H.B. No. 4030
AN ACT
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[, including the name and address
of any subagent]. For purposes of this subsection, a policy is
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[, or life and
health insurance counselor].
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[, or life and health insurance counselor].
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[, or life and
health insurance counselor]; and
(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[, or life and health
insurance counselor].
SECTION 6. Section 1131.056(a), Insurance Code, is amended
to read as follows:
(a) In this section, "agent" includes a general agent[,
subagent,] or a salesperson.
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) [a full-time home office salaried employee of an
insurer authorized to engage in the business of insurance 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 Subchapter G, Chapter
4051;
[(3)] an attorney in fact or the traveling salaried
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) [(4)] the attorney in fact for a Lloyd's plan;
(4) [(5)] the group motor vehicle insurance business
or the group motor vehicle department of a company engaged in that
business; or
(5) [(6)] a salaried employee who is not involved in
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 [, a subagent,]
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 [,] Chapter 21[, or a provision
listed in Section 4001.009] if the person:
(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) [each location from which the corporation or
partnership will engage in business in this state under authority
of a license issued by the department is registered separately with
the department;
[(6)] the corporation or partnership has submitted the
application, appropriate fees, and any other information required
by the department; and
(6) [(7)] an officer, director, member, manager,
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 [The]
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 [90] days after the date of issuance.
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) [an applicant for a life and health insurance
counselor license who is designated as a chartered life underwriter
(CLU), chartered financial consultant (ChFC), or certified
financial planner (CFP);
[(6)] an applicant for a property and casualty license
who is designated as a chartered property casualty underwriter
(CPCU);
(6) [(7)] an applicant for a specialty license issued
under Chapter 4055;
(7) [(8)] a nonresident individual who is exempt from
the examination requirement under Chapter 4056; or
(8) [(9)] an applicant for a general life, accident,
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, [a life and health insurance
counselor license,] an adjuster license, a managing general agent
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 [two]
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) [a subagent of a person who holds a license as an
agent under this chapter who solicits and binds insurance risks for
that agent; or
[(3)] an agent who writes any other kind of insurance
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[:
[(1)] an agent who writes property and casualty
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[; or
[(2) a subagent of a person who holds a license as an
agent under this subchapter who solicits and binds insurance risks
for that agent].
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) [a clearance letter from the state authority of
the state that issued the agent's prior resident license
demonstrating the agent's good standing with that authority; and
[(3)] fingerprint forms in the format prescribed by
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) [if currently licensed as a resident public
insurance adjuster in the applicant's state of residence, provides
with the application a certificate or letter of authorization from
the licensing authority of the applicant's state of residence that:
[(A) states that the applicant holds a current or
comparable license to act as a public insurance adjuster; and
[(B) meets the requirements of Subsection (b);
[(10) if the applicant's state of residence does not
require licensure as a resident public insurance adjuster and the
applicant has been licensed as an adjuster, agent, broker, or other
insurance representative in the applicant's state of residence or
any other state within the past three years, provides with the
application a certificate or letter of authorization from the
licensing authority that:
[(A) states that the applicant holds or has held
a license to act as an adjuster, agent, broker, or other insurance
representative; and
[(B) meets the requirements of Subsection (c);
[(11)] files proof of financial responsibility in
accordance with Section 4102.105; and
(10) [(12)] complies with any other requirements
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