Chapter 14 TX Life & Health State Laws
How long is a temporary license valid?
90 days
What is a foreign insurer?
A foreign insurer is organized under the laws of another U.S. jurisdiction (i.e., another state), whether it is admitted to do business in this state
What can the issuer of policy that received a Cease and Desist order do?
A person affected by an order is entitled to request a hearing to contest the order. ---No later than 30 days ---Must be written, directed to the commissioner, and states the grounds for the request
What must the Cease and Desist order contain?
A statement if the charges -must be served by registered or certified mail, return receipt requested, to the affected person's last known address
Can a temporary license holder obtain commission on sales made to a person with a business relationship?
A temporary license holder may not obtain commission on sales made to a person with a family, employment, or business relationship.
Can an insurer be examined whenever?
An insurer may be examined whenever it is deemed necessary, but domestic and licensed insurers must be examined by the Commissioner or appointed examiner no less frequently than once every 5 years.
If the Commissioner decides to revoke or modify an insurer's certificate of authority, must he/she provide any time to the insurer?
Before doing so, the Commissioner must provide the insurer with at least 10 days' advance written notice before such revocation or modification. ---The notice must state the reason for the action.
In order for an insurance company to transact insurance in Texas, it must submit an application for a
Certificate of Authority
Consumer Complaints
If a consumer files a written complaint with the Department, the Department must keep records of all related information on file. ---The Department must notify each party to an active complaint of its status at least quarterly until disposition, unless the notice would compromise an undercover investigation.
What types of policies do stock insurers issue?
Non-Participating Policies
What type of policies do mutual insurers issue?
Participating Policies
What can the applicant request if the Department denied or disapproved his/her Certificate of Authority?
The applicant may request a hearing. -The Commissioner must request a hearing date no later than 30 days after the applicant's request for the hearing.
What is the primary purpose of an examination?
The primary purpose of an examination is to determine solvency of the insurer.
How many terms does the Commissioner have?
Two-year term
Licensing Requirements
Types of Licenses: -Agent
How much credit does the State and National Insurance Association give you towards Continuing Education?
Up to 4 hours for attending its educational presentations
What are the ways that the Commissioner can invoke penalties?
-may cancel or revoke any authorization -suspension of license (up to 1 year) -cease and desist order -administrative penalty -resititution -modify an insurer's certificate of authority
Foreign, Domestic, and Alien Insurers
A domicile is the jurisdiction in which an insurer is formed or incorporated, such as a state or country. A domestic insurer is organized under the laws of this state, whether it is admitted to do business in this state A foreign insurer is organized under the laws of another U.S. jurisdiction (i.e., another state), whether it is admitted to do business in this state An alien insurer is organized under the laws of a jurisdiction outside the United States, whether it is admitted to do business in this state
What does a renewal license issued to an agent authorize he/she to do?
A renewal license issued to an agent authorizes the agent to represent and act for all insurers for which the agent is appointed.
Stock and Mutual Insurers
A stock insurer is owned by the company's stockholders or shareholders and issues Non-participating policies. -Directors and officers of the company manage the company's operations and are elected by the stockholders. ---When the directors declare the issuance of dividends, which are a taxable return of profit, they are paid to the stockholders. A mutual insurer is owned by the company's policyholders, who may also be referred to as members, and issues Participating policies. -The company's board of trustees or directors manages its operations and the board's members are elected by the policyholders. ---When the directors declare the issuance of dividends, which are a non-taxable return of profit, they are paid to the policyholders.
Which of the following is not a duty of the Commissioner? A. Make state insurance laws B. Handle insurance-related consumer complaints C. Issue an insurance license for a producer D. Enforce state insurance laws
A. Make state insurance laws The Commissioner must enforce state insurance laws, not establish them.
An agent's appointment: A. Remains in force until terminated or withdrawn B. Can only be canceled if the agent fails to write new business C. Must be renewed before the license expires D. Is valid for a maximum of 2 years
A. Remains in force until terminated or withdrawn An agent's appointment remains in force until terminated or withdrawn by the insurer.
What is an agent?
An agent is a person authorized and licensed to transact insurance on behalf of an insurer, and includes a subagent and any other person who performs the acts of an agent, including selling, soliciting, and negotiating insurance or annuity contracts and collecting such premiums.
What is an alien insurer?
An alien insurer is organized under the laws of a jurisdiction outside the United States, whether it is admitted to do business in this state
What must authorized insurers file annually?
