INSURANCE CODE - NOT CODIFIED
CHAPTER 21. GENERAL PROVISIONS
SUBCHAPTER A. AGENTS AND AGENTS' LICENSES
Art. 21.01. Purpose; Consolidation of Licenses; Application;
Certificate of Authority or License Required; Rulemaking Authority
Purpose
Sec. 1. It is the intent of the legislature to:
(1) simplify and reform the regulation of insurance agents in this
state by consolidating the types of licenses issued to insurance
agents under this subchapter; and
(2) promote uniformity in the licensing, examination, continuing
education, and disciplinary requirements for agents in this state
and with other states.
Certificate of Authority or License Required
Sec. 2. It shall not be lawful for any person to act, as an agent or
otherwise, in soliciting or receiving applications for insurance of
any kind whatever in this state, or in any manner to aid in the
transaction of the business of any insurance company incorporated
in this state, or out of it, without first procuring a license or
certificate of authority from the department.
Application
Sec. 3. Except as otherwise provided by this code, this subchapter
applies to each person licensed in accordance with:
(1) Section 4, Article 1.14-2, of this code;
(2) Section 7, Article 3.75, of this code;
(3) Subsection (c), Article 5.13-1, of this code;
(4) Article 10.37-3 of this code;
(5) Article 16.24A of this code;
(6) Section 9, Article 17.25, of this code;
(7) Article 21.07 of this code;
(8) Article 21.07-1 of this code;
(9) Chapter 29, Acts of the 54th Legislature, Regular Session, 1955
(Article 21.07-2, Vernon's Texas Insurance Code);
(10) the Managing General Agents' Licensing Act (Article 21.07-3,
Vernon's Texas Insurance Code);
(11) Chapter 407, Acts of the 63rd Legislature, Regular Session,
1973 (Article 21.07-4, Vernon's Texas Insurance Code);
(12) Article 21.07-5 of this code;
(13) Article 21.07-6 of this code;
(14) Article 21.07-7 of this code;
(15) Article 21.09 of this code;
(16) Article 21.11 of this code;
(17) Article 21.14 of this code;
(18) Article 21.14-1 of this code;
(19) Article 21.14-2 of this code; or
(20) Article 23.23A of this code.
Rules
Sec. 4. The commissioner may adopt rules as necessary to implement
this subchapter and to meet the minimum requirements of federal law
and regulations.
Acts 1951, 52nd Leg., ch. 491.
Amended by Acts 2001, 77th Leg., ch. 703, Sec. 1.01, eff. Sept. 1,
2001; Sec. 3 amended by Acts 2003, 78th Leg., ch. 207, Sec. 3.03,
eff. June 11, 2003.
Art. 21.01-1. Agents' Qualifying Examination; Continuing
Education Requirements for Agents
Article repealed effective April 1, 2005.
Examination Administration
Sec. 1. (a) The commissioner may accept examinations administered
by a testing service as satisfying the examination requirements of
persons seeking license as agents, counselors, or adjusters under
this code. The commissioner may negotiate agreements with such
testing services to include performance of examination
development, test scheduling, examination site arrangements, and
test administration, grading, reporting and analysis. The
commissioner may require such testing services to correspond
directly with the applicants with regard to the administration of
such examinations and that such testing services collect fees for
administering such examinations directly from the applicants. The
commissioner may stipulate that any agreements with such testing
services provide for the administration of examinations in specific
locales and at specified frequencies. The commissioner shall
retain the authority to establish the scope and type of all
examinations. Prior to negotiating and making any agreement with
any testing service as authorized hereby, the commissioner shall
hold a public hearing in accordance with Chapter 2001, Government
Code, and shall adopt such rules and standards as may be deemed
appropriate by the commissioner to implement the authority granted
in this article.
(b) The commissioner may appoint advisory boards consisting of any
of the following persons: persons holding a license for which the
respective examinations are intended, persons who are employed by
insurance companies appointing such licensees, persons acting as
general agents or managers, persons teaching insurance at an
accredited college or university in Texas, persons who are citizens
of the State of Texas but who are not of any of the preceding
descriptions, or any combination of such persons. The function of
such advisory boards will be to make recommendations to the
commissioner or the testing service with respect to the scope,
type, and conduct of such examinations and the times and places
within the state where they shall be held. The members of such
advisory boards shall serve without pay but shall be reimbursed for
their reasonable expenses in attending meetings of their respective
advisory boards.
(c) In the absence of an agreement with a testing service, the
department shall administer any required qualifying examination in
accordance with this article. The commissioner may adopt rules
relating to the scope, type, and conduct of the written
examinations and the times and places in this state at which the
examinations will be conducted. The commissioner's rules may
designate textbooks, manuals, and other materials to be studied by
applicants in preparation for examinations conducted under this
subsection. Those textbooks, manuals, or other materials may
consist of material available to an applicant by purchase from the
publisher or of material prepared at the direction of the
commissioner and distributed to an applicant on request and on
payment of the reasonable cost of the material. All examination
questions shall be prepared from the contents of the textbooks,
manuals, and other materials designated or prepared by the
commissioner under this subsection.
(d) Not later than the 30th day after the date on which a licensing
examination is administered under this code, the department shall
notify each examinee of the results of the examination. However, if
an examination is graded or reviewed by a testing service, the
department shall notify each examinee of the results of the
examination not later than the 14th day after the date on which the
department receives the results from the testing service. If the
notice of examination results graded or reviewed by a testing
service will be delayed for longer than 90 days after the
examination date, the department shall notify the examinee of the
reason for the delay before the 90th day. The department may
require a testing service to notify examinees of the results of an
examination.
(e) If requested in writing by a person who fails a licensing
examination administered under this code, the department shall
furnish the person with an analysis of the person's performance on
the examination.
Examination of License Applicant
Sec. 2. (a) Except as otherwise provided by this code, each
applicant for a license to act as an insurance agent in this state
must submit to a personal written examination that is prescribed by
the commissioner and must pass the examination to the satisfaction
of the department. The examination shall determine the applicant's
competence with respect to:
(1) the type of insurance contracts for which the applicant seeks a
license;
(2) the laws of this state regulating the business of insurance;
and
(3) the ethical obligations and duties of an insurance agent.
(b) The department shall charge each applicant an examination fee
in an amount determined by the department as necessary for
administration of the examination. The fee must accompany each
application to take the examination. The fee is nonrefundable
other than for failure of the applicant to appear and take the
examination after the applicant has given at least 24 hours' notice
of an emergency situation to the department and received the
department's approval of refund of the fee.
(c) The commissioner shall prescribe a limited written licensing
examination for applicants for a limited license under Article
21.07-1 or 21.14 of this code. A limited examination shall be
administered according to the provisions of this article and shall
determine the applicant's competence and understanding of:
(1) the basic principles of insurance contracts;
(2) the basic laws of this state regulating the business of
insurance; and
(3) the ethical obligations and duties of an insurance agent.
(d) The department may not require a person to take an examination
under this article if the person is:
(1) an applicant for the renewal of an unexpired license issued by
the department;
(2) an applicant whose license issued by the department expired
less than one year before the date of the application, if the
previous license was not denied, revoked, or suspended by the
commissioner;
(3) a partnership, corporation, or depository institution;
(4) an applicant for a life, accident, and health license who has
attained the designation of chartered life underwriter (CLU);
(5) an applicant for a life and health insurance counselor license
who has attained the designation of chartered life underwriter
(CLU), chartered financial consultant (ChFC), or certified
financial planner (CFP);
(6) an applicant for a property and casualty license who has
attained the designation of chartered property and casualty
underwriter (CPCU);
(7) an applicant for a specialty license issued under Article 21.09
of this code;
(8) a nonresident individual who is exempt from the examination
requirement under Article 21.11 of this code; or
(9) an applicant for a general life, accident, and health license
who was authorized to solicit or procure insurance on behalf of a
fraternal benefit society on September 1, 1999, if the applicant:
(A) solicited or procured insurance on behalf of the fraternal
benefit society for at least 24 months preceding September 1, 1999;
(B) does not solicit or procure insurance for any other insurer or a
different fraternal benefit society on or after September 1, 1999;
(C) does not solicit or procure an insurance contract on or after
September 1, 1999, except from a person who is eligible for
membership in the fraternal benefit society; and
(D) does not solicit or procure an interest-sensitive life
insurance contract that exceeds $35,000 of coverage on an
individual life on or after September 1, 1999, unless the applicant
has obtained the designation of "Fraternal Insurance Counselor" at
the time the contract is solicited or procured.
