Chapter 13 Licensing Flashcards
Licensing Requirements
Types of Licenses
- All Lines
- Property
- Property and Casualty
- Surety
- Workers’ Compensation
Licensing
Generally, no company or individual can conduct business in Texas without being property licensed & supervised by the Commissioner. All insurance companies & individuals must obtain a certificate of authority (license) to transact business in Texas.
Certificate of Authority
No insurer may conduct business in Texas unless it has received a certificate of authority from the Department of Insurance. A certificate of authority indicates that the insurer has met the department’s standards and is qualified to transact insurance business in Texas.
A certificate of authority is effective until it is suspended or revoked. Before denying or revoking a certificate of authority, the Commissioner must give an insurer at least 10 days’ written notice, specifically stating the reason for the proposed action.
Agent
To act as an insurance agent (agent or adjuster) in Texas, a person must have a valid Texas Insurance license for the type of insurance involved. A person may not act as an agent of any insurer unless licensed by the state, and insurers may not appoint any person to act as their agent unless that person is licensed. An agent’s license can be insured to a natural person, a corporation, or a partnership.
Broadly speaking, an agent is anyone who transacts, solicits, or negotiates an insurance contract. Texas law defines an agent as a person who is authorized to:
a. Solicit insurance on behalf of an insurer;
b. Receive or transmit an application for insurance or an insurance policy to or from the insurer;
c. Advertise that he will receive or transmit an application for insurance or insurance policy;
d. Receive or transmit an insurance policy;
e. Examine or inspect a risk;
f. Receive, collect, or transmit an insurance premium;
g. Take any other action in the making or consummation of insurance;
h; Examine, adjust, or aid in adjusting a loss for or on behalf of an insurer.
The referral by an unlicensed person or a customer or potential customer to an agent is not an act of an agent under the section unless the unlicensed person discusses specific policy terms or conditions with the customer or potential customer.
One license per agent - no agent may hold more than one license of the same type currently in effect.
Licensing Requirements
A person who wishes to obtain a license must:
a. Be at least 18 years old;
b. Pass the state licensing examination;
c. Have not committed an act for which a license may be denied under the Insurance Code;
d. Submit the application, nonrefundable fee, and any other information required by the department.
The Department may deny an application for an authorization if the applicant fails to provide a complete set of fingerprints on request by the Department.
Non resident agents - a licensed non resident agent has the same rights and privileges as a resident license holder. The Commissioner may enter into an agreement with the appropriate official of another state as necessary to implement reciprocal licensing of nonresident agents.
Temporary license - a temporary license can be obtained before a person passes the state examination for the permanent license.
Appointment - A licensed agent may represent more than one insurer at any time while the agent’s license is in force. The agent and insurance company must notify the Commissioner of any additional appointments. The notice must be accompanied by a certificate from each insurer named in each additional appointment and must state the insurance company wants to appoint the applicant as its agent. The agent must pay a non-refundable fee for each additional appointment.
a. An agent’s appointment continues in effect until it is terminated and withdrawn by the insurance company or agent. When an insurer terminates an agent’s appointment for cause, ti must immediately file with the Commissioner a statement of the facts related to the termination and the date and cause.
b. Each renewal license authorizes the agent to represent the insurers for which the agent holds appointments until the appointments are terminated. The agent is considered to be the agent of the appointing insurer.
c. If an agent who has been appointed by an insurer appoints a subagent, the general agent must give written notification to the Department about the appointment, along with a nonrefundable fee. If an agent terminates a subagent for any reason other than for cause, the agent must promptly report the termination to the Department, and the subagent has no further authority to act for the agent or insurer.
License denial, renewal, expiration
An insurance license issued in Texas is valid for two years, with the following stipulations; a temporary license is valid for only 90 days. Texas uses a combined license renewal process, which means that a person with a Texas license who receives a new license from a different line of insurance will be licensed in that line for less than two years, so that both licenses come due for renewal at the same time.
a. License denial - the Department may deny a license application if the applicant has:
1. violated an insurance law of the state of Texas;
2. Intentionally made a material misstatement in the license application;
3. obtained or attempted to obtain a license by fraud or misrepresentation;
4. misappropriated or illegally mishandled money belonging to
a. an insurer
b. a health maintenance organization
c. an insured, enrollee, or beneficiary;
5. engaged in fraudulent or dishonest acts or practices;
6. been convicted of a felony;
7. obtained or attempted to obtain a license for controlled business;
License renewal
An agent may renew a license that has not expired or been suspended or revoked by filing a renewal application and fee with the Department before the license expires with the following stipulations. Agent may not renew a license that has been suspended or revoked.
- The original license of an agent who has applied for renewal remains in effect until the Department issues the renewal license or the license is revoked by the commissioner.
- If a license has been expired for 90 days or less, the applicant may renew by paying a license renewal penalty of one-half of the maximum renewal fee allowed by law, in addition to the regular renewal fee.