An annual statement ---suspension or revocation of the certificate of authority will be filed if no annual statement is filed
Does the applicant for a temporary license have to pass an exam?
An applicant is not required to pass a written exam to obtain a temporary license
Does the appointment for a licensed agent need to be renewed?
An appointment continues in effect without the necessity of renewal.
What is a stock insurer?
Is owned by the company's stockholders and shareholders and issues non-participating policies
When the directors for the mutual insurer policies issue the dividends, are these taxable?
Non-taxable and paid to the policyholders
Who owns the mutual insurer policies?
Policyholders (members)
Who owns the stock insurer policies?
Stockholders and Shareholders
Inquiries
The Department may address a reasonable inquiry made to any insurer, agent, or holder of any type of authority to transact business in this state if it pertains to any of the following: ---That person's business condition ---Any matter concerning that person's transactions that the Department deems necessary for the public good Any person receiving such an inquiry must respond to it in writing no later than 15 days after receipt unless the person submits a written notice to the Department requesting additional time to respond. ---A record of all inquiries made by the department must be maintained by the department.
Who manages the mutual insurer policies?
The company's board of trustees or directors manages its operations
If a license has been expired for between 90 days to 1 year:
---Person must file a new application with the Department, along with the license fee and an additional fee equal to one-half the license fee ---Person is NOT required to take a licensing exam
If a license has been expired for 1 year or more:
---Take a licensing exam, if an exam is required for an original license ---Comply with other requirements and procedures for obtaining a new license
Fees The Department will collect a nonrefundable fee from each agent or insurer for the following:
-License application fee -Appointment fee for each appointment of the agent by an insurer -Examination fees -License renewal application fees The Department will set the fees in amounts considered reasonable and necessary.
What are the qualifications for the Commissioner?
-competent and experienced -well informed and qualified in the field of insurance regulation -At least 5 years experience in the administration of business and government
What is the requirement under continuing education?
All licensees must complete continuing education requirements before the expiration date of the license AND at least 50% of the hours must be completed in a classroom, or classroom equivalent, setting.
Who appoints the Commissioner (Chief Executive and Administrative Officer of the Texas Department of Insurance)?
Appointed by the governor with advice and consent from the senate
General life, accident, and health agents must complete a minimum of ______ continuing education hours per renewal period. A. 15 B. 24 C. 20 D. 40
B. 24 Agents must complete 24 continuing education hours every 2 years (per renewal period).
A licensed agent is required to obtain which of the following before transacting insurance in Texas? A. An insurance counselor's license B. A Certificate of Authority C. An appointment from an insurer D. A CLU designation
C. An appointment from an insurer Licensed agents are not permitted to transact insurance as an agent until they have been appointed by an insurer authorized to transact insurance in this state.
Which type of insurance company is owned by its policyholders? A. Stock insurer B. Non-admitted insurer C. Mutual insurer D. Admitted insurer
C. Mutual insurer A mutual insurer is owned by its policyholders.
Why might the Department address a reasonable inquiry?
If it pertains to any of the following: ---That person's business condition ---Any matter concerning that person's transactions that the Department deems necessary for the public good
What occurs if the license is not renewed?
If not renewed, an insurance license will expire 2 years after the date it was issued.
When does the hearing take place for a Cease and Desist order?
No later than 10 days after the date the Commissioner received the request ---unless parties mutually agree for a later hearing date
What is a domicile?
The jurisdiction in which an insurer is formed or incorporated, such as a state or country
How long is the Certificate of Authority effective?
When issued, a Certificate of Authority is effective until suspended or revoked and must state the specific lines of insurance for which the insurer is authorized to transact business.
What is a domestic insurer?
A domestic insurer is organized under the laws of this state, whether it is admitted to do business in this state
If an individual holds a general life, accident and health, life agent, life and health counselor, adjuster, general property and casualty, or personal lines property and casualty license must complete:
An individual who holds a general life, accident and health, life agent, life and health counselor, adjuster, general property and casualty, or personal lines property and casualty license must complete 24 continuing education hours for all licenses during each two-year license period. ---Each individual must complete 2 hours of ethics as part of the 24 hours.
Insurance Contracts with Unauthorized Insurers
An insurance contract effective in this state and entered into by an unauthorized insurer is unenforceable by the insurer. ---If a loss is sustained, both the unauthorized insurer and the agent who assisted, directly or indirectly, in the sale of the contract, are liable to the insured for the amount of a claim or loss under the terms of the contract. ---If the unauthorized insurer fails to pay the claim or loss, the agent is responsible for the full amount.
