Bill Text: TX HB4030 | 2021-2022 | 87th Legislature | Enrolled
Bill Title: Relating to the licensing and regulation of insurance professionals.
Spectrum: Partisan Bill (Republican 2-0)
Status: (Passed) 2021-06-07 - Effective on 9/1/21 [HB4030 Detail]
Download: Texas-2021-HB4030-Enrolled.html
H.B. No. 4030 |
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relating to the licensing and regulation of insurance | ||
professionals. | ||
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: | ||
SECTION 1. Section 443.156(a), Insurance Code, is amended | ||
to read as follows: | ||
(a) Every person who represented the insurer as an agent and | ||
receives notice in the form prescribed in Section 443.155 that the | ||
insurer is the subject of a liquidation order, not later than the | ||
30th day after the date of the notice, shall provide to the | ||
liquidator, in addition to the information the agent may be | ||
required to provide pursuant to Section 443.010, the information in | ||
the agent's records related to any policy issued by the insurer | ||
through the agent and any policy issued by the insurer through an | ||
agent under contract to the agent[ |
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issued through an agent if the agent has a property interest in the | ||
expiration of the policy or if the agent has had in the agent's | ||
possession a copy of the declarations of the policy at any time | ||
during the life of the policy, except where the ownership of the | ||
expiration of the policy has been transferred to another. | ||
SECTION 2. Section 521.151, Insurance Code, is amended to | ||
read as follows: | ||
Sec. 521.151. APPLICABILITY OF SUBCHAPTER. This subchapter | ||
applies to any legal entity engaged in the business of insurance in | ||
this state, including: | ||
(1) a capital stock insurance company; | ||
(2) a mutual insurance company; | ||
(3) a title insurance company; | ||
(4) a fraternal benefit society; | ||
(5) a local mutual aid association; | ||
(6) a statewide mutual assessment company; | ||
(7) a county mutual insurance company; | ||
(8) a Lloyd's plan; | ||
(9) a reciprocal or interinsurance exchange; | ||
(10) a stipulated premium company; | ||
(11) a group hospital service corporation; | ||
(12) a farm mutual insurance company; | ||
(13) a risk retention group; | ||
(14) an eligible surplus lines insurer; and | ||
(15) an agent, broker, or adjuster[ |
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SECTION 3. Section 541.002(2), Insurance Code, is amended | ||
to read as follows: | ||
(2) "Person" means an individual, corporation, | ||
association, partnership, reciprocal or interinsurance exchange, | ||
Lloyd's plan, fraternal benefit society, or other legal entity | ||
engaged in the business of insurance, including an agent, broker, | ||
or adjuster[ |
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SECTION 4. Section 544.001, Insurance Code, is amended to | ||
read as follows: | ||
Sec. 544.001. APPLICABILITY OF SUBCHAPTER. This subchapter | ||
applies to: | ||
(1) any legal entity engaged in the business of | ||
insurance in this state, including: | ||
(A) a capital stock insurance company; | ||
(B) a mutual insurance company; | ||
(C) a title insurance company; | ||
(D) a fraternal benefit society; | ||
(E) a local mutual aid association; | ||
(F) a statewide mutual assessment company; | ||
(G) a county mutual insurance company; | ||
(H) a Lloyd's plan; | ||
(I) a reciprocal or interinsurance exchange; | ||
(J) a stipulated premium company; | ||
(K) a group hospital service corporation; | ||
(L) a farm mutual insurance company; | ||
(M) a risk retention group; | ||
(N) an eligible surplus lines insurer; and | ||
(O) an agent, broker, or adjuster[ |
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(2) a health maintenance organization. | ||
SECTION 5. Section 544.051, Insurance Code, is amended to | ||
read as follows: | ||
Sec. 544.051. APPLICABILITY OF SUBCHAPTER. This subchapter | ||
applies to any individual, corporation, association, partnership, | ||
or other legal entity engaged in the business of insurance, | ||
including: | ||
(1) a fraternal benefit society; | ||
(2) a county mutual insurance company; | ||
(3) a Lloyd's plan; | ||
(4) a reciprocal or interinsurance exchange; | ||
(5) a farm mutual insurance company; and | ||
(6) an agent, broker, or adjuster[ |
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SECTION 6. Section 1131.056(a), Insurance Code, is amended | ||
to read as follows: | ||
(a) In this section, "agent" includes a general agent[ |
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SECTION 7. Section 4001.002(b), Insurance Code, is amended | ||
