Texas General Insurance Laws
Lauri did not realize her adjusters license had expired until two months after its expiration date. The current exam fee is $50. How much will it cost Lauri to renew her license?
$75 An applicant for a renewal license whose license has expired for less than 90 days must pay the license fee plus an additional fee equal to the one-half the original license fee.
The following are not required to take an adjuster's license exam:
-Persons holding a CPCU® (Chartered Property Casualty Underwriter) or AIC (Associate in Claims) designation -Persons who completed a certified adjuster prelicensing education program and passed an exam that meets insurance code requirements -Persons who had an adjuster's license that expired more than 90 days but less than one year earlier
The department may also deny a license to individuals or discipline existing licensees who have done any of the following:
-Willfully violated a state insurance law -Intentionally made a material misstatement on the license application -Attempted to obtain, or actually obtained, a license by fraud or misrepresentation -Misappropriated, converted, or illegally withheld money belonging to an insurer, an insured, or a claimant -Engaged in other fraudulent or dishonest acts or practices -Materially misrepresented the terms and conditions of an insurance policy -Encouraged a policyholder to surrender or replace an existing policy by inaccurately comparing its terms or conditions -Been convicted of a felony -Offered a rebate or kickback to an insured -Sought or obtained an insurance license primarily for the purpose of insuring himself, a member of his family, or a business associate rather than insuring the general public.
In Texas, any person who adjusts insurance claims for an insurance company is considered an adjuster. The adjuster may be an individual, operating as an independent contractor, or an employee of any of the following:
-adjustment bureau -association -insurance agent -independent contractor -insurance company -managing general agent (MGA)
Anyone supervising claims handling is also considered an adjuster. However, the Texas insurance code does not consider any of the following to be an adjuster:
-an attorney who does not represent himself or herself as an adjuster but occasionally includes adjusting insurance losses as part of his or her legal practice -an insurance company's salaried employee who does not regularly adjust, investigate, or supervise insurance claims -any party, such as an attorney, engineer, photographer, or a private detective, hired only to provide technical assistance to a licensed adjuster -an insurance agent who processes undisputed or uncontested claims for the insurer -a clerical claims department or agency employee who does not negotiate claims -a person who handles, life, accident, and health claims (This exemption does not apply to workers compensation claims) -someone who handles easements and other right-of-way agreements and handles only claims related to those agreements -a person hired to investigate claims-related insurance fraud but not to adjust or evaluate claims. -a public adjuster -an individual whose duties are limited to obtaining or providing claims information and entering it into an automated system -a nonresident adjuster who is -adjusting a single loss in Texas -adjusting catastrophe losses -acting as a temporary substitute for a licensed Texas adjuster
The practices listed in this lesson are prohibited in Texas as unfair practices involving the settlement of insurance claims by an insurer. While the list is lengthy, the unfair practices can be grouped into three major categories:
-failure to respond to a claim promptly or failing to respond at all; -misrepresenting the terms of the policy so as to deny liability when in fact the policy calls for payment of the claim; and -stalling or unreasonably denying claims so regularly that the insurer is a frequent subject of complaints or lawsuits.
To qualify for CE or prelicensing certification, a course must enhance the student's knowledge, understanding, and professional competence concerning one or more of the following topics:
-insurance principles and coverages -applicable laws and rules -recent and anticipated coverage changes -technical policy provisions and underwriting guidelines and standards -law and the licensee's duties and responsibilities -consumer protection -insurance ethics -insurance agency management
TDI is responsible for
-issuing certificates of authority to insurers wishing to market insurance products in Texas (it is illegal for an insurer to transact insurance business in Texas without a certificate of authority); -overseeing the marketing practices and solvency of the insurers that are authorized to do business in the state of Texas; -establishing product standards, including required and prohibited provisions in insurance contracts; -licensing producers to sell insurance products; -conducting investigations to determine whether there have been violations of insurance law; -making reasonable rules and regulations necessary to implement Texas insurance laws; -taking legal action to enforce the law, including issuing cease and desist orders and imposing penalties on violators; -administering the state's workers compensation system; and -protecting consumers and ensuring fair competition in the insurance industry.