Why might the Department not issue a license as an agent if he/she qualified for everything?
If it has been determined that the applicant intends to be actively engaged in the soliciting or writing of insurance for the general public and actively engaged in the business if insurance.
Who must examine the financial condition of an insurer?
The Commissioner or appointed examiner must examine the financial condition of an insurer, including its ability to meet its financial obligations and liabilities, as well as its compliance with state law.
What must a person do to obtain a renewal license?
The person must file with the Department a renewal application on the appropriate form and make payment for the required renewal fee AND an additional fee equal to one-half the renewal fee.
What is known as controlled business?
When the applicant does not engage in at least 25 % of the total volume of premiums and only is involved in a person's business
Under stock insurers, when the directors declare the issuance of dividends, are these taxable?
Yes they are taxable and paid to the shareholders
Can an agent represent and act as an agent for multiple insurers?
Yes. An agent may represent and act as an agent for multiple insurers.
Insurance Definitions
-Certificate of Authority
A temporary license cannot be issued to an applicant who:
-Does not intend to apply for a license to sell insurance or memberships to the general public -Plans to write controlled business
When does an agent appointment end?
Agent appointments remain in force until they are terminated or withdrawn.
What happens if the licensee does not complete the continuing education requirements?
An automatic fine will be charged to a licensee who fails to obtain the required number of continuing education hours and attempts to renew a license, applies for an expired license, or applies for a new license. ---The automatic fine is $50 per credit hour not completed, not to exceed $500 per license, per reporting period.
Who elects the board members for the mutual insurer policies?
Elected by the policyholders
Can the temporary license be issued or renewed?
In no case, may be issued or renewed to the same applicant more than once in any consecutive six-month period.
When can a licensed agent being transacting insurance as an agent?
Licensed agents are not permitted to transact insurance as an agent until they have been appointed by an insurer authorized to transact insurance in this state. The agent and the insurer involved must notify the department, on a form prescribed by the department with a nonrefundable fee, no more than 30 days from the effective date of the appointment of any additional appointment authorizing the agent to act as an agent for one or more additional insurers.
What must the Commissioner do if there is an impairment to the surplus?
The Commissioner will order an insurer to correct the impairment by bringing the surplus to an acceptable level specified by the Commissioner or to cease doing business in this state. ---After issuing the order, the Commissioner will immediately institute any preceding necessary to determine any further action.
How many days does a person have to renew their license?
90 days or less
Which of the following is NOT transacting insurance? A. Selling stocks, bonds, and mutual funds B. Delivering an insurance contract C. Collecting an insurance payment D. Indirectly acting as an agent
A. Selling stocks, bonds, and mutual funds Transacting insurance involves activities relating to the business of insurance. Stocks, bonds and mutual funds are not insurance products.
Continuing Education
All licensees must complete continuing education requirements before the expiration date of the license AND at least 50% of the hours must be completed in a classroom, or classroom equivalent, setting. ---Continuing education hours completed in other professions, or in association with professional designations in insurance-related fields may be accepted by the Department. A licensee must submit a timely written request to the Department to extend the time required to complete continuing education, or to be exempted from some or all of the requirements due to illness, medical disability, or extenuating circumstances beyond the licensee's control. An individual who holds a general life, accident and health, life agent, life and health counselor, adjuster, general property and casualty, or personal lines property and casualty license must complete 24 continuing education hours for all licenses during each two-year license period. ---Each individual must complete 2 hours of ethics as part of the 24 hours. An automatic fine will be charged to a licensee who fails to obtain the required number of continuing education hours and attempts to renew a license, applies for an expired license, or applies for a new license. ---The automatic fine is $50 per credit hour not completed, not to exceed $500 per license, per reporting period.
Which of the following statements about continuing education is true? A. Licensees must complete 24 continuing education hours for each license held B. Continuing education hours must be completed after the expiration date of the license C. At least 50% of continuing education hours must be completed in a classroom or classroom equivalent setting D. Every licensee must complete 3 continuing education hours on the topic of ethics
C. At least 50% of continuing education hours must be completed in a classroom or classroom equivalent setting At least 50% of continuing education hours must be completed in a classroom or classroom equivalent setting. Licensees must complete 2 hours of ethics (not 3), 24 CE hours per person (not per license) and they must be completed BEFORE the expiration date.
