved course of study and instruction.
(c) The commissioner may investigate as necessary the manner of instruction and the examination administered by an insurer under this section. The commissioner may withdraw from an insurer the authority under this section to offer instruction and administer an examination.
(d) An insurance agent licensed under this section may not write any coverage or combination of coverages with an initial guaranteed death benefit that exceeds $15,000 on any life.
(e) A license is not required under this section for an agent who, in the preceding calendar year, wrote policies that generated, in the aggregate, less than $20,000 in direct premium.
(f) Except as specifically provided by this section, the provisions of this subchapter that apply to a limited license apply to a license issued under this section.
I.C. Art. 21.07-1 - Texas Life, Accident, and Health Agents License Act
Sec. 1. (a) This article may be cited as the Texas Life, Accident, and Health Agents License Act.
(b) Each agent of an insurance company authorized to provide life, accident, and health insurance coverage in this state is subject to this article. This article applies to each person who:
(1) performs the acts of an agent, as defined by Article 21.02 of this code, whether through oral, written, or electronic communications or otherwise, by the solicitation of, negotiation for, procurement of, or collection of premiums on an insurance or annuity contract offered by any type of insurance carrier authorized to sell life, accident, and health insurance products in this state; or
(2) represents or purports to represent a health maintenance organization in the solicitation, negotiation, procurement, or effectuation of membership in the health maintenance organization.
Sec. 2. General Life, Accident, and Health License; License Required. (a) A general life, accident, and health license is required for each person who acts as:
(1) an agent writing life, accident, and health insurance for a life insurance company;
(2) an agent writing only accident and health insurance;
(3) an agent representing a health maintenance organization;
(4) an agent writing fixed or variable annuity contracts or variable life contracts;
(5) an industrial life insurance agent for an industrial company that writes only weekly premium life insurance on a debit basis under Article 3.52 of this code;
(6) an agent writing:
(A) only life insurance in excess of $15,000 on any one life for a stipulated premium insurance company;
(B) only accident and health insurance for a stipulated premium insurance company; or
(C) both types of insurance described by Paragraphs (A) and (B) of this subdivision;
(7) an agent writing life, accident, and health insurance for any type of authorized life insurance company, including a legal reserve life insurance company, domiciled in this state, representing the insurer in a foreign country or territory and either on a United States military installation or with United States military personnel;
(8) an agent writing life, accident, and health insurance for a fraternal benefit society except as provided by Article 10.37- 3 of this code; or
(9) an agent writing any other type of insurance as required by the commissioner for the protection of the insurance consumers of this state.
(b) For the purposes of this subsection, a "combination company" is an insurer that writes weekly premium life insurance or monthly ordinary life insurance on a debit basis. A general life, accident, and health license is required for each person who acts as a combination life insurance agent for a combination company. A combination company and a combination life insurance agent may also write ordinary contracts of life insurance.
Sec. 3. Authority to Write Additional Product Lines. A person who holds a general life, accident, and health license issued under the requirements of this subchapter may, without obtaining an additional license, write additional types of insurance contracts as provided under:
(1) Sections 4, 5, and 6 of this article; or
(2) Article 21.09 of this code.
Sec. 4. Limited Life, Accident, and Health License. (a) An agent must hold a limited life, accident, and health license if the agent writes:
(1) a policy or rider to a policy that provides only:
(A) lump-sum cash benefits in the event of accidental death, death by accidental means, or dismemberment; or
(B) ambulance expense benefits in the event of accident or sickness;
(2) a prepaid legal services contract under Article 5.13- 1 or Chapter 23 of this code;
(3) credit insurance except as otherwise provided under Article 21.09 of this code; or
(4) any other type of insurance, if determined necessary by the commissioner to protect insurance consumers in this state.
(b) A person who holds a limited life, accident, and health license issued under this section may write only the types of insurance products designated on the license by the department.
(c) An applicant for a limited life, accident, and health license is eligible for a temporary license under Section 3A, Article 21.07, of this code.
Sec. 5. Funeral Prearrangement Life Insurance Agent. (a) In this section, "funeral prearrangement life insurance agent" means a life insurance agent who, subject to the limitations of this section, writes only life insurance policies and fixed annuity contracts to secure the delivery of funeral services and merchandise under prepaid funeral contracts regulated by the Texas Department of Banking under Chapter 154, Finance Code.
(b) The department shall issue a license to act as a funeral prearrangement life insurance agent to an individual after receiving certification from an insurance company authorized to write life insurance and annuities in this state that the applicant has completed a course of study and instruction on life insurance and fixed annuities for applicants offered by the insurance company and passed without aid a written examination administered by the insurance company. The course of study and instruction must be at least a five-hour course and must include instruction on:
(1) the policies to be sold; and
(2) the laws relating to funeral prearrangement.
(c) The commissioner shall authorize an insurance company to administer a funeral prearrangement life insurance agent examination as provided by Subsection (b) of this section after approval by the commissioner of a complete outline and explanation of the course of study and instruction and the nature and manner of conducting the examination for applicants. The commissioner shall prescribe a uniform examination for applicants that fairly addresses the information contained in the approved course of study and instruction.
(d) The commissioner may investigate as necessary the manner of instruction and the examination administered by an insurance company under this section. The commissioner may withdraw from an insurance company the authority under this section to offer instruction and administer an examination.
(e) A funeral prearrangement life insurance agent licensed under this section may not:
(1) write any coverage or combination of coverages with an initial guaranteed death benefit that exceeds $15,000 on any life; or
(2) act as an agent for more than one insurance company.
(f) A license issued under this section to act as an agent for an insurance company is canceled when the license holder ceases to act as an agent for an insurance company. Not later than the 15th day after the date on which the license holder ceases to act as an agent for an insurance company, the insurance company or agent shall send written notification to the department.
(g) Except as specifically provided by this section, the provisions of this subchapter that apply to a limited license apply to a license issued under this section.
Sec. 6. Life Insurance Not Exceeding $15,000. (a) The department shall issue a license to act as an agent to an individual who writes only life insurance not to exceed $15,000 on any one life after receiving certification from a stipulated premium insurance company, a statewide mutual assessment company, a local mutual aid association, or a local mutual burial association, that the applicant has completed a course of study and instruction on life insurance and fixed annuities offered by the insurer and passed without aid a written examination administered by the insurer. The course of study and instruction must be at least a five-hour course and must include instruction on:
(1) the policies to be sold; and
(2) the laws relating to the regulation of insurance in this state.
(b) The commissioner shall authorize an insurer described by Subsection (a) of this section to administer an agent examination as provided by Subsection (a) of this section after approval by the commissioner of a complete outline and explanation of the course of study and instruction and the nature and manner of conducting the examination for applicants. The commissioner shall prescribe a uniform examination for applicants that fairly addresses the information contained in the approved course of study and instruction.
(c) The commissioner may investigate as necessary the manner of instruction and the examination administered by an insurer under this section. The commissioner may withdraw from an insurer the authority under this section to offer instruction and administer an examination.
(d) An insurance agent licensed under this section may not write any coverage or combination of coverages with an initial guaranteed death benefit that exceeds $15,000 on any life.
(e) A license is not required under this section for an agent who, in the preceding calendar year, wrote policies that generated, in the aggregate, less than $20,000 in direct premium.
(f) Except as specifically provided by this section, the provisions of this subchapter that apply to a limited license apply to a license issued under this section.
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