(e) A license to which the exemption authorized under Subsection
(d)(9) of this section applies must be held by the applicant in an
individual capacity and is not transferable.
(f) Each examination administered under this article shall be
offered in English and Spanish.
Continuing Education Requirements
Sec. 3. (a) The department has exclusive jurisdiction for all
matters relating to the continuing education of insurance agents
who are licensed under this code.
(b) Except as provided by Subsection (d) of this section, each
individual who holds a license issued by the department shall
complete continuing education. All required continuing education
hours must be completed before the expiration date of the
individual's license. An individual who holds a general life,
accident, and health license, a life and health insurance counselor
license, or a general property and casualty license shall complete
15 hours of continuing education annually. The agent may not be
required to complete more than 15 continuing education hours
annually as a result of holding more than one license for which
continuing education is required. An individual who holds a
limited life, accident, and health license or a limited property
and casualty license shall complete five hours of continuing
education annually. Each individual who holds a license issued by
the department shall complete two hours of continuing education in
ethics during each license renewal period. At least 50 percent of
all required continuing education hours must be completed in a
classroom setting or a classroom equivalent setting approved by the
department. The department may accept continuing education hours
completed in other professions or in association with professional
designations in an insurance-related field.
(c) On a timely written request of an agent, the department may
extend the time for the agent to comply with the continuing
education requirements of this section or may exempt the agent from
some or all of the requirements for a licensing period if the
department finds that the agent is unable to comply with the
requirements because of illness, medical disability, or another
extenuating circumstance beyond the control of the agent. The
commissioner by rule shall prescribe the criteria for an exemption
or extension under this subsection.
(d) An individual who has continuously held a license issued under
this code to operate as an insurance agent for at least 20 years is
exempt from the continuing education requirements of this section.
The commissioner by rule may provide for other reasonable
exemptions.
(e) The department shall certify continuing education programs for
agents. Only a program that satisfies the criteria established by
rule by the commissioner may receive certification. The
certification criteria shall be designed to ensure that continuing
education programs enhance the knowledge, understanding, and
professional competence of the license holder. A nonrefundable
certification fee, in an amount set by the commissioner as
necessary for administering this section, must accompany each
application for certification of a continuing education program.
The fee shall be established by rule and based on a graduated scale
according to the number of hours required to complete the program.
(f) Each continuing education program provider shall register with
the department as a course provider. The department shall assess a
registration fee for each application for registration as a
provider, set by the commissioner in an amount necessary for the
proper administration of this section. The commissioner may adopt
rules establishing the requirements for continuing education
program providers. The department may enter into agreements with
independent contractors under which the independent contractor
certifies and registers continuing education programs and
providers. The department may require those independent
contractors to correspond directly with providers with regard to
the administration of continuing education programs, and the
contractors may collect fees from the providers for administration
of the courses. The department retains the authority to establish
the scope and type of continuing education requirements for each
type of license.
(g) The commissioner may appoint an advisory council to provide the
commissioner with information and assistance in the conduct of the
continuing education program for agents licensed under this
subchapter. If an advisory council is appointed, it must be
composed of nine members, four of whom must be public members. A
public member is entitled to reimbursement for the member's travel
expenses as provided by Chapter 660, Government Code, and the
General Appropriations Act. A public member may not:
(1) be an officer, director, or employee of an insurance company,
insurance agency, agent, broker, adjuster, or any other business
entity regulated by the department;
(2) be a person required to register with the Texas Ethics
Commission under Chapter 305, Government Code; or
(3) be related to a person described by Subdivision (1) or (2) of
this subsection within the second degree by affinity or
consanguinity, as determined under Chapter 573, Government Code.
Added by Acts 1985, 69th Leg., ch. 841, Sec. 65, eff. Sept. 1, 1985.
Amended by Acts 1993, 73rd Leg., ch. 685, Sec. 12.03, eff. Sept. 1,
1993; Acts 2001, 77th Leg., ch. 703, Sec. 1.02, eff. Sept. 1, 2001.
Art. 21.01-2. General Provisions Applicable to Certain License
Holders
Sec. 1. Repealed by Acts 2001, 77th Leg., ch. 703, Sec. 8.01(3),
eff. Sept. 1, 2001.
Expiration And Renewal of Licenses
Sec. 1A. (a) Except as provided by a staggered renewal system
adopted under Subsection (j) of this section, each agent license
issued by the department expires on the second anniversary of the
date of issuance unless suspended or revoked by the commissioner.
The commissioner by rule may change the two-year expiration period
if the commissioner finds that the change is necessary to promote a
uniform license period among this state and the other states. A
person may renew a license that has not expired or has not been
suspended or revoked by filing a properly completed renewal
application with the department in the form prescribed by the
department and paying to the department before the expiration date
of the license the required renewal fee. A renewal fee paid under
this section is nonrefundable.
(b) On the filing of a completed renewal application not later than
the expiration date of the license accompanied by the renewal fee
set by the commissioner, the original license continues in force
until:
(1) the department issues the renewal license; or
(2) the commissioner issues an order revoking the license.
(c) If a person's license has been expired for 90 days or less, the
person may renew the license by filing a renewal application with
the department in the form prescribed by the department and paying
to the department the required renewal fee and an additional fee
that is equal to one-half of the renewal fee for the license.
(d) If a person's license has been expired for more than 90 days but
less than one year, the person may not renew the license, but is
entitled to a new license without taking the applicable examination
if the person submits to the department a new application, the
license fee, and an additional fee equal to one-half of the license
fee.
(e) If a person's license has been expired for one year or more, the
person may not renew the license. The person may obtain a new
license by submitting to reexamination, if examination is required
for original issuance of the license, and complying with the
requirements and procedures for obtaining an original license.
(f) The department may renew without reexamination an expired
license of a person who was licensed in this state, moved to another
state, and is currently licensed and has been in continual practice
in the other state preceding the date of the application. The
person must pay to the department a fee that is equal to the license
fee.
(g) Not later than the 30th day after moving from one state to
another state, a nonresident or resident agent licensed in this
state shall file with the department:
(1) the agent's new address; and
(2) proof of authorization to engage in the business of insurance in
the new state of residence.
(h) The department may not charge a fee or require a license
application under Subsection (g) of this section.
(i) At least 30 days before the expiration of a person's license,
the department shall send written notice of the impending license
expiration to the person at the person's last known mailing address
according to the records of the department.
(j) The commissioner by rule may adopt a system under which licenses
expire on various dates during a licensing period. For the
licensing period in which the license expiration is changed,
license fees shall be prorated so that each license holder shall pay
only that portion of the license fee that is allocable to the period
during which the license is valid. On renewal of the license on the
new expiration date, the total license renewal fee is payable. The
commissioner shall adopt a system under which a person who holds
more than one license may renew all the licenses held in a single
process.
(k) This section is not applicable to a license issued under Article
21.07-6 of this code.
Sec. 2. Redesignated as Sec. 1A and amended by Acts 2001, 77th Leg.,
ch. 703, Sec. 1.03, eff. Sept. 1, 2001.
Prohibited Activities
Sec. 2A. (a) A person licensed under this code who receives a
commission or other consideration for services as an insurance
agent may not receive an additional fee for those services provided
to the same client except for a fee described by Article 21.35A or
21.35B of this code.
(b) An insurer or licensed insurance agent engaged in the business
of insurance in this state may not pay, directly or indirectly, and
may not accept, any commission or other valuable consideration to
or from any person for services performed by that person as an
insurance agent in this state unless the person holds a license to
act as an insurance agent as required by the laws of this state.