The Texas Department of Insurance requires all licensees to: A. Obtain a Certificate of Authority B. Complete 40 hours of prelicensing education C. Engage in the business of insurance for the sole purpose of transacting insurance with family members D. Be honest, trustworthy, and reliable
D. Be honest, trustworthy, and reliable Since the relationship between licensees and the public is one of trust, the Department requires all licensees to be honest, trustworthy and reliable.
State and National Insurance Association Credit
Licensees who hold a national designation certification or are a member in good standing of a state or national insurance association may accumulate up to 2 hours for reviewing that sponsor's or association's educational materials and up to 4 hours for attending its educational presentations. (Towards 24 hour continuing education) ---The maximum credit hours earned is four and they may not count toward the ethics requirements.
Transacting Insurance
The transaction of insurance involves activities relating to the business of insurance, such as the solicitation and negotiation of insurance, including the execution of an insurance contract and the transaction of matters relating to the contract. The following acts that involve transacting insurance include: -Issuing or proposing to issue, as an insurer, an insurance contract -Taking or receiving of an insurance application -Receiving or collecting any consideration for insurance, including a premium, commission, membership fee, or assessment -Issuing or delivering an insurance contract -Directly or indirectly acting as an insurance producer or otherwise representing an insurer
Why might the Commissioner conduct an investigation and hearing?
To find out if the financial condition of an insurer indicates a condition that might make the insurer's continued operation hazardous to policyholders, creditors, or the public ---the Commissioner may, after notice of a hearing, order the insurer to take action to remedy the condition.
What occurs if a health benefit issuer fails to comply with a cease and desist order?
the Commissioner may revoke or suspend the issuer's certificate of authority or other authorization to operate a health benefit plan in this state.
How do you terminate an agent's appointment?
To terminate an agent's appointment, the insurance company must send notice to the Texas Department of Insurance.
The Department has developed guidelines that determine what crimes disqualify persons from licensure due to their serious nature:
-Any offense for which fraud, dishonesty, or deceit is an essential element -Any criminal violation of Texas insurance code, state or federal insurance law, or state or federal securities law that pertains to the business of insurance -Any felony that involves moral turpitude (an act that violates accepted moral standards) or a breach of fiduciary duty -Any offense with the essential elements of criminal homicide, felony assault, arson, robbery, burglary, or theft -Kidnapping, public lewdness, indecent exposure, indecency with a child under age 17, prohibited sexual conduct, certain domestic violence crimes in violation of a court order, stalking, and child pornography -Commission of a misdemeanor or felony, or engaging in fraudulent or dishonesty activity, relating to the duties associated with the license
According to the Texas Insurance Code, an insurance company incorporated in New Mexico is a(n): A. Foreign insurer B. Domestic insurer C. Admitted insurer D. Alien insurer
A. Foreign insurer A company incorporated in another state, such as New Mexico, is considered a foreign insurer.
Life and Health Insurance Counselor A person who:
-Charges a fee or other compensation to examine a life, accident, or health policy, annuity or pure endowment contract to provide advice or other information regarding: ---The policy, plan, or contract terms, conditions, benefits, coverage, or premiums ---The advisability of changing, exchanging, converting, replacing, surrendering, continuing, or rejecting a policy, plan, or contract from an insurer or health plan issuer -Publicly uses a title (e.g. insurance adviser, analyst, counselor, or specialist; policyholders' adviser or counselor) that indicates the person is engaged in the business of giving advice or other information to any person having an interest in a life, accident, or health policy, health benefit plan, or annuity or pure endowment contract A Life and Health Insurance Counselor is prohibited from charging a fee for services IN ADDITION TO earning a commission on the products that he or she recommended to a client.
Agent (License) The Department will issue an agent license if the applicant:
-Is at least 18 years of age -Has not committed an act for which a license may be denied -Submitted the application, appropriate fees, and any other required information -Passed a licensing exam within the past 12 months An "agent" is NOT: -A regular salaried employee or officer who: ---Devotes substantially all of his/her time to activities other than the solicitation of insurance applications ---Does not receive a commission or other compensation directly from the sale of insurance ---Does not solicit or accept insurance applications from the public -An employer, employee, or trustee engaged in the administration or operation of an employee benefits plan if not directly compensated by the insurer issuing the contracts The department may not issue a license as an agent unless it has been determined that the applicant intends to be actively engaged in the soliciting or writing of insurance for the general public and actively engaged in the business if insurance. It is prohibited to license an applicant who has the intent to engage in the business of insurance principally to handle business that the applicant controls only through ownership, mortgage, family relationship, or employment. -The applicant must have the intent to engage in business in which, in any calendar year, at least 25% of the total volume of premiums is derived from persons other than the business controlled by the license applicant. ---This prohibition is known as controlled business.
