Chapter 5 - Texas Statutes and Rules Common to Life and Health Insurance
What are the different reinstatement options for a license
- If expired for no more than 90 days, the license may be renewed by filing a renewal application, paying the renewal fee, and paying an additional fee (equal to one-half of the renewal fee) - If expired for more than 90 days but less than 1 year, the licensee may obtain a new license by filing a new application, paying the license fee and an additional free equal to one half of the license fee - If expired for more than one year, the license cannot be renewed. The person must go through a complete licensing process
What is the fine for willful violation of the Fair Credit Reporting Act
$2500
What is the maximum fine for violating the insurance codr
$25000
What is the maximum agent licensing fee
$50
When do continuing education requirements not apply
- Agents who have been licensed for 20 years or more as of December 31, 2002 - Agents who are licensed solely to receive residual or renewal commissions - Nonresident agents, who are subject to continuing education requirements in their home state - Retired agents - Agents who qualify for an exemption because of illness or circumstances out of their control
When can a corporation or partnership receive an agent's license
- At least one officer of the corporation or one active partner is individually licensed separately from the corporation or partnership - Each location which the corporation or partnership will engage business is registered separately with the Department - The corporation can pay up to $25000 on claim or compensation for negligent act - A member who has the ability to control the corporation of partnership has not had license suspended or revoked or been the subject of disciplinary action by financial or insurance regulator in the United States
What are all the requirements to become an insurance agent
- Is at least 18 years old - Passed the requiring licensing examination in the last 12 months - Has submitted the application, requires fees, and any other required information by required by the department - Has not committed acts for which a license may be denied
What must you have to become a commissioner in Texas
5 years of experience in the administration of business or government or as a practicing attorney or certified public accountant
How many days after license renewal date for agent to pay fees and complete CE before license expires
90 days
How long of a notice does the Commissioner provide for the suspension or revocation of a certificate of authority
A 10 day notice
What is reciprocity
A mutual interchange of rights and privileges
What are reciprocal agreements
Allows officials of the other states to waive the written examination requirements for applicants for reside in those states as long as: - The other states requires licensing applicants to pass a written examination - The other states certifies that the applicant currently holds a valid insurance license in that state - The applicant has no place of business within Texas an an insurance agent
What can an agent charge and not charge a client
An agent can charge a client for - Special delivery or postal charges - Electronic mail costs - Telephone transmission costs - Similar costs that the agent incurs on behalf of the client It is illegal for an insurer to pay an unlicensed person for performing the duties of the agent
What is an alien insurer
An insurance company that is incorporated outside the United States.
What is a foreign insurer
An insurer with a home office in another state
What is the Home Office
An insurer's headquarters, principal place of business
What is an inducement
An offer that attempts to influence the other party
What is a fraternal benefit society
An organization formed to provide insurance benefits for members of an affiliated lodge, religious organization, or fraternal organization with a representative form of government
What is advertising protection by the Life, and Health Insurance Guaranty Association considered
An unfair trade practice
What is a life and health insurance counselor
Any person who, for a free or commission, offers to examine a life, accident, or health insurance policy, an annuity, to give a recommendation or information regarding the policy's terms, conditions, benefits, coverage, or premiums
How many hours of continuing education must be completed during the reporting period
At least 24 hours and at least 2 hours must cover ethics
How many continuing education hours must be completed in the classroom
At least 50%
Insurers who are approved to conduct business in Texas are
Authorized or Admitted
Why is it illegal to be involved in boycott, coercion, or intimidation
Because it restricts fair trade and creates a monopoly
What must the commissioner do every 5 years
Examine all authorized insurers at least once every 5 years
What must an agent do if they are charging a client for a service
He must inform the client and obtain the clients written consent
When may the Commissioner issue an emergency cease and desist order?
If the Commissioner believe that an agent is engaged in an unfair method of competition or trade practice, is in hazardous financial condition, or that an unlicensed person is engaging in the sale of insurance
How do commissioners deal with complaints
If the department receives a written complaint, they will notify each party about the complaint quarterly. They must keep information about each complaint filed with the department
What is rebating
Inducement offered to the insured in the sale of insurance products that is not specified on the policy. Both the offer and acceptance of rebates are illegal
What is misrepresentation?
Information that is not true. False information.