This subsection does not prevent the payment or receipt of renewal
or other deferred commissions to or by any person solely because the
person has ceased to hold a license to act as an insurance agent.
(c) An insurance agent licensed under this code may not pay, allow,
or give, or offer to pay, allow, or give, directly or indirectly, to
any person who is not a licensed insurance agent, any rebate of
premiums payable, commission, paid employment, or contract for
service, or any other valuable consideration or inducement, that is
not specified in the policy or contract of insurance for or on
account of the solicitation or negotiation of contracts of
insurance.
(d) In addition to any other penalty imposed under this code, a
person who is determined by the department to have committed
conduct described by this subsection is barred from receiving a
license as an insurance agent before the fifth anniversary of the
date of the determination. This subsection applies to a person who:
(1) acts as an insurance agent without holding a license under this
code;
(2) solicits a contract of insurance or acts as an insurance agent
without having been appointed or designated by an authorized
insurance company, association, or organization to do so as
provided by this code;
(3) solicits any contract of insurance or acts as an agent for a
person, including an insurance company, association, or
organization, not authorized to engage in the business of insurance
in this state without holding a license issued under Article 1.14-2
of this code; or
(4) as an officer or representative of an insurance company,
knowingly contracts with or appoints as an agent a person who does
not hold a valid and outstanding license.
(e) A person who has had an insurance license revoked in this state
or any other state may not solicit or otherwise transact business
under Chapter 10 of this code unless it is determined by the
department to be in the public interest, for good cause shown, to
allow the person to act in that capacity.
(f) A person who has had an insurance license revoked in this state
or any other state may not act as an officer, director, member,
manager, or partner, or as a shareholder with a controlling
interest, of an entity licensed under this subchapter unless it is
determined by the department to be in the public interest, for good
cause shown, to allow the person to act in that capacity.
(g) A property and casualty agent may not knowingly grant, write, or
permit a greater amount of insurance against loss by fire than the
reasonable value of the subject of the insurance.
(h) An insurance agent licensed under this code may not pay, allow,
or give, or offer to pay, allow, or give, directly or indirectly, to
a person who is not a licensed insurance agent, a fee or other
valuable consideration for the referral of a customer who seeks to
purchase, or seeks an opinion on or advice regarding an insurance
product, based on the purchase of insurance by that customer.
(i) This section does not apply to a person who is licensed under or
holds a certificate of authority issued under Chapter 9 of this
code.
Sec. 3. Repealed by Acts 2001, 77th Leg., ch. 703, Sec. 8.01(3),
eff. Sept. 1, 2001.
Denial or Refusal of License Application; Suspension or Revocation
of Licenses; Discipline of License Holders
Sec. 3A. (a) In addition to any other remedy available under Chapter
82 of this code, the department may refuse to issue an original
license, revoke, suspend, or refuse to renew a license, place on
probation a person whose license has been suspended, assess an
administrative penalty, or reprimand a license holder for a
violation of this code, another insurance law of this state, or a
rule of the commissioner. If a license suspension is probated, the
commissioner may require the person to:
(1) report regularly to the department on matters that are the basis
of the probation;
(2) limit the person's practice to the areas prescribed by the
department; or
(3) continue or review professional education until the person
attains a degree of skill satisfactory to the commissioner in those
areas that are the basis of the probation.
(b) If the department proposes to refuse to issue an original
license, or to suspend, revoke, or refuse to renew a license, the
person affected is entitled to a hearing conducted by the State
Office of Administrative Hearings in accordance with Chapter 40 of
this code. Notice of the hearing shall be provided to the person
and to any insurance carrier appearing on the application as
desiring that the license be issued.
(c) The department may discipline a license holder or deny a license
application under this article if the department determines that
the applicant or license holder, individually or through any
officer, director, or shareholder:
(1) has wilfully violated any provision of the insurance laws of
this state;
(2) has intentionally made a material misstatement in the license
application;
(3) has obtained, or attempted to obtain, a license by fraud or
misrepresentation;
(4) has misappropriated, converted to the applicant's or license
holder's own use, or illegally withheld money belonging to:
(A) an insurer;
(B) a health maintenance organization; or
(C) an insured, enrollee, or beneficiary;
(5) has engaged in fraudulent or dishonest acts or practices;
(6) has materially misrepresented the terms and conditions of an
insurance policy or contract, including a contract relating to
membership in a health maintenance organization;
(7) has made or issued, or caused to be made or issued, any
statement misrepresenting or making incomplete comparisons
regarding the terms or conditions of an insurance or annuity
contract legally issued by an insurer or a membership issued by a
health maintenance organization to induce the owner of the contract
or membership to forfeit or surrender the contract or membership or
allow it to lapse for the purpose of replacing the contract or
membership with another;
(8) is convicted of a felony;
(9) has offered or given a rebate of an insurance premium or
commission to an insured or enrollee;
(10) is not actively engaged in the soliciting or writing of
insurance for the public generally as required by Section 2(c),
Article 21.07, of this code; or
(11) has obtained or attempted to obtain a license, not for the
purpose of holding the license holder or applicant out to the
general public as an agent, but primarily for the purpose of
soliciting, negotiating, or procuring insurance or annuity
contracts or memberships covering:
(A) the applicant or license holder;
(B) a member of the applicant's or license holder's family; or
(C) a business associate of the applicant or license holder.
(d) An individual whose license application is denied or whose
license has been revoked under this article may not apply for any
license as an insurance agent before the fifth anniversary of:
(1) the effective date of the denial or revocation; or
(2) if the applicant or license holder seeks judicial review of the
department's action, the date of the final court order or decree
affirming that action.
(e) The commissioner may deny a timely application filed under
Subsection (d) of this section if the applicant does not show good
cause why the denial or revocation of the previous license
application or license should not be considered a bar to the
issuance of a new license. This subsection does not apply to an
applicant whose license application was denied for failure to:
(1) pass a required written examination; or
(2) submit a properly completed license application.
(f) Instead of or in addition to taking disciplinary action under
this section, the department may order that a license holder who is
currently afflicted with a disability be placed on disability
probation under the terms and conditions specified under Article
21.15-6 of this code and department rules.
(g) The department may institute a disciplinary proceeding against
a license holder for conduct that the license holder committed
before the effective date of a voluntary surrender or automatic
forfeiture of the license. In the proceeding, the fact that the
license holder has surrendered or forfeited the license does not
affect the license holder's culpability for that conduct.
(h) Subsections (c)-(f) of this section do not apply to a person who
is licensed under or holds a certificate of authority issued under
Chapter 9 of this code.
Sec. 4. Repealed by Acts 2001, 77th Leg., ch. 703, Sec. 8.01(3),
eff. Sept. 1, 2001.
Judicial Review
Sec. 4A. A license applicant or license holder may appeal as
provided by Chapter 36 of this code if:
(1) the commissioner:
(A) refuses an application for a license as provided by this
article; or
(B) suspends, revokes, or refuses to renew a license at a hearing as
provided by this article; and
(2) the applicant or license holder is dissatisfied with the action
of the commissioner.
Sec. 5. Redesignated as Sec. 3A and amended by Acts 2001, 77th Leg.,
ch. 703, Sec. 1.05, eff. Sept. 1, 2001.
Automatic Fines
Sec. 5A. (a) To expedite the department's processing of certain
violations of this code, the commissioner may establish by rule
monetary fines for certain violations. Violations for which the
fines may be assessed include a failure to:
(1) obtain the total number of continuing education hours before
the renewal date of the license;
(2) timely report a change of address to the department; or
(3) notify the department of an administrative action taken against
the agent by another state or federal financial or insurance
regulator.
(b) This section does not limit the department's authority to take
any other disciplinary action against a license holder as provided
under another provision of this code.
(c) If a person disputes the assessment of a fine under this
section, the matter is a contested case subject to Chapter 2001,
Government Code.