- If a license has been expired for more than 90 days, adjusters will have to pass the license examination again and meet all requirements for a new license.
- The Department may renew, without examination, an expired license of a person who was licensed in Texas, moved to another state, and is currently licensed and in continual practice in that state.
- At least 30 days before the license expires, the Department will send a written notice of the impending license expiration (with renewal form) to the address on file for the agent.
Reporting of actions
- An agent must notify the Department on a monthly basis of;
a. a change in mailing address;
b. any felony conviction;
c. an administrative action taken against the license holder by a financial or insurance regulator of Texas, another state, or the US. - A corporation or partnership licensed as an agent must file biographical information for:
a. each executive officer, director, or unlicensed partner who administers the entity’s operations;
b. each shareholder who is in control of the corporation or partner who has the right or ability to control the partnership; and
c. if the corporation or partnership is owned, in whole or part, by another entity, each individual who is in control of the apparent entity. - A corporation or partnership must notify the department no later than 30 days after:
a. a felony conviction of a licensed agent;
b. an agent’s suspension or revocation in another state;
c. the addition or removal of an officer, director, partner, member, or manager.
Interstate move by the agent
No later than 30 days after moving from one state to another, an agent licensed in Texas must file:
a. the agent’s new address;
b. proof of authorization to engage in the business of insurance in the new state of residence.
License termination, revocation, suspension
The Commissioner may discipline a license holder and revoke, suspend, or deny an application.
a. No applicant or licensee whose license has been denied, refused, or revoked (except for failure to pass a required written exam or to submit a completed license application) can file another licensing application within five years from the effective date of the denial, refusal, or revocation or, if judicial review is sought, within five years from the date of final court order to decree affirming such action.
b. The Commissioner may refuse the application unless the applicant shows good cause why the action on the previous license should prevent a new license from being issued.
c. The Commissioner will suspend an agent’s license if he doesn’t not have an outstanding valid appointment with an insurance company.
d. the surrender of an agent’s license to the Insurance Department will not negate any offense committed before the surrender’s effective date.
Continuing Education
At least half the hours must be earned in a classroom or equivalent setting. There are only two acceptable topic groups:
- General
- Ethics/Consumer protection
Any licensee may take courses from these two groups. Courses are not divided by license type.
The continuing education requirement for Adjusters is 24 hours, every two years. Two of these hours must be in Consumer Protection or Adjuster Ethics.
Exemptions from continuing education requirement
Exceptions from and extensions of time, for a licensee to comply with continuing education requirements are g ranted under very limited circumstances.
a. The request for an exemption must be presented on proper documentation and must be due to circumstances that are beyond the licensee’s control. Examples might be long-term illness or military service in a theater of war. Reasons related to business or work-load are never acceptable.
b. An individual who has continuously held a license as an insurance agent for at least 20 years is exempt from the CE requirements.
Failure to comply
a. The Department may investigate or audit a licensee’s CE records. The Commissioner may after notice and opportunity for hearing, discipline a licensee if the Commissioner determines that the license holder:
- is in violation of or had failed to comply with the Insurance Code;
- has filed any document which is false or deceptive for the purpose of providing evidence of complying with the CE statutes or in responding to any inquiry from the Department concerning compliance;
- has falsified records or participated in any activity that allows circumvention of the requirements of the Insurance Code;
- has received or used unauthorized materials or assistance or provided to another student unauthorized materials or assistance before or during an examination or interactive inquiry period;
- has failed to pay within 90 days an automatic fine without properly requesting a hearing.
Automatic fines
The Dept establishes the following procedure for automatic fines:
a. All automatic fines must be paid by check or money order made payable to the Texas Dept of Ins within 30 days after the date of issuance of the automatic fine unless the fined property disputes the assessment and files a written request for contested case hearing within the 30-day period.
b. If the assessment of the fine is disputed, the Dept may, at its discretion, assert other matters and claims against the fined party at a hearing and also seek any disciplinary action available under the Insurance Code, including additional fine amounts in excess of the automatic fine amount.
c. The Dept adopts the following automatic fines:
1. For failure by a licensee to obtain the required number of CE hours, $50 per credit hour not completed;
Finger print and criminal history requirements
All Texas resident applicants, Adjuster (Designated Home State,) and all nonresident insurance adjuster applicants must submit their fingerprints as part of the license application unless the applicant already submitted fingerprints to TDI for another license or registration and that license or registration is still active.
Applicants claiming exemption from the fingerprint requirements must be provided information on the types of license application or TDI filing with which the fingerprints were submitted and the date the fingerprints were submitted to the Texas Dept of Ins.
Fingerprints provided for an application will be used to check criminal history records of the Texas DPS and the FBI, in accordance with applicable statutes.
If you are required to provide fingerprints, your application will not be processed until the Texas Dept of Ins receives your criminal history reports from the DPS and FBI.