to read as follows: | ||
(b) This title does not apply to: | ||
(1) a resident of this state who arbitrates in the | ||
adjustment of losses between an insurer and an insured, a marine | ||
adjuster who adjusts particular or general average losses of | ||
vessels or cargoes if the adjuster paid an occupation tax of $200 | ||
for the year in which the adjustment is made, or a practicing | ||
attorney at law in this state, acting in the regular transaction of | ||
the person's business as an attorney at law, who is not a local | ||
agent and is not acting as an adjuster for an insurer; | ||
(2) [ |
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[ |
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representative of a reciprocal or interinsurance exchange admitted | ||
to engage in the business of insurance in this state as to business | ||
transacted through the attorney in fact or salaried representative; | ||
(3) [ |
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(4) [ |
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or the group motor vehicle department of a company engaged in that | ||
business; or | ||
(5) [ |
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soliciting or negotiating insurance in the office of an agent and | ||
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 an agent, if: | ||
(A) the employee does not receive any | ||
commissions; and | ||
(B) the employee's compensation is not varied by | ||
the volume of premiums taken and received. | ||
SECTION 8. Section 4001.003(1), Insurance Code, is amended | ||
to read as follows: | ||
(1) "Agent" means a person who is an authorized agent | ||
of an insurer or health maintenance organization [ |
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and any other person who performs the acts of an agent, whether | ||
through an oral, written, electronic, or other form of | ||
communication, by soliciting, negotiating, procuring, or | ||
collecting a premium 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 soliciting, negotiating, | ||
procuring, or effectuating membership in the health maintenance | ||
organization. The term does not include: | ||
(A) a regular salaried officer or employee of an | ||
insurer, health maintenance organization, or 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 officer or | ||
employee or a trustee of an employee benefit plan, to the extent | ||
that the employer, officer, employee, or trustee is engaged in the | ||
administration or operation of an employee benefits program | ||
involving the use of insurance or annuities issued by an insurer or | ||
memberships issued by a health maintenance organization, if the | ||
employer, officer, employee, or trustee is not directly or | ||
indirectly compensated by the insurer or health maintenance | ||
organization issuing the insurance or annuity contracts or | ||
memberships; | ||
(C) except as otherwise provided by this code, a | ||
depository institution, or an officer or employee of a depository | ||
institution, to the extent that the depository institution or | ||
officer or employee collects and remits 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 title. | ||
SECTION 9. Section 4001.051(b), Insurance Code, is amended | ||
to read as follows: | ||
(b) Regardless of whether the act is done at the request of | ||
or by the employment of an insurer, broker, or other person, a | ||
person is the agent of the insurer for which the act is done or risk | ||
is taken for purposes of the liabilities, duties, requirements, and | ||
penalties provided by this title or [ |
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(1) solicits insurance on behalf of the insurer; | ||
(2) receives or transmits other than on the person's | ||
own behalf an application for insurance or an insurance policy to or | ||
from the insurer; | ||
(3) advertises or otherwise gives notice that the | ||
person will receive or transmit an application for insurance or an | ||
insurance policy; | ||
(4) receives or transmits an insurance policy of the | ||
insurer; | ||
(5) examines or inspects a risk; | ||
(6) receives, collects, or transmits an insurance | ||
premium; | ||
(7) makes or forwards a diagram of a building; | ||
(8) takes any other action in the making or | ||
consummation of an insurance contract for or with the insurer other | ||
than on the person's own behalf; or | ||
(9) examines into, adjusts, or aids in adjusting a | ||
loss for or on behalf of the insurer. | ||
SECTION 10. Section 4001.106(b), Insurance Code, is amended | ||
to read as follows: | ||
(b) The department shall issue a license to a corporation or | ||