Sec. 6. Repealed by Acts 2001, 77th Leg., ch. 703, Sec. 8.01(3),
eff. Sept. 1, 2001.
Enforcement of Subchapter
Sec. 6A. The attorney general, a district or county attorney, or the
department acting through the commissioner may institute an
injunction proceeding or any other proceeding to enforce this
subchapter and to enjoin any person, firm, corporation, or
depository institution from engaging or attempting to engage in the
business of insurance in violation of this code or any other
insurance law of this state. The provisions of this section are
cumulative of the other penalties or remedies provided by this
article.
Added by Acts 1993, 73rd Leg., ch. 685, Sec. 12.01, eff. Sept. 1,
1993. Sec. 1 repealed by Acts 2001, 77th Leg., ch. 703, Sec.
8.01(3), eff. Sept. 1, 2001; Sec. 1A added by Acts 2001, 77th Leg.,
ch. 703, Sec. 1.03, eff. Sept. 1, 2001; Sec. 2 redesignated and
amended as Sec. 1A by Acts 2001, 77th Leg., ch. 703, Sec. 1.03, eff.
Sept. 1, 2001; Sec. 2A added by Acts 2001, 77th Leg., ch. 703, Sec.
1.04, eff. Sept. 1, 2001; Sec. 3 repealed by Acts 2001, 77th Leg.,
ch. 703, Sec. 1.05, eff. Sept. 1, 2001; Sec. 3A added by Acts 2001,
77th Leg., ch. 703, Sec. 1.05, eff. Sept. 1, 2001; Sec. 4 repealed
by Acts 2001, 77th Leg., ch. 703, Sec. 1.06, eff. Sept. 1, 2001;
Sec. 4A added by Acts 2001, 77th Leg., ch. 703, Sec. 1.06, eff.
Sept. 1, 2001; Sec. 5 redesignated and amended as Sec. 3A by Acts
2001, 77th Leg., ch. 703, Sec. 1.05, eff. Sept. 1, 2001; Sec. 5A
added by Acts 2001, 77th Leg., ch. 703, Sec. 1.06, eff. Sept. 1,
2001; Sec. 6 repealed by Acts 2001, 77th Leg., ch. 703, Sec. 1.06,
eff. Sept. 1, 2001; Sec. 6A added by Acts 2001, 77th Leg., ch. 703,
Sec. 1.06, eff. Sept. 1, 2001.
Art. 21.02. Who Are Agents
(a) Any person who solicits insurance on behalf of any insurance
company, whether incorporated under the laws of this or any other
state or foreign government, or who takes or transmits other than
for himself any application for insurance or any policy of
insurance to or from such company, or who advertises or otherwise
gives notice that he will receive or transmit the same, or who shall
receive or deliver a policy of insurance of any such company, or who
shall examine or inspect any risk, or receive, or collect, or
transmit any premium of insurance, or make or forward any diagram of
any building or buildings, or do or perform any other act or thing
in the making or consummating of any contract of insurance for or
with any such insurance company other than for himself, or who shall
examine into, or adjust, or aid in adjusting, any loss for or on
behalf of any such insurance company, whether any of such acts shall
be done at the instance or request, or by the employment of such
insurance company, or of, or by, any broker or other person, shall
be held to be the agent of the company for which the act is done, or
the risk is taken, as far as relates to all the liabilities, duties,
requirements and penalties set forth in this chapter. This article
does not authorize an agent to orally, in writing, or otherwise
alter, amend, modify, waive, or change a term or condition of an
insurance policy or application for an insurance policy. The
provisions of this subchapter shall not apply to citizens of this
State who arbitrate in the adjustment of losses between the
insurers and insured, nor to the adjustment of particular or
general average losses of vessels or cargoes by marine adjusters
who had paid an occupation tax of $200 for the year in which the
adjustment is made, nor to practicing attorneys at law in the State
of Texas, acting in the regular transaction of their business as
such attorneys at law, and who are not local agents, nor acting as
adjusters for any insurance company. Any person who shall do any of
the acts mentioned in this article for or on behalf of any insurance
company without such company having first complied with the
requirements of the laws of this State, shall be personally liable
to the holder of any policy of insurance in respect of which such
act was done for any loss covered by the same.
(b) The referral by an unlicensed person of a customer or potential
customer to a licensed insurance agent is not an act of an agent
under this article, unless the unlicensed person discusses specific
insurance policy terms or conditions with the customer or potential
customer.
Acts 1951, 52nd Leg., ch. 491.
Amended by Acts 1985, 69th Leg., ch. 203, Sec. 1, eff. May 24, 1985;
Acts 2001, 77th Leg., ch. 703, Sec. 1.07, eff. Sept. 1, 2001.
Art. 21.03. Assessment of Taxes
Whenever any person shall do or perform within this State any of the
acts mentioned in the preceding article for or on behalf of any
insurance company therein referred to, such company shall be held
to be doing business in this State and shall be subject to the same
taxes, state, county and municipal, as insurance companies that
have been legally qualified and admitted to do business in this
State by agents or otherwise are subject, the same to be assessed
and collected as taxes are assessed and collected against such
companies; and such persons so doing or performing any of such acts
or things shall be personally liable for such taxes.
Acts 1951, 52nd Leg., ch. 491.
Art. 21.04. License Holder Deemed Company's Agent
Any person who solicits an application for life, accident, or
health insurance, or property or casualty insurance, shall, in any
controversy between the insured or the insured's beneficiary and
the company issuing any policy upon such application or between the
insured or the insured's dependents and that company, be regarded
as the agent of the company, and not the agent of the insured, but
such agent shall not have the power to waive, change or alter any of
the terms or conditions of the application or policy.
Acts 1951, 52nd Leg., ch. 491.
Amended by Acts 1985, 69th Leg., ch. 66, Sec. 1, eff. May 2, 1985;
Acts 1991, 72nd Leg., ch. 242, Sec. 11.59, eff. Sept. 1, 1991; Acts
2001, 77th Leg., ch. 703, Sec. 1.08, eff. Sept. 1, 2001.
Art. 21.07. Licensing of Agents
Applicability of Article
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.
Definitions
Sec. 1A. 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.
Secs. 1B, 1C. Repealed by Acts 2001, 77th Leg., ch. 703, Sec.
8.01(7)(A), eff. Sept. 1, 2001.
Application for License; to Whom License May be Issued
Sec. 2. (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.
Persons other than licensed agents who may share in profits of an
agent
Sec. 2A. (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 by Acts 2001, 77th Leg., ch. 703, Sec. 8.01(7)(B),
eff. Sept. 1, 2001.
Temporary License
Sec. 3A. (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. Repealed by Acts 2001, 77th Leg., ch. 703, Sec. 8.01(7)(B),
eff. Sept. 1, 2001.
Sec. 4. Repealed by Acts 2001, 77th Leg., ch. 703, Sec. 8.01(7)(B),
eff. Sept. 1, 2001.
Sec. 4A. Repealed by Acts 2001, 77th Leg., ch. 703, Sec. 8.01(7)(B),
eff. Sept. 1, 2001.
Sec. 5. Repealed by Acts 2001, 77th Leg., ch. 703, Sec. 8.01(7)(B),
eff. Sept. 1, 2001.
Filing Of Additional Appointments
Sec. 6. (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 by Acts 2001, 77th Leg., ch. 703, Sec. 8.01(7)(B),
eff. Sept. 1, 2001.
Insurance Carrier to Notify Department of Termination of Contract
for Cause; Communication Privileged
Sec. 6B. (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.
Fees; Use of Funds
Sec. 6C. (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.
Secs. 7 to 20. Repealed by Acts 2001, 77th Leg., ch. 703, Sec.
8.01(7)(B), eff. Sept. 1, 2001.
Sec. 21. Repealed by Acts 1999, 76th Leg., ch. 1530, Sec. 6.01(1)
and (2), eff. Sept. 1, 1999.
Acts 1951, 52nd Leg., ch. 491. Amended by Acts 1955, 54th Leg., p.