What is commingling
Insurance producers are prohibited from commingling premiums collected from the applicants with there own personal funds
How often must an agent license be renewed
It has to be renewed every 2 years and the agent will send an agent that license is about to expire 30 days before that date
What will a surrender of a license not do
It will not keep the agent from getting punished
What is Discrimination in Insurance
No discrimination must be made on the basis of an individual's martial status, race, national origin, gender identity, sexual orientation, creed, or ancestry
When must claims be settled
No later than the 15th business day following the receipt of a notice of a claim
Do nonparticipating policies pay dividends to policyowners
No they don't
What is defamation
Oral or written statement that is intended to injure a person engaged in the insurance of business. Also apply to statements to a critical of the financial condition of any person or company
What are stock companies
Owned by stockholders who provide the capital necessary to establish and operate the insurance company and who share any profits or losses
What is domicile
Refers to the location where an insurer is incorporated, not necessarily where the insurer conducts business
What is an insurance transaction
Solicitation, Negotiation, Sale, and Advising an individual concerning coverage or claims
How long is the term for commissioner
The Commissioner is appointed by the governor for a 2-year term ending on February 1 of each odd-numbered year
Who regulates insurers and companies that conduct insurance in Texas
The Texas Department of Insurance
What is the difference between an emergency cease and desist order and a cease and desist order
The cease and desist order comes after the hearing
What can the commissioner do if he suspects that an insurer is engaged in an unfair trade practice
The commissioner may issue a statement of charges and hold a hearing for any purpose deemed necessary
What is a coercion
The forceful act or threat to influence a person to act against their will
Who is the commisioner
The head of the Texas Department of Insurance
What happens if an insurer delays a claim later than 60 days
The insurer must pay an interest of 18% per year
What is fraud
The intentional misrepresentation or intentional concealment of a material fact used to induce another party to make or refrain from making a contract, or to deceive or cheat a party. Fraud is grounds for voiding an insurance contract
What is a commision
The payment to the agent by the insurance company for placing insurance, usually a percentage of the policy premium
What is Restitution
The restoration to the original condition or repayment
What are policyowners entitled to in participating policies
They are entitled to dividends but they are no guaranteed
What are mutual companies
They are owned by policyowners and issue participating policies
What are continuing education rules
They are rules established by the public by maintaining high standards of professional competence in the insurance industry
What are continuation requirements for people who transact Medicare and Medicare supplement insurance
They must complete an 8 hour Medicare related-product certification course and 4 hours of department certified Medicare-related products continuing education
What must insurers have in order to conduct business in Texas
They must have a certificate of authority
What can a person do to challenge and emergency cease and desist order
They must request a hearing for the order within 30 days of the emergency cease and desist order. The hearing must be held no later than 10 days after the commissioner received the request
What does it mean to be insolvent
To be unable too meet financial obligations
What does it mean to be exempt
To not be subject to an obligation
What is cease and desist?
To stop or discontinue
When are emergency cease and desist orders final
Unless the person in violation requests a hearing, emergency cease and desists orders are final 31 days from the date they are received
What is false advertising
Untrue, deceptive, misleading statements that apply to the business of insurance or anyone that conducts
What are nonparticipating policies
Usually stock companies. The policyowners do not share in profits or loss
What is the Texas Life and Health Insurance Guaranty Association
Was created to protect policyowners, insured, beneficiaries, and anyone entitled to payment under an insurance policy from the incompetence and insolvency of insurers
When is an insurance agent license not required for an officer, director, or employee of insurance comoany
When they are not directly or indirectly involved with the sale of an insurance contract and don't receive commission
How long must it take for the insurer to pay a claim
Within 5 business days
What is statute
Written law. Insurance statutes can be found in the state Insurance Code
How can someone obtain a temporary license
You must complete a 40-hour training course before applying for a license or within 14 days of applying for a license. They last for 90 days and cannot be gotten more than once in a 6 month period. Temporary licenses cannot replace an existing life insurance policy or an annuity contract
What is fiduciary responsibility
a requirement that the insurer act in the best interest of the client
What constitutes the business of insurance in Texas
- Making or proposing to make an insurance contract - Taking or receiving an insurance application - Issuing or delivering an insurance contract - Receiving or collecting any consideration for insurance - Directly or indirectly acting as an agent for an insurer - Doing any kind of insurance business
When may a commissioner discipline a license holder or deny application to anyone
- Violated any provision of the Texas Insurance Code - Intentionally made a material misstatement in the licensing application - Been convicted of a felony - Been guilty of fraudulent or dishonest practices
When can an agent get their license revoked
- Willful violations of state insurance laws - Intentional material misstatements in a license application - Rebates of insurance premiums - Felony conviction
How long does it take to reapply for a license after it's been revoked
5 years
How much Continuing Education (CE) may be carried over to the next renewal period?
0
How long are licensing examination results valid
12 months
What is the duration of the reporting period
2 years
How much of a licensee total volume of premiums must be from business other than controlled business
25%
What are continuing education requirements for resident agents who sell, solicit or negotiate annuity contracts
4 hours
How long must producers maintain records of completion of continuing education requirement courses for
4 years
What is a domestic insurer
an insurance company that is incorporated in this state
What is moral turpitude
conduct contrary to honesty, good morals, justice, or accepted custom