partnership if the department determines that: | ||
(1) the corporation or partnership is: | ||
(A) organized under the laws of this state or | ||
another state; and | ||
(B) authorized by its articles of incorporation | ||
or its partnership agreement to act as an agent; | ||
(2) 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; | ||
(3) the corporation or partnership will have the | ||
ability to pay any amount up to $25,000 that it might become legally | ||
obligated to pay under a claim made against it by a customer and | ||
caused by a negligent act, error, or omission of the corporation or | ||
partnership or a person for whose acts the corporation or | ||
partnership is legally liable in the conduct of its business under | ||
this code; | ||
(4) if engaged in the business of insurance, the | ||
corporation or partnership intends to be actively engaged in that | ||
business as required under Section 4001.104(a); | ||
(5) [ |
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application, appropriate fees, and any other information required | ||
by the department; and | ||
(6) [ |
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partner, or other person who has the right or ability to control the | ||
corporation or partnership 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 Subchapter C, Chapter 4005. | ||
SECTION 11. Section 4001.153, Insurance Code, is amended to | ||
read as follows: | ||
Sec. 4001.153. APPLICATION FOR AND ISSUANCE OF TEMPORARY | ||
LICENSE. (a) Except as provided by Subsection (b), the [ |
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department shall issue a temporary license immediately on receipt | ||
of a properly completed application executed by the applicant in | ||
the form required by Section 4001.102 and accompanied by: | ||
(1) the nonrefundable filing fee set by the | ||
department; and | ||
(2) a certificate signed by an officer or properly | ||
authorized representative of an agent, insurer, or health | ||
maintenance organization stating that: | ||
(A) the applicant is being considered for | ||
appointment by the agent, insurer, or health maintenance | ||
organization as its full-time agent; | ||
(B) the agent, insurer, or health maintenance | ||
organization desires that the applicant be issued a temporary | ||
license; and | ||
(C) the applicant will complete training as | ||
prescribed by Section 4001.160 under the agent's, insurer's, or | ||
health maintenance organization's supervision. | ||
(b) The department may deny a license application under this | ||
subchapter if the department determines that any of the grounds | ||
exist for license denial or disciplinary action under Section | ||
4005.101 of this code or Chapter 53, Occupations Code. | ||
SECTION 12. Section 4001.155, Insurance Code, is amended to | ||
read as follows: | ||
Sec. 4001.155. TERM OF TEMPORARY LICENSE. A temporary | ||
license is valid for 180 [ |
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SECTION 13. Section 4001.352, Insurance Code, is amended to | ||
read as follows: | ||
Sec. 4001.352. AUTHORITY TO ISSUE PROVISIONAL PERMIT. | ||
(a) The department may, in conjunction with a license application | ||
under Section 4001.102, issue a provisional permit to an applicant | ||
who is being considered for appointment as an agent by another | ||
agent, an insurer, or a health maintenance organization. | ||
(b) The department may suspend the issuance of a provisional | ||
permit under this subchapter if: | ||
(1) the department's processing time for license | ||
applications has not exceeded 21 days in any month in the preceding | ||
90 days before the suspension; and | ||
(2) the department provides notice both on its | ||
Internet website and to applicants for provisional licenses that | ||
the provisional license applications are temporarily suspended | ||
because sufficient processing time for permanent licenses is | ||
available to allow for those licenses to be processed in not more | ||
than 21 days for a completed application. | ||
SECTION 14. Section 4002.003(a), Insurance Code, is amended | ||
to read as follows: | ||
(a) The department may not require a person to take an | ||
examination under this chapter 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 is designated as a chartered life underwriter (CLU); | ||
(5) [ |
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[ |
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who is designated as a chartered property casualty underwriter | ||
(CPCU); | ||
(6) [ |
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under Chapter 4055; | ||
(7) [ |
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the examination requirement under Chapter 4056; or | ||