517, ch. 153, Sec. 1; Acts 1959, 56th Leg., p. 665, ch. 308, Sec. 1,
2; Acts 1969, 61st Leg., 2nd C.S., p. 168, ch. 25, Sec. 1, eff.
Sept. 19, 1969; Acts 1971, 62nd Leg., p. 2952, ch. 978, Sec. 1, 2,
eff. June 15, 1971; Acts 1975, 64th Leg., p. 2372, ch. 731, Sec. 1,
eff. Sept. 1, 1975; Acts 1977, 65th Leg., p. 386, ch. 192, Sec. 1,
eff. Aug. 29, 1977; Acts 1977, 65th Leg., pp. 387, 388, ch. 193,
Sec. 1 to 4, eff. Aug. 29, 1977; Acts 1977, 65th Leg., pp. 1421 to
1426, ch. 579, Sec. 2 to 4, eff. Aug. 29, 1977; Acts 1979, 66th
Leg., p. 369, ch. 166, Sec. 1, eff. Aug. 27, 1979; Acts 1979, 66th
Leg., p. 884, ch. 404, Sec. 1, eff. June 6, 1979; Acts 1981, 67th
Leg., p. 708, ch. 269, Sec. 1, eff. Aug. 31, 1981; Acts 1981, 67th
Leg., p. 2640, ch. 707, Sec. 4(28), eff. Aug. 31, 1981.
Sec. 3 amended by Acts 1983, 68th Leg., p. 4106, ch. 646, Sec. 5,
eff. Aug. 29, 1983; Sec. 3A added by Acts 1983, 68th Leg., p. 3973,
ch. 622, Sec. 62, eff. Sept. 1, 1983; Sec. 4(b)(i) amended and Sec.
4(f) added by Acts 1983, 68th Leg., p. 3969, ch. 622, Sec. 57, 58,
eff. Sept. 1, 1983; Sec. 4A added by Acts 1983, 68th Leg., p. 4107,
ch. 646, Sec. 6, eff. Aug. 29, 1983; Secs. 5, 6 amended by Acts
1983, 68th Leg., p. 3971, ch. 622, Sec. 59, eff. Sept. 1, 1983; Sec.
7(a) amended by Acts 1983, 68th Leg., p. 3971, ch. 622, Sec. 60,
eff. Sept. 1, 1983; Sec. 7(e), (f) added by Acts 1983, 68th Leg.,
ch. 622, Sec. 61, eff. Sept. 1, 1983; Sec. 10(a) amended by Acts
1983, 68th Leg., p. 4071, ch. 639, Sec. 1, eff. June 19, 1983; Sec.
14 amended by Acts 1983, 68th Leg., p. 3939, ch. 622, Sec. 31, eff.
Sept. 1, 1983; Sec. 15A added by Acts 1983, 68th Leg., p. 3973, ch.
622, Sec. 62, eff. Sept. 1, 1983; Sec. 19(b) amended by Acts 1983,
68th Leg., p. 3973, ch. 622, Sec. 63, eff. Sept. 1, 1983; Sec. 2(b)
amended by Acts 1985, 69th Leg., ch. 841, Sec. 13, eff. Sept. 1,
1985; Sec. 3B added by Acts 1985, 69th Leg., ch. 841, Sec. 14, eff.
Sept. 1, 1985; Sec. 4(a), (b) amended by Acts 1985, 69th Leg., ch.
841, Sec. 15, eff. Sept. 1, 1985; Sec. 4(f) amended by Acts 1985,
69th Leg., ch. 841, Sec. 16, eff. Sept. 1, 1985; Sec. 4A(a) amended
by Acts 1985, 69th Leg., ch. 841, Sec. 17, eff. Sept. 1, 1985; Sec.
4A(b) amended by Acts 1985, 69th Leg., ch. 841, Sec. 8, eff. Sept.
1, 1985; Sec. 5 amended by Acts 1985, 69th Leg., ch. 841, Sec. 19,
eff. Sept. 1, 1985; Sec. 6 amended by Acts 1985, 69th Leg., ch. 841,
Sec. 20, eff. Sept. 1, 1985; Sec. 7(b) amended by Acts 1985, 69th
Leg., ch. 841, Sec. 21, eff. Sept. 1, 1985; Sec. 7(e) amended by
Acts 1985, 69th Leg., ch. 841, Sec. 22, eff. Sept. 1, 1985; Sec.
10(b) amended by Acts 1985, 69th Leg., ch. 841, Sec. 23, eff. Sept.
1, 1985; Sec. 14(a) amended by Acts 1985, 69th Leg., ch. 841, Sec.
24, eff. Sept. 1, 1985; Sec. 18 amended by Acts 1985, 69th Leg., ch.
841, Sec. 67, eff. Sept. 1, 1985; Sec. 19(b) amended by Acts 1985,
69th Leg., ch. 841, Sec. 25, eff. Sept. 1, 1985; Sec. 20 added by
Acts 1985, 69th Leg., ch. 841, Sec. 26, eff. Sept. 1, 1985; Sec. 1A
added by Acts 1987, 70th Leg., ch. 731, Sec. 1, eff. June 18, 1987;
Sec. 2 amended by Acts 1987, 70th Leg., ch. 731, Sec. 2, eff. June
18, 1987; Sec. 2A added by Acts 1987, 70th Leg., ch. 731, Sec. 3,
eff. June 18, 1987; Sec. 3 amended by Acts 1987, 70th Leg., ch. 731,
Sec. 4, eff. June 18, 1987; Sec. 4(a) amended by Acts 1987, 70th
Leg., ch. 731, Sec. 5, eff. June 18, 1987; Sec. 4A(a) amended by
Acts 1987, 70th Leg., ch. 731, Sec. 6, eff. June 18, 1987; Sec. 11
amended by Acts 1987, 70th Leg., ch. 731, Sec. 7, eff. June 18,
1987; Sec. 4(a) amended by Acts 1989, 71st Leg., 1st C.S., ch. 14,
Sec. 7, eff. Oct. 18, 1989; Sec. 2(c), (d) amended by Acts 1991,
72nd Leg., ch. 242, Sec. 11.60, eff. Sept. 1, 1991; Secs. 6, 7
amended by Acts 1991, 72nd Leg., ch. 242, Sec. 11.61, eff. Sept. 1,
1991; Sec. 8 amended by Acts 1991, 72nd Leg., 2nd C.S., ch. 12, Sec.
3.01, eff. Jan. 1, 1992; Sec. 10(d) added by Acts 1991, 72nd Leg.,
ch. 242, Sec. 11.62, eff. Sept. 1, 1991; Sec. 10A added by Acts
1991, 72nd Leg., ch. 242, Sec. 11.14, eff. Sept. 1, 1991; Sec. 18
amended by Acts 1991, 72nd Leg., ch. 787, Sec. 1, eff. June 16,
1991; Sec. 1(c) added by Acts 1993, 73rd Leg., ch. 685, Sec. 12.16,
eff. Sept. 1, 1993; Sec. 2(b) amended by Acts 1993, 73rd Leg., ch.
685, Sec. 12.17, eff. Sept. 1, 1993; Sec. 3 amended by Acts 1993,
73rd Leg., ch. 685, Sec. 12.18, eff. Sept. 1, 1993; Sec. 3A
repealed by Acts 1993, 73rd Leg., ch. 685, Sec. 12.51(11), eff.
Sept. 1, 1993; Sec. 4(c) amended by Acts 1993, 73rd Leg., ch. 685,
Sec. 12.19, eff. Sept. 1, 1993; Sec. 4(e), (f) repealed by Acts
1993, 73rd Leg., ch. 685, Sec. 12.51(9), eff. Sept. 1, 1993; Sec.
4A(a), (c), (e) amended by Acts 1993, 73rd Leg., ch. 685, Sec.
