Life & Health Agent - Common TX Law

Licensing application for a corporation or partnership must:

Designate an individually licensed insurance agent who is responsible for compliance with insurance laws and all other persons performing the acts of an agent must individually licensed

Unfair Discrimination

Discrimination between individuals of the same class and equal expectation of life - in rates charged or in dividends or other benefits payable, or any other terms of policy - In P&C between insured's having substantially like risk & exposure factors - Availability of any insurance contract shall not be denied on the bases of gender or marital status - For life or annuities, may not discriminate in rates for individuals who are blind or physically disabled

Licensing Requirements

- 18 Years or older - Resident of the state - Pass required exam & pay non-refundable fee - Fingerprint requirement - Fill out application - Must have minimum of one appointment - Must not be getting license to sell "principally" for controlled business

Reasons for License denial/denial of renewal:

- An offense that involves fraud, dishonesty or deceit - Any criminal violation of TX Insurance code - Any felony involving moral turpitude or breach of fiduciary duty

Exemptions/Exceptions from exam requirement

- Renewal of license if expired less than 1 year - Partnership, corporations - CLU, ChFC, CFP, CPCU - Non-resident licenses

Licensee must notify Commissioner of changes...

- Such as address, name, felony conviction or adverse action taken against them - Within 30 days

Commissioner may refuse to issue license if:

- There is material misrepresentation or fraud in application - If you have a record of dishonesty or misappropriation of customer funds - Incompetence or lack of moral turpitude - Record of suspension or revocation in any other jurisdiction - Applicant has been convicted of a felony

Boycott, Coercion or Intimidation

- Unfair method of competition or an unfair or deceptive act or practice - Results in the unreasonable restraint of or a monopoly in the business of insurance

Counselor

Someone who for compensation: Offers to examine and give advice on life, accident or health insurance policy plans, contract terms, conditions, benefits, coverage or premiums, OR the advisability of: changing, exchanging, converting, replacing, surrendering, continuing or rejecting such.

Insurance Department

State department - Protects the Insured/Public

Non-admitted company

Surplus Lines Insurer

Max penalty for violation of Cease & Desist order

$1000 per violation, up to $5000 for all violations

How does a insurer become "Authorized"?

(1) Must file for approval rates & forms (2) Must post legal reserves to pay future claims (3) Must participate in the state Guaranty fund

Commissioner shall not reissue any revoked license for at least:

5 years & only if applicant has re-qualified and has shown good cause why the revocation or denial should not bar issuance of new license

Temporary License lasts for...

90 days & may not be applied for or renewed more than once in 6 months

Late renewal applications may be accepted up to...

90 days, with late renewal fee

Before suspending/taking away a license an agent the right to...

A hearing, must have the chance to defend him/herself

Unfair Competition

All rates must be fair, not too high, not to low Insurance Commissioner requires rates to be submitted for approval

Commissioner required to audit:

Any authorized insurer, not less than once every 5 years (may be more often)

May pay a commission to a temporary licensee if:

Commission is from an application that is NOT a result of controlled business

Domestic Insurer

Home office in Texas

Agent

Involved in transacting insurance Must be properly licensed - may only solicit applications for lines licensed for

Misrepresentation

It is unlawful to knowingly make any misrepresentation including: - misrepresenting terms/benefits or dividends - making false statements about the financial condition of any insurer or the legal reserve system - using any name that misrepresents the true nature of the policy - making misrepresentation for the purpose of replacing life insurance (twisting)

Agent is allowed in connection with offer or sale of an insurance policy to give a promotional advertisement item, education item, or traditional courtesy extended to customers ONLY if:

It is valued at $25 or less

Twisting

Making a misrepresentation for the purpose of replacing life insurance - when it's not in the clients best interest

How many appointments are required to keep your license?

Minimum of one

Agents records:

Must be kept at place of business, open to the inspection of the Commissioner at any time

Nonresident Agents

Must be properly licensed in their own state Exempt from taking pre-licensing exam Must submit proper application, forms & fees May have as many nonresident licenses as you need

Surplus Lines Licensee

Must first hold P&C agent license For compensation, as independent contractor, procures insurance with surplus lines insurers

Special regulations for soliciting the sale of Annuity products

Must have adequate knowledge of the product to recommend the annuity and must be in compliance with the insurers standards for product training

Duty to report fraud

Not later than the 30th day after person makes determination or reasonably suspects that a fraudulent act has been or is about to be committed - person is not liable in civil action if reported to an authorized governmental agency or department

Mutual Insurer

Owned by policyholders Dividends paid to policyholders Participating policies (You are participating in dividends)

Insurer must maintain a complete record of all complaints for:

The preceding 3 years, or since the date of most recent examination by the Commissioner, whichever is shorter

Civil penalty for violation of insurance law, rule, regulation or order

Up to $25,000. Amount is based on severity of violation

Controlled business

Using license "principally" for the purpose of selling insurance to yourself, family members or employees. Applicant must intend to be actively engaged in selling insurance to the general public

When must you notify the Commissioner of any administrative action or criminal prosecution taken against you?

Within 30 days

Fiduciary Capacity

You are in a position of financial trust. Commingling of trust account is not allowed.

If license has been expired over 1 year...

You must apply for a new license and re-take exam

If license has been expired between 90 days & 1 year...

You must apply for a new license but do not have to re-take the exam, with a late fee

Who is exempt from continuing education?