Exemptions from Examination The department may not require the passing of a licensing examination if the applicant is:
-Renewing an unexpired license -Renewing a license that expired less than 1 year before the date of the application, as long as the previous license was not denied, revoked, or suspended -Applying for a life-only or life, accident and health license and holds a Chartered Life Underwriter (CLU) professional designation -Applying for a property and casualty license and holds a Chartered Property and Casualty Underwriter (CPCU) professional designation
Issuance of an Agency License to a Corporation or Partnership The Department will issue an agency license to a corporation or partnership if the following has been determined:
-The corporation or partnership is organized under the laws of a state and authorized under the corporation or partnership to act as an agent -At least one officer or one active partner is individually licensed by the department separate from the entity for the same line of authority as the agency -All persons transacting insurance are licensed individually and separately from the agency -The corporation or partnership has the ability to pay any amount up to $25,000 it is legally obligated to pay to a customer and was caused by a negligent act, error, or omission -The corporation or partnership intends to be actively engaged in the solicitation or writing of insurance for the general public and is actively engaged in the business of insurance -Each business location acting under the authority of a license is registered separately with the Department -An officer, director, member, manager, partner, or other controlling person of the corporation or partnership has not had a license suspended or revoked, been the subject of a disciplinary action by a regulator of any state, or committed an act for which a license may be denied
To be eligible for a temporary license, an individual must submit an application accompanied by:
-nonrefundable fee -A certificate signed by an agent, insurer, or HMO stating that: ---The applicant is being considered ---wants a temporary license to be issued to the applicant ---The applicant will complete at least 40 hours of supervised training, with at least 10 of those hours completed in a classroom setting, within 14 days from the application date
Temporary Agent
A temporary agent license may be issued by the Department under certain circumstances; -it will be valid for 90 days, and in no case, may be issued or renewed to the same applicant more than once in any consecutive six-month period. To be eligible for a temporary license, an individual must submit an application accompanied by: -The appropriate nonrefundable fee -A certificate signed by an agent, insurer, or HMO stating that: ---The applicant is being considered for appointment by the agent, insurer, or HMO ---The agent, insurer, or HMO wants a temporary license to be issued to the applicant ---The applicant will complete at least 40 hours of supervised training, with at least 10 of those hours completed in a classroom setting, within 14 days from the application date An applicant is not required to pass a written exam to obtain a temporary license; however, a temporary license cannot be issued to an applicant who: -Does not intend to apply for a license to sell insurance or memberships to the general public -Plans to write controlled business A temporary license holder may not obtain commission on sales made to a person with a family, employment, or business relationship.
Who is NOT eligible for an agent license in this state? A. A 17-year-old who passed the licensing exam 6 months ago B. A 43-year-old who submitted the appropriate application and fees 1 month ago C. An applicant intending to be actively engaged in the business of insurance D. An applicant intending to solicit insurance to the general public
A. A 17-year-old who passed the licensing exam 6 months ago Eligible applicants for an agent's license must be at least 18 years old.
A corporation applying for an agency license must meet which of the following requirements? A. All employees must be licensed individually in the same line of authority as the agency B. At least one officer or active partner are individually licensed in the same line of authority as the agency C. The company must be incorporated for at least 5 years prior to applying for the license D. Only the home office of the business entity being licensed as an agency must be registered with the Department
B. At least one officer or active partner are individually licensed in the same line of authority as the agency At least one officer or active partner must be individually licensed in the same line of authority. Only the employees transacting insurance must also be individually licensed. Each business location acting under the authority of a license must be registered separately with the Department. There is no requirement for how long a business has been incorporated prior to applying for an agency license.
The Commissioner may examine the records of an insurance company for the purpose of: A. Setting rates B. Determining solvency C. Approving claims D. Approving coverages
B. Determining solvency The primary purpose of examining the records of an insurance company is to review the financial condition of an insurer and determine solvency.