The unfair claims settlement practices act applies to virtually all types of insurers, including not only stock and mutual insurance companies but also insurers operated as a proprietorship, partnership, or unincorporated association. These include all of the following types of companies:
-life, health, or accident insurance company; -fire or casualty insurance company; -hail or storm insurance company; -title insurance company; -mortgage guarantee company; -mutual assessment company; -local mutual aid association; -local mutual burial association; -statewide mutual assessment company; -stipulated premium company; -fraternal benefit society; -group hospital service corporation; -county mutual insurance company; -Lloyd's plan; -reciprocal or interinsurance exchange; and -farm mutual insurance company.
Insurers must maintain a complete record of all complaints received during the preceding three years or since the date of the insurer's last examination by TDI, whichever period is shorter. The record must indicate:
-the total number of complaints -the classification of complaints by line of insurance -the nature of each complaint -the disposition of the complaints -the time spent processing each complaint
The following types of courses do not qualify for CE credit:
-training concerning a specific company's marketing and business practices -courses in general business skills such as accounting or computer use -soft-skills courses, such as time management or sales skills -prelicensing exam courses -courses that merely define terms or recite statutes, rules, legal principles, or theories without applying them to the insurance business.
certified course
A certified course is a classroom, classroom equivalent, or self-study course offered by a registered provider and approved by the TDI. It is up to the course provider to apply for and obtain certification. A provider who has applied for certification may not advertise that the course has been certified but may advertise the course as "Pending certification by the Texas Department of Insurance." The provider's name and TDI provider number must be included in courses that refer to course certification.
Fees [Ins. 4101.057]
A license fee, not to exceed $50, must be paid biennially (once every two years). An applicant for a renewal license whose license has expired for less than 90 days must also pay an additional fee equal to one-half the original license fee. For example, Larry's adjuster's license expired a month ago, and the regular license fee is $50. Larry must pay $75 to renew his license. There is an additional fee for a duplicate license.
A licensed adjuster who is called to active military service in a combat theater may also request an extension of time for meeting CE requirements.
A licensed adjuster who is called to active military service in a combat theater may also request an extension of time for meeting CE requirements. The request must be made before the end of the reporting period it applies to, and it must include documentation to support the request.
market conduct exam
A market conduct exam is an investigation by insurance regulators to determine if an insurer has followed state laws relating to marketing, advertising, sales, underwriting, rating, and claims handling practices.
Claimant
A person making or having made a claim.
reinsurance reserve
A reinsurance reserve is a fund providing for the return of unearned premiums on policies that are canceled.
reporting period
A reporting period, usually a two-year period, is the period from the issue date or last renewal date of the license to the expiration date of the license.
Claim
A written request or demand a Texas resident files with an insurer for payment of funds or the providing of services under the terms of a policy, certificate, or binder of insurance.
Unfair Claims Practices
All states have unfair claims practices laws that describe certain prohibited types of claims handling behavior. Because these laws describe undesirable behavior, a claim adjuster may generally infer that the behaviors opposite to these described as unfair are considered desirable. In any case, claims ethics begins with avoiding unfair claims practices.
Electronic Transfers [Ins. 201.004]
Among the Commissioner's duties is the responsibility for handling any funds from penalties, fees, or other sources held for the benefit of the state, including the duty to use electronic means to transfer any funds over $500,000.
An adjuster must
An adjuster must apply for an emergency license within five days after beginning work as a CAT adjuster. To qualify for an emergency license, the emergency adjuster's application must be certified by a licensed adjuster or an insurer authorized to do business in Texas. Whoever certifies the emergency adjuster's application is responsible for that person's claims practices. The applicant need not be a Texas resident or an otherwise licensed adjuster.
An adjuster who has been continuously licensed by the TDI for 20 years or more may apply for an exemption from the CE requirement.
An adjuster who has been continuously licensed by the TDI for 20 years or more may apply for an exemption from the CE requirement. Nonresident licensees who meet their resident state's CE requirements are also exempt. Documentation is, of course, required.
License Reinstatement or Reissuance [Ins. 4101.202]
An adjuster whose license has been suspended, revoked, or nonrenewed may apply for reinstatement. Before restoring the license, the Commissioner must determine that the reason why the license was suspended, revoked, or nonrenewed no longer exists.
An emergency license fee
An emergency license fee, not to exceed $20, must be paid to the TDI within 30 days after the license is issued. An emergency license is good for 90 days, but the Commissioner may extend it for an additional 90 days.
An extension of time to complete the CE requirement,
An extension of time to complete the CE requirement, or a waiver of that