12.20, eff. Sept. 1, 1993; Secs. 5, 8 amended by Acts 1993, 73rd
Leg., ch. 685, Sec. 12.21, eff. Sept. 1, 1993; Sec. 10(a) amended
by Acts 1993, 73rd Leg., ch. 685, Sec. 12.22, eff. Sept. 1, 1993;
Sec. 10(b) repealed by Acts 1993, 73rd Leg., ch. 685, Sec. 12.51(10)
eff. Sept. 1, 1993; Sec. 11 amended by Acts 1993, 73rd Leg., ch.
685, Sec. 12.21, eff. Sept. 1, 1993; Sec. 15A repealed by Acts
1993, 73rd Leg., ch. 685, Sec. 12.51(11), eff. Sept. 1, 1993; Sec.
19(b) amended by Acts 1993, 73rd Leg., ch. 685, Sec. 12.23, eff.
Sept. 1, 1993; Sec. 1A amended by Acts 1995, 74th Leg., ch. 508,
Sec. 1, eff. June 12, 1995; Sec. 1B added by Acts 1995, 74th Leg.,
ch. 508, Sec. 2, eff. June 12, 1995; Sec. 4A heading amended by Acts
1995, 74th Leg., ch. 898, Sec. 5, eff. Aug. 28, 1995; Sec. 18
amended by Acts 1995, 74th Leg., ch. 806, Sec. 1, eff. Aug. 28,
1995; Sec. 1(a), (b) amended by Acts 1997, 75th Leg., ch. 596, Sec.
1, eff. Sept. 1, 1997; Sec. 1C added by Acts 1997, 75th Leg., ch.
596, Sec. 1, eff. Sept. 1, 1997; Sec. 2 amended by Acts 1997, 75th
Leg., ch. 596, Sec. 3, eff. Sept. 1, 1997; Sec. 2(d) amended by Acts
1997, 75th Leg., ch. 1423, Sec. 11.45, eff. Sept. 1, 1997; Sec. 3
amended by Acts 1997, 75th Leg., ch. 596, Sec. 3, eff. Sept. 1,
1997; Sec. 3 amended by Acts 1997, 75th Leg., ch. 972, Sec. 1, eff.
Sept. 1, 1997; Sec. 4(a) amended by Acts 1997, 75th Leg., ch. 596,
Sec. 4, eff. Sept. 1, 1997; Sec. 4A amended by Acts 1997, 75th Leg.,
ch. 972, Sec. 2, eff. Sept. 1, 1997; Sec. 6A added by Acts 1997,
75th Leg., ch. 504, Sec. 1, eff. Sept. 1, 1997; Secs. 12, 13 amended
by Acts 1997, 75th Leg., ch. 596, Sec. 5, eff. Sept. 1, 1997; Sec.
15A added by Acts 1997, 75th Leg., ch. 972, Sec. 3, eff. Sept. 1,
1997; Sec. 16 amended by Acts 1997, 75th Leg., ch. 596, Sec. 5, eff.
Sept. 1, 1997; Sec. 18(b) amended by Acts 1997, 75th Leg., ch. 791,
Sec. 23, eff. Sept. 1, 1997; Sec. 18(c) added by Acts 1997, 75th
Leg., ch. 596, Sec. 6, eff. Sept. 1, 1997; Sec. 21 added by Acts
1997, 75th Leg., ch. 820, Sec. 1, eff. Sept. 1, 1997; Sec. 21 added
by Acts 1997, 75th Leg., ch. 1196, Sec. 1, eff. June 20, 1997; Sec.
1C(a) amended by Acts 1999, 76th Leg., ch. 62, Sec. 7.69, eff. Sept.
1, 1999; Sec. 3 amended by Acts 1999, 76th Leg., ch. 1429, Sec. 1,
eff. Sept. 1, 1999; Sec. 4A heading amended by Acts 1999, 76th
Leg., ch. 1429, Sec. 2, eff. Sept. 1, 1999; Sec. 4A(a), (c) and (e)
amended by Acts 1999, 76th Leg., ch. 1429, Sec. 3, eff. Sept. 1,
1999; Sec. 21 repealed by Acts 1999, 76th Leg., ch. 1530, Sec.
6.01(1), (2), eff. Sept. 1, 1999; Sec. 1 amended by Acts 2001, 77th
Leg., ch. 703, Sec. 1.09, eff. Sept. 1, 2001; Sec. 1A amended by
Acts 2001, 77th Leg., ch. 703, Sec. 1.10, eff. Sept. 1, 2001; Secs.
1B, 1C repealed by Acts 2001, 77th Leg., ch. 703, Sec. 8.01(7)(A),
eff. Sept. 1, 2001; Sec. 2 amended by Acts 2001, 77th Leg., ch. 703,
Sec. 1.11, eff. Sept. 1, 2001; Sec. 3 repealed by Acts 2001, 77th
Leg., ch. 703, Sec. 8.01(7)(B), eff. Sept. 1, 2001; Sec. 3A added
by Acts 2001, 77th Leg., ch. 703, Sec. 1.12, eff. Sept. 1, 2001;
Sec. 3B repealed by Acts 2001, 77th Leg., ch. 703, Sec. 8.01(7)(B),
eff. Sept. 1, 2001; Secs. 4, 4A, 5 repealed by Acts 2001, 77th Leg.,
ch. 703, Sec. 8.01(7)(B), eff. Sept. 1, 2001; Sec. 6 amended by
Acts 2001, 77th Leg., ch. 703, Sec. 1.13, eff. Sept. 1, 2001; Sec.
6A repealed by Acts 2001, 77th Leg., ch. 703, Sec. 8.01(7)(B), eff.
Sept. 1, 2001; Secs. 6B, 6C added by Acts 2001, 77th Leg., ch. 703,
Sec. 1.14, eff. Sept. 1, 2001; Secs. 7 to 20 repealed by Acts 2001,
77th Leg., ch. 703, Sec. 8.01(7)(B), eff. Sept. 1, 2001.
Art. 21.07-1. Legal Reserve Life Insurance Agents; Examination;
Licenses
Article repealed effective April 1, 2005.
Text of article as added by Acts 1955, 54th Leg., p. 621, ch. 213 and
amended by Acts 2001, 77th Leg., ch. 699, Sec. 19
Secs. 1 to 5A. Repealed by Acts 2001, 77th Leg. ch. 703, Sec.
8.01(9), eff. Sept. 1, 2001.
Insurance Funded Prepaid Funeral Contract Sales
Sec. 5B. Notwithstanding any other provision of this code, a
funeral home employee or other person who has a funeral
prearrangement life insurance agent license or a license to sell
life insurance not exceeding $15,000 and who 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, is not required to comply with any
continuing education requirements in order to maintain such a
license, except that the appointing insurance company must educate
its appointed agents about any new products sold by the licensed
agent to fund prepaid funeral contracts. Such a licensee may be
appointed by more than one insurance company.
Secs. 6 to 17. Repealed by Acts 2001, 77th Leg. ch. 703, Sec.
8.01(9), eff. Sept. 1, 2001.
Acts 1955, 54th Leg., p. 621, ch. 213. Amended by Acts 1959, 56th
Leg., p. 665, ch. 308, Sec. 3; Acts 1967, 60th Leg., p. 711, ch.
294, Sec. 1, eff. May 25, 1967; Acts 1969, 61st Leg., p. 1990, ch.
679, Sec. 1, eff. Sept. 1, 1969; Acts 1969, 61st Leg., p. 2047, ch.
703, Sec. 1, eff. June 12, 1969; Acts 1973, 63rd Leg., p. 1775, ch.
650, Sec. 1, eff. June 16, 1973; Acts 1975, 64th Leg., p. 2372, ch.
731, Sec. 2, eff. Sept. 1, 1975; Acts 1977, 65th Leg., pp. 383, 384,
ch. 191, Sec. 1 to 3, eff. Aug. 29, 1977; Acts 1977, 65th Leg., p.
386, ch. 192, Sec. 2, eff. Aug. 29, 1977; Acts 1977, 65th Leg., p.