A Certificate of Authority is issued to an insurer for which of the following reasons? A. It recognizes the insurer for excellence in handling claims B. It certifies the insurer has passed a market conduct exam in this state C. It certifies the agent is authorized to transact insurance in this state D. It certifies the insurer is authorized to transact insurance in this state
D. It certifies the insurer is authorized to transact insurance in this state The Certificate of Authority that gives the insurer approval to act as an insurer is effective until suspended or revoked.
To terminate an agent's appointment, the insurer must: A. Request a hearing through the Department of Insurance B. Notify the Texas Department of insurance to cancel the license C. Require the agent to cancel the license with the Texas Department of Insurance D. Notify the Texas Department of Insurance of the termination of appointment
D. Notify the Texas Department of Insurance of the termination of appointment The insurer must notify the Texas Department of Insurance of the termination of appointment, which does not cancel or terminate the license.
The Commissioner is authorized to perform all of the following duties, except: A. Conduct investigations B. Issue cease and desist orders C. Adopt reasonable rules and regulations to enforce insurance laws D. Suspend insurance licenses for up to 5 years
D. Suspend insurance licenses for up to 5 years The Commissioner may suspend the license for up to 1 year.
License Expiration and Renewal
If not renewed, an insurance license will expire 2 years after the date it was issued. An agent may renew a license that has not expired by filing the required renewal application and paying the renewal fee established by the Department. ---Agents may not renew licenses that have been suspended or revoked. ---Once issued, an original license remains in effect from the date a renewal application is filed until the renewal license is issued or the Commissioner revokes the license. ---A person may renew an expired license if the license has been expired for 90 days or less. ---To obtain a renewal license, the person must file with the Department a renewal application on the appropriate form and make payment for the required renewal fee AND an additional fee equal to one-half the renewal fee. If a license has been expired for more than 90 days, the person may not renew the license and must apply for a new license. Requirements for application of the new license differ based on how long the license has been expired. -If a license has been expired for between 90 days to 1 year: ---Person must file a new application with the Department, along with the license fee and an additional fee equal to one-half the license fee ---Person is NOT required to take a licensing exam -If a license has been expired for 1 year or more: ---Take a licensing exam, if an exam is required for an original license ---Comply with other requirements and procedures for obtaining a new license If a licensee fails to maintain the qualifications necessary to obtain a license, the Department will revoke, suspend, or refuse to renew the license.
Investigation and Notice of Hearings
If the Commissioner determines, upon review and examination of records, that the financial condition of an insurer indicates a condition that might make the insurer's continued operation hazardous to policyholders, creditors, or the public, the Commissioner may, after notice of a hearing, order the insurer to take action to remedy the condition. The impairment of the surplus of an insurance company is prohibited. ---The Commissioner will order an insurer to correct the impairment by bringing the surplus to an acceptable level specified by the Commissioner or to cease doing business in this state. ---After issuing the order, the Commissioner will immediately institute any preceding necessary to determine any further action.
Cease & Desist Orders
If the Commissioner finds that an authorized person is in violation of insurance laws, the Commissioner may issue a cease and desist order. The order must contain a statement of the charges and it must be served by registered or certified mail, return receipt requested, to the affected person's last known address. If a health benefit plan issuer fails to comply with a cease and desist order, the Commissioner may revoke or suspend the issuer's certificate of authority or other authorization to operate a health benefit plan in this state. Request for Hearing -A person affected by an order is entitled to request a hearing to contest the order. ---The person must request the hearing not later than 30 days after the date on which the person receives the order. A request to contest an order must: ---Be in writing ---Be directed to the Commissioner ---State the grounds for the request to set aside or modify the order Hearing -The hearing must be held not later than 10 days after the date the Commissioner receives the request for a hearing, unless the parties mutually agree to a later hearing date.
Certificate of Authority
In order for an insurance company to transact insurance in Texas, it must submit an application for a Certificate of Authority. ---If the Department finds the applicant has complied with state law, it will approve the application and issue the Certificate of Authority authorizing the insurer to engage in the business of insurance. ---The certificate must state the specific kinds of insurance authorized. When issued, a Certificate of Authority is effective until suspended or revoked and must state the specific lines of insurance for which the insurer is authorized to transact business. -Authorized insurers are required to file an annual statement with the Department. ---Failure to file an annual statement as required by law subjects the insurer to suspension or revocation of the certificate of authority. If the Department issues a denial or disapproval of an application for a Certificate of Authority, the applicant may request a hearing. -The Commissioner must request a hearing date no later than 30 days after the applicant's request for the hearing.