(8) [ |
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and health license or a life agent 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; and | ||
(B) does not, on or after September 1, 1999, | ||
solicit or procure: | ||
(i) insurance for any other insurer or a | ||
different fraternal benefit society; | ||
(ii) an insurance contract from anyone | ||
other than a person who is eligible for membership in the fraternal | ||
benefit society; or | ||
(iii) an interest-sensitive life insurance | ||
contract that exceeds $35,000 of coverage on an individual life, | ||
unless the applicant is designated as a "Fraternal Insurance | ||
Counselor" at the time the contract is solicited or procured. | ||
SECTION 15. Section 4004.053(a), Insurance Code, is amended | ||
to read as follows: | ||
(a) An individual who holds a general life, accident, and | ||
health license, a life agent license, [ |
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license, a general property and casualty license, or a personal | ||
lines property and casualty license must complete 24 hours of | ||
continuing education during the license period. If the individual | ||
holds more than one license for which continuing education is | ||
otherwise required, the individual is not required to complete more | ||
than 24 continuing education hours for all licenses during the | ||
license period. An individual who is required under rules adopted | ||
under Chapter 4008 to hold a certificate to sell a designated | ||
product or product line may use continuing education programs | ||
administered under Section 4004.151 to satisfy the continuing | ||
education requirements under this subsection. | ||
SECTION 16. Section 4004.054, Insurance Code, is amended to | ||
read as follows: | ||
Sec. 4004.054. ETHICS REQUIREMENT. Each individual who | ||
holds a license issued by the department shall complete three [ |
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hours of continuing education in ethics during each license renewal | ||
period. | ||
SECTION 17. Section 4051.051(a), Insurance Code, is amended | ||
to read as follows: | ||
(a) A person is required to hold a general property and | ||
casualty license if the person acts as: | ||
(1) an agent who writes property and casualty | ||
insurance for an insurer authorized to engage in the business of | ||
property and casualty insurance in this state; or | ||
(2) [ |
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[ |
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as required by the commissioner for the protection of the insurance | ||
consumers of this state. | ||
SECTION 18. Section 4051.401, Insurance Code, is amended to | ||
read as follows: | ||
Sec. 4051.401. PERSONAL LINES PROPERTY AND CASUALTY | ||
LICENSE; LICENSE REQUIRED. A person is required to hold a personal | ||
lines property and casualty license if the person acts as[ |
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[ |
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insurance sold to individuals and families primarily for personal | ||
or household use for an insurer authorized to engage in the business | ||
of property and casualty insurance in this state[ |
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[ |
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SECTION 19. Section 4056.052, Insurance Code, is amended by | ||
adding Subsection (c) to read as follows: | ||
(c) A license issued under this section shall be | ||
automatically suspended, canceled, or revoked if the licensee's | ||
home state suspends, cancels, or revokes the licensee's | ||
corresponding resident license. | ||
SECTION 20. Section 4056.059(b), Insurance Code, is amended | ||
to read as follows: | ||
(b) A nonresident agent may apply to the department for a | ||
comparable license for residents of this state. An application | ||
must include: | ||
(1) a notification of the agent's change of address and | ||
contact information; and | ||
(2) [ |
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[ |
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the department, which may be electronic. | ||
SECTION 21. Section 4102.054(a), Insurance Code, is amended | ||
to read as follows: | ||
(a) The commissioner may issue a nonresident license to an | ||
applicant for a public insurance adjuster license who is not a | ||
permanent resident of this state on determining that the | ||
application meets the requirements of this chapter, the nonresident | ||
license application fee has been paid, and the applicant is an | ||
individual who: | ||
(1) is at least 18 years of age; | ||