388, ch. 193, Sec. 5 to 7, eff. Aug. 29, 1977; Acts 1977, 65th Leg.,
p. 1427, ch. 579, Sec. 5 to 9, eff. Aug. 29, 1977; Acts 1977, 65th
Leg., p. 2124, ch. 849, Sec. 1, eff. Aug. 29, 1977; Acts 1979, 66th
Leg., p. 370, ch. 166, Sec. 2, eff. Aug. 27, 1979; Acts 1979, 66th
Leg., p. 2045, ch. 800, Sec. 2, eff. June 13, 1979.
Sec. 3A added by Acts 1983, 68th Leg., p. 3974, ch. 622, Sec. 64,
eff. Sept. 1, 1983; Sec. 4(c) amended by Acts 1983, 68th Leg., p.
3974, ch. 622, Sec. 65, eff. Sept. 1, 1983; Sec. 5(e) added by Acts
1983, 68th Leg., p. 3975, ch. 622, Sec. 66, eff. Sept. 1, 1983; Sec.
8(a) amended by Acts 1983, 68th Leg., p. 3975, ch. 622, Sec. 67,
eff. Sept. 1, 1983; Sec. 9(a), (d) amended, Sec. 9(f), (g) added by
Acts 1983, 68th Leg., p. 3976, ch. 622, Sec. 68, 69, eff. Sept. 1,
1983; Sec. 10 amended by Acts 1983, 68th Leg., p. 710, ch. 162, Sec.
1, eff. May 20, 1983; Sec. 10A added by Acts 1983, 68th Leg., p.
3941, ch. 622, Sec. 32, eff. Sept. 1, 1983; Sec. 12(a) amended by
Acts 1983, 68th Leg., p. 4072, ch. 639, Sec. 2, eff. June 19, 1983;
Sec. 16 added by Acts 1983, 68th Leg., p. 3405, ch. 569, Sec. 1, eff.
Aug. 29, 1983; Secs. 4(a), (c), (d), 5(b), (d), (e), 6, 7(c), 8(a),
9(b), (f), 12(b), 16(c), (e), (g), (h), 17 amended by Acts 1985,
69th Leg., ch. 841, Sec. 27 to 43, eff. Sept. 1, 1985; Sec. 1A added
by Acts 1987, 70th Leg., ch. 731, Sec. 8, eff. June 18, 1987; Sec.
3A amended by Acts 1987, 70th Leg., ch. 70, Sec. 3, eff. Aug. 31,
1987; Sec. 3B added by Acts 1987, 70th Leg., ch. 70, Sec. 4, eff.
Aug. 31, 1987; Sec. 4 amended by Acts 1987, 70th Leg., ch. 731, Sec.
9, eff. June 18, 1987; Sec. 4A added by Acts 1987, 70th Leg., ch.
731, Sec. 10, eff. June 18, 1987; Sec. 5(a), (d) amended by Acts
1987, 70th Leg., ch. 731, Sec. 11, eff. June 18, 1987; Sec. 8
amended by Acts 1987, 70th Leg., ch. 819, Sec. 1, eff. Sept. 1,
1987; Sec. 13 amended by Acts 1987, 70th Leg., ch. 731, Sec. 12,
eff. June 18, 1987; Sec. 16(d) amended by Acts 1987, 70th Leg., ch.
731, Sec. 13, eff. June 18, 1987; Sec. 3A amended by Acts 1989, 71st
Leg., 1st C.S., ch. 14, Sec. 8, eff. Oct. 18, 1989; Sec. 1(b)
amended by Acts 1991, 72nd Leg., ch. 502, Sec. 1, eff. June 16,
1991; Sec. 2 amended by Acts 1991, 72nd Leg., ch. 242, Sec. 11.63,
eff. Sept. 1, 1991; Sec. 3A amended by Acts 1991, 72nd Leg., ch.
242, Sec. 11.63, eff. Sept. 1, 1991; Acts 1991, 72nd Leg., ch. 834,
Sec. 2, eff. Jan. 1, 1993; Acts 1991, 72nd Leg., 2nd C.S., ch. 12,
Sec. 3.06, eff. Jan. 1, 1992; Sec. 4 amended by Acts 1991, 72nd
Leg., ch. 242, Sec. 11.63, eff. Sept. 1, 1991; Sec. 4(c) amended by
Acts 1991, 72nd Leg., 2nd C.S., ch. 12, Sec. 3.03, eff. Jan. 1,
1992; Sec. 4(f) amended by Acts 1991, 72nd Leg., ch. 834, Sec. 3,
eff. Sept. 1, 1991; Sec. 5(a) amended by Acts 1991, 72nd Leg., ch.
242, Sec. 11.64, eff. Sept. 1, 1991; Acts 1991, 72nd Leg., 2nd
C.S., ch. 12, Sec. 3.04, eff. Jan. 1, 1992; Sec. 5(d) amended by
Acts 1991, 72nd Leg., ch. 242, Sec. 11.64, eff. Sept. 1, 1991; Sec.
8(a) amended by and Sec. 8(e) added by Acts 1991, 72nd Leg., ch.
242, Sec. 11.65, eff. Sept. 1, 1991; Sec. 9 amended by Acts 1991,
72nd Leg., ch. 242, Sec. 11.63, eff. Sept. 1, 1991; Sec. 10 amended
by Acts 1991, 72nd Leg., 2nd C.S., ch. 12, Sec. 3.05, eff. Jan. 1,
1992; Sec. 11(a) amended by Acts 1991, 72nd Leg., ch. 242, Sec.
11.66, eff. Sept. 1, 1991; Sec. 12 amended by Acts 1991, 72nd Leg.,
ch. 242, Sec. 11.63, eff. Sept. 1, 1991; Sec. 3(c) added by Acts
1993, 73rd Leg., ch. 685, Sec. 12.24, eff. Sept. 1, 1993; Sec.
3A(c) added by Acts 1993, 73rd Leg., ch. 961, Sec. 2, eff. Sept. 1,
1993; Sec. 4(b) amended by Acts 1993, 73rd Leg., ch. 685, Sec.
12.25, eff. Sept. 1, 1993; Sec. 5(e) repealed by Acts 1993, 73rd
Leg., ch. 685, Sec. 12.51(12), eff. Sept. 1, 1993; Sec. 6 amended
by Acts 1993, 73rd Leg., ch. 685, Sec. 12.26, eff. Sept. 1, 1993;
Sec. 9(a) amended by Acts 1993, 73rd Leg., ch. 685, Sec. 12.27, eff.
Sept. 1, 1993; Sec. 9(d), (e) repealed by Acts 1993, 73rd Leg., ch.
685, Sec. 12.51(12), eff. Sept. 1, 1993; Sec. 10 amended by Acts
1993, 73rd Leg., ch. 685, Sec. 12.28, eff. Sept. 1, 1993; Sec.
12(a) amended by Acts 1993, 73rd Leg., ch. 685, Sec. 12.29, eff.
Sept. 1, 1993; Sec. 12(b) repealed by Acts 1993, 73rd Leg., ch.
685, Sec. 12.51(12), eff. Sept. 1, 1993; Sec. 13 amended by Acts
1993, 73rd Leg., ch. 685, Sec. 12.30, eff. Sept. 1, 1993; Sec.
16(h) amended by Acts 1993, 73rd Leg., ch. 685, Sec. 12.31, eff.
Sept. 1, 1993; Sec. 1A amended by Acts 1995, 74th Leg., ch. 508,
Sec. 3, eff. June 12, 1995; Sec. 1B added by Acts 1995, 74th Leg.,
ch. 508, Sec. 4, eff. June 12, 1995; Sec. 1(a) amended by Acts 1997,
75th Leg., ch. 716, Sec. 1, eff. Sept. 1, 1997; Sec. 1(a-1) added by
Acts 1997, 75th Leg., ch. 716, Sec. 1, eff. Sept. 1, 1997; Sec. 1(b)
amended by Acts 1997, 75th Leg., ch. 596, Sec. 7, eff. Sept. 1,
1997; Sec. 1(b) amended by Acts 1997, 75th Leg., ch. 716, Sec. 1,
eff. Sept 1, 1997; Sec. 1(b) amended by Acts 1997, 75th Leg., ch.
1160, Sec. 1, eff. Sept. 1, 1997; Sec. 1(c) amended by Acts 1997,
75th Leg., ch. 716, Sec. 1, eff. Sept. 1, 1997; Sec. 1(c) amended by
Acts 1997, 75th Leg., ch. 1160, Sec. 1, eff. Sept 1, 1997; Sec. 1(d)
amended by Acts 1997, 75th Leg., ch. 716, Sec. 1, eff. Sept. 1,
1997; Sec. 1(d-1) added by Acts 1997, 75th Leg., ch. 716, Sec. 1,
eff. Sept. 1, 1997; Sec. 1(e) to (g) amended by Acts 1997, 75th
Leg., ch. 716, Sec. 1, eff. Sept. 1, 1997; Sec. 1C added by Acts
1997, 75th Leg., ch. 596, Sec. 8, eff. Sept. 1, 1997; Sec. 2(a)
amended by Acts 1997, 75th Leg., ch. 596, Sec. 9, eff. Sept. 1,
1997; Sec. 3(a), (b) amended by Acts 1997, 75th Leg., ch. 596, Sec.
10, eff. Sept. 1, 1997; Sec. 3(a), (b) amended by Acts 1997, 75th
Leg., ch. 716, Sec. 2, eff. Sept. 1, 1997; Sec. 4(a) amended by Acts
1997, 75th Leg., ch. 716, Sec. 3, eff. Sept. 1, 1997; Sec. 4(b)
amended by Acts 1997, 75th Leg., ch. 716, Sec. 3, eff. Sept. 1,
1997; Sec. 4(d) amended by Acts 1997, 75th Leg., ch. 716, Sec. 3,
eff. Sept. 1, 1997; Sec. 4(e) added by Acts 1997, 75th Leg., ch.
596, Sec. 11, eff. Sept. 1, 1997; Sec. 4(e) amended by Acts 1997,
75th Leg., ch. 716, Sec. 3, eff. Sept. 1, 1997; Sec. 4(e) amended by
Acts 1997, 75th Leg., ch. 1423, Sec. 11.46, eff. Sept. 1, 1997;
Sec. 4(f) added by Acts 1997, 75th Leg., ch. 596, Sec. 11, eff.
Sept. 1, 1997; Sec. 4(f) amended by Acts 1997, 75th Leg., ch. 716,
Sec. 3, eff. Sept. 1, 1997; Sec. 4(g) added by Acts 1997, 75th Leg.,
ch. 596, Sec. 11, eff. Sept. 1, 1997; Sec. 4A amended by Acts 1997,
75th Leg., ch. 716, Sec. 4, eff. Sept. 1, 1997; Sec. 5(a) amended by
Acts 1997, 75th Leg., ch. 596, Sec. 12, eff. Sept. 1, 1997; Sec.
5(a) amended by Acts 1997, 75th Leg., ch. 716, Sec. 5, eff. Sept. 1,
1997; Sec. 5(c) amended by Acts 1997, 75th Leg., ch. 716, Sec. 5,
eff, Sept. 1, 1997; Sec. 5(d) amended by Acts 1997, 75th Leg., ch.
596, Sec. 12, eff. Sept. 1, 1997; Sec. 5A added by Acts 1997, 75th
Leg., ch. 857, Sec. 1, eff. June 18, 1997; Sec. 6 amended by Acts
1997, 75th Leg., ch. 716, Sec. 6, eff. Sept. 1, 1997; Sec. 7(a)
amended by Acts 1997, 75th Leg., ch. 716, Sec. 7, eff. Sept. 1,
1997; Sec. 7(b) amended by Acts 1997, 75th Leg., ch. 596, Sec. 13,
eff. Sept. 1, 1997; Sec. 7(b) amended by Acts 1997, 75th Leg., ch.
716, Sec. 7, eff. Sept. 1, 1997; Sec. 8 amended by Acts 1997, 75th
Leg., ch. 716, Sec. 8, eff. Sept. 1, 1997; Sec. 9(a) amended by Acts
1997, 75th Leg., ch. 716, Sec. 9, eff. Sept. 1, 1997; Sec. 10(a) to
(c), (e), (f) amended by Acts 1997, 75th Leg., ch. 716, Sec. 10,
eff. Sept. 1, 1997; Sec. 11(a) amended by Acts 1997, 75th Leg., ch.
716, Sec. 11, eff. Sept. 1, 1997; Sec. 12(a) amended by Acts 1997,
75th Leg., ch. 716 , Sec. 12, eff. Sept. 1, 1997; Sec. 14 amended by
Acts 1997, 75th Leg., ch. 596, Sec. 14, eff. Sept. 1, 1997; Sec. 14
amended by Acts 1997, 75th Leg., ch. 716, Sec. 13, eff. Sept. 1,
1997; Sec. 15 amended by Acts 1997, 75th Leg., ch. 596, Sec. 14,
eff. Sept. 1, 1997; Sec. 16(a) amended by Acts 1997, 75th Leg., ch.
596, Sec. 15, eff. Sept. 1, 1997; Sec. 16(a) amended by Acts 1997,
75th Leg., ch. 716, Sec. 14, eff. Sept. 1, 1997; Sec. 16(a) amended
by Acts 1997, 75th Leg., ch. 1160, Sec. 2, eff. Sept. 1, 1997; Sec.
16(b) amended by Acts 1997, 75th Leg., ch. 596, Sec. 15, eff. Sept.
1, 1997; Sec. 16(b) amended by Acts 1997, 75th Leg., ch. 716, Sec.
14, eff. Sept. 1, 1997; Sec. 16(c) amended by Acts 1997, 75th Leg.,
ch. 596, Sec. 15, eff. Sept. 1, 1997; Sec. 16(c) amended by Acts
1997, 75th Leg., ch. 716, Sec. 14, eff. Sept. 1, 1997; Sec. 16(d)
amended by Acts 1997, 75th Leg., ch. 596, Sec. 15, eff. Sept. 1,
1997; Sec. 16(d) amended by Acts 1997, 75th Leg., ch. 716, Sec. 14,
eff. Sept. 1, 1997; Sec. 16(h) to (j) amended by Acts 1997, 75th
Leg., ch. 596, Sec. 15, eff. Sept. 1, 1997; Sec. 1(b) amended by
Acts 1999, 76th Leg., ch. 432, Sec. 19, eff. Jan. 1, 2000; Sec. 1C
amended by Acts 1999, 76th Leg., ch. 62, Sec. 7.70, eff. Sept. 1,
1999; Sec. 5(a) amended by Acts 1999, 76th Leg., ch. 432, Sec. 20,
eff. Jan. 1, 2000; Sec. 16(d-1) added by Acts 1999, 76th Leg., ch.
432, Sec. 21, eff. Jan. 1, 2000; Sec. 5B added by Acts 2001, 77th
Leg., ch. 699, Sec. 19, eff. Sept. 1, 2001.
Art. 21.07-1. Texas Life, Accident, and Health Agents License Act
Article repealed effective April 1, 2005.
Text of article as added by Acts 2001, 77th Leg., ch. 703, Sec. 2.01
Short Title; Application
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.
General Life, Accident, and Health License; License Required
Sec. 2. (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.
Authority to Write Additional Product Lines
Sec. 3. 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.
Limited Life, Accident, and Health License
Sec. 4. (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.
Funeral Prearrangement Life Insurance Agent
Sec. 5. (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.
Life Insurance Not Exceeding $15,000
Sec. 6. (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.
Added by Acts 2001, 77th Leg., ch. 703, Sec. 2.01, eff. Sept. 1,
2001.
For text of article as added by Acts 1955, 54th Leg., p. 621, ch. 213
and amended by Acts 2001, 77th Leg., ch. 699, Sec. 19, see art.
21.07-1, ante.
Art. 21.07-2. Life and Health Insurance Counselor License
Definition of