Appointment
Licensed agents are not permitted to transact insurance as an agent until they have been appointed by an insurer authorized to transact insurance in this state. ---An agent may represent and act as an agent for multiple insurers. The agent and the insurer involved must notify the department, on a form prescribed by the department with a nonrefundable fee, no more than 30 days from the effective date of the appointment of any additional appointment authorizing the agent to act as an agent for one or more additional insurers. ---This means that the agent may act on behalf of the appointing insurer before the department receives the notice filed. An appointment continues in effect without the necessity of renewal. ---A renewal license issued to an agent authorizes the agent to represent and act for all insurers for which the agent is appointed. Agent appointments remain in force until they are terminated or withdrawn. ---To terminate an agent's appointment, the insurance company must send notice to the Texas Department of Insurance.
How many days does a person have to respond to an inquiry? Any exceptions?
Must respond to it in writing no later than 15 days after receipt ---unless person submits for additional time to respond
Examination of Records
The Commissioner has a duty to examine each insurance carrier that is organized under the laws of Texas and each carrier that is authorized to engage in business in this state. The Commissioner may visit the insurance carrier's principal office for the purpose of investigating the affairs and condition. The Commissioner or appointed examiner must examine the financial condition of an insurer, including its ability to meet its financial obligations and liabilities, as well as its compliance with state law. ---The primary purpose of an examination is to determine solvency of the insurer. An insurer may be examined whenever it is deemed necessary, but domestic and licensed insurers must be examined by the Commissioner or appointed examiner no less frequently than once every 5 years. ---The insurer or agent may be required to provide free access to all books and papers that relate to the insurer or agent's business affairs. The Commissioner may summon and examine under oath any of the insurer's officers, agents, and employees in relation to the insurer's affairs and condition. ---Failing to comply with a request of examination or to provide requested information by the department or appointed examiner will subject the insurer or insurer's agent to disciplinary action.
Commissioner of Insurance
The Commissioner is the Chief Executive and Administrative Officer of the Texas Department of Insurance (TDI) and is appointed by the governor, with the advice and consent of the senate, for a two-year term. Qualifications of appointment require the Commissioner to be a competent and experienced administrator, be well informed and qualified in the field of insurance regulation, and have at least 5 years experience in the administration of business or government, which may include former employment with the TDI. The Commissioner is empowered to make reasonable rules and regulations to enforce existing laws, conduct investigations of violations of the insurance code, hold hearings, issue subpoenas, administer oaths, take testimony, issue cease and desist orders, and assess penalties.
Penalties
The Commissioner may cancel or revoke any authorization, after giving notice and the opportunity for a hearing, if the holder of a license or certificate of authority has violated or failed to comply with the Texas Insurance Code or any rule of the Commissioner. The Commissioner may also: -Suspend the license for up to 1 year -Issue a cease and desist order from the activity determined to be a violation -Order the licensee to pay an administrative penalty -Direct the licensee to make restitution to each Texas resident or insured in the amount, form, and within the period specified by the Commissioner The Commissioner may revoke or modify an insurer's certificate of authority if the insurer does not meet the requirements of law necessary for granting the issuance of a certificate of authority. ---Before doing so, the Commissioner must provide the insurer with at least 10 days' advance written notice before such revocation or modification. ---The notice must state the reason for the action.
General Powers and Duties (Commissioner)
The Commissioner's powers and duties are granted by the Department and state legislature. In addition to administering insurance regulations in Texas, the powers and duties include: -Regulating the business of insurance in this state -Executes and enforces, but does not establish, the state's insurance code and other insurance laws -Ensuring fair competition within the insurance industry to foster competition -Protecting and ensuring the fair treatment of consumers and handling insurance-related consumer complaints -Issuing producer licenses and approving, disapproving, or denying applications for a certificate of authority to act as an insurer -Examining the records of an insurer to determine financial condition and solvency
Licensing Persons with Criminal Backgrounds
The Department views the relationship between licensees and the public to be one where the public places its trust in licensees and relies upon them to act legally and ethically with respect to insurance products, which are often complex. ---Therefore, the Department requires licensees to be honest, trustworthy, and reliable.
If a license has been expired for more than 90 days,
the person may not renew the license and must apply for a new license. Requirements for application of the new license differ based on how long the license has been expired. ---90 to 1 year ---1 year or more