(2) except as provided by Section 4102.058, has | ||
passed, to the satisfaction of the commissioner, an examination | ||
approved by the commissioner and of sufficient scope as prescribed | ||
by Section 4102.057; | ||
(3) is self-employed as a public insurance adjuster or | ||
associated with or employed by a public insurance adjusting firm or | ||
other public insurance adjuster; | ||
(4) is trustworthy and of a moral character that | ||
reasonably ensures that the applicant will conduct the business of | ||
a public insurance adjuster fairly and in good faith without | ||
detriment to the public; | ||
(5) has never been convicted of a felony or, if | ||
convicted of a felony, has received a full pardon from that | ||
conviction and is otherwise relieved from any disabilities | ||
connected with that conviction; | ||
(6) has sufficient experience or training relating to | ||
the assessment of: | ||
(A) real and personal property values; and | ||
(B) physical loss of or damage to real or | ||
personal property that may be the subject of insurance and claims | ||
under insurance; | ||
(7) is sufficiently informed as to the terms and | ||
effects of the types of insurance contracts that provide coverage | ||
on real and personal property; | ||
(8) possesses knowledge and experience adequate to | ||
enable the applicant to engage in the business of a public insurance | ||
adjuster fairly and without injury to the public or any member of | ||
the public with whom the applicant may have business as a public | ||
insurance adjuster; | ||
(9) [ |
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accordance with Section 4102.105; and | ||
(10) [ |
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under applicable state law, including provision of a complete set | ||
of fingerprints on request, as provided by Section 4001.103. | ||
SECTION 22. The following provisions of the Insurance Code | ||
are repealed: | ||
(1) Section 4001.003(9); | ||
(2) Sections 4001.009 and 4001.109; | ||
(3) Section 4001.156(a); | ||
(4) Section 4001.205; | ||
(5) Subchapters D and G, Chapter 4051; | ||
(6) Chapter 4052; | ||
(7) Section 4056.004; | ||
(8) Sections 4102.054(b) and (c); and | ||
(9) Section 4102.114(d). | ||
SECTION 23. (a) In this section, "department" means the | ||
Texas Department of Insurance. | ||
(b) On the effective date of this Act, the department shall | ||
convert all active insurance services representative licenses | ||
issued before June 1, 2021, to general property and casualty | ||
insurance agent licenses. Licensees must comply with all | ||
requirements of the converted license to keep the license active | ||
and in good standing. Any insurance services representative | ||
licenses issued on or after June 1, 2021, through the effective date | ||
of this Act may not be renewed on expiration of the license and may | ||
not convert to another license type. | ||
(c) On the effective date of this Act, the department shall | ||
convert all active life and health insurance counselor licenses | ||
issued before June 1, 2021, to general life and health agent | ||
licenses. Converted licensees must comply with all requirements of | ||
the converted license to keep the license active and in good | ||
standing. Any life and health insurance counselor licenses issued | ||
on or after June 1, 2021, through the effective date of this Act may | ||
not be renewed on expiration of the license and may not convert to | ||
another license type. | ||
(d) On the effective date of this Act, any existing home | ||
office salaried employee registration is void and ceases to exist. | ||
Any former home office salaried employee registrant engaging in the | ||
business of insurance after the effective date of this Act must | ||
follow the requirements of the Insurance Code and any other | ||
applicable laws of this state. | ||
SECTION 24. This Act takes effect September 1, 2021. | ||
______________________________ | ______________________________ | |
President of the Senate | Speaker of the House | |
I certify that H.B. No. 4030 was passed by the House on April | ||
30, 2021, by the following vote: Yeas 128, Nays 13, 2 present, not | ||
voting; and that the House concurred in Senate amendments to H.B. | ||
No. 4030 on May 24, 2021, by the following vote: Yeas 138, Nays 8, | ||
1 present, not voting. | ||
______________________________ | ||
Chief Clerk of the House | ||
I certify that H.B. No. 4030 was passed by the Senate, with | ||
amendments, on May 19, 2021, by the following vote: Yeas 31, Nays | ||
0. | ||
______________________________ | ||
Secretary of the Senate | ||
APPROVED: __________________ | ||
Date | ||
__________________ | ||
Governor |