Individuals who have held an agents license for at least 20 years

The term "agent" does not apply to someone who:

- Devotes most of their time to activities other than solicitation of applications - Does not receive a commission - Does not solicit or accept from the public applications for insurance

Temporary License requirements

- Do not have to pass a test - Must submit application and fee - Someone has to claim responsibility for temporary agents actions - Person must intend to get proper license - Required to complete 40 hour course before applying or within 14 days after applying

Emergency Adjuster

- No exam required - Only allowed if there is a catastrophe or an emergency - Commissioner may issue emergency license - if application is certified not later than the 5th day after the date on which the person begins work by licensee or insurer with Certificate of Authority in the state - Person who certifies the emergency licensee is responsible for their actions - Effective for up to 90 days, renewable once

Examples of Unfair/Prohibited trade practices:

1. Misrepresenting a material fact or provision at issue 2. Failing to attempt to settle in good faith any sort of claim that is reasonably clear 3. Failing to promptly provide reason for denial 4. Failing to affirm or deny coverage of a claim within reasonable time 5. Refusing claim for which a third-party is responsible (subrogation clause) 6. Refuse to pay a claim without conducting a reasonable investigation 7. Require a claimant as a condition of settling a claim to produce income tax returns (unless with a court order, for a fire loss, or for a claim involving lost profits or income). 8. Compelling a policyholder to sue the insurance company over money they're owed 9. Any other act the commissioner determines constitutes an unfair claim settlement practice

False advertising

1. Untrue, deceptive or misleading advertisement 2. Using a name that suggests that a person is a insurance company 3. May not make unfair or incomplete comparison of policies or compare incomparable policies 4. If containing policies of other insurers, must have disclaimer that information was not furnished by that company 5. P&C advertisements may not use the word "dividends" or similar words or illustrations that implies dividends are guaranteed

Continuing education requirements

24 hours, including: - 2 hours or ethics - 1/2 must be in classroom or classroom equivalent courses - Requirements are per person, not per license (Before Sept 2015 requirement was 30 hours)

Commissioner ay suspend, revoke permanently or refuse to renew and license:

AFTER a hearing for: 1. Willful violation of the insurance code, incompetence or false license application 2. Misrepresentation, fraud, misappropriation or conversion of money 3. Conviction of a felony or suspension or revocation in another state

What happens to clients accounts if an agents license is revoked?

Accounts are not terminated, clients would have to go to another licensed agent

Notice of a hearing must be given to:

Agent & Insurer listed on application (agent has appointment with)

Commissions may only be shared if:

Agent commission is shared with holds the same line of insurance license

Limited Lines Licenses

Allowed to write limited property and casualty lines of business such as: Job protection insurance Insurance on growing crops Pre-paid legal service contracts Credit Insurance

Fraudulent insurance act

Any act in violation of a penal law committed or attempted while engaging in business of insurance, as part of an insurance transaction, or in an attempt to defraud insurer

Transacting Insurance

Any activity related to the negotiation, sale or purchase of insurance - Comes under the jurisdiction of the Texas Insurance Code (including handling claims, inspecting risks and collecting premiums)

Adjuster

Any person who, for compensation, either adjusts, investigates or negotiates settlement of claims on behalf of insurer or insured Must be properly licensed Must be 18yrs of age & pass Texas Adjuster exam

Insurance Commissioner

Appointed by Governor & serves for 2 years. Oversees dept. of Insurance

Certificate of Authority

Authority granted by Commissioner to an insurer to transact business in this state

Dividends may never...

Be guaranteed

Continuing education requirement for Annuities:

Counts within the 24 hours needed every 2 years - Prior to selling, must do a 4 hour annuity CE course - On an ongoing basis you must complete 8 hours of CE related to annuities

Unfair/Prohibited trade practices

Ensure insurers & agents do what is best for clients

All foreign, domestic & alien insurers must:

File annual financial statements to prove that they have "legal reserves" to pay future obligations

Managing general agent

Full time person who is responsible for recruiting and training a local insurance sales staff for L&H or P&C insurer

Authorized Insurer

Has a certificate of authority - authorized to do business in TX (not "approved")

Alien Insurer

Home office in another county, but holding a Certificate of Authority in Texas

Foreign Insurer

Home office in another state but holding a Certificate of Authority in Texas

Discrimination of rates may allowed:

If based upon rate filings filed with the Commissioner that are based upon verifiable statistical actuarial data

Counselor may use titles such as:

Insurance adviser, Insurance analyst, Insurance counselor, Insurance specialist, Policyholders adviser, Policyholders counselor, or any other similar title

Agency License

License for a corporation or partnership

Insurance service representative

Licensee is a salaried employee who performs assigned duties only in an office of a P&C agent with express approval of the P&C agent who supervises the license holder

Risk manager

Licensee who may examine, evaluate and provide advice regarding reduction of risk to a person seeking to obtain or renew P&C insurance coverage

Defamation

Making oral or written statements that are false or maliciously critical of the financial condition of an insurer that is calculated to injure and person engaged in the insurance business

Rebating

May not offer as an inducement to the sale: Rebate of commission or advantage in dividends not specified in the policy. Also includes offer of employment, shares of stock or securities or any prizes or merchandise.

Stock Insurers

Owned by stockholders Dividends paid to stockholders Non-participating policies (You don't participate in dividends)

Who pays for examination/audit by commissioner?

The examined company

Percent allowable for controlled business

at least 25% of volume of premiums must come from persons that are not controlled business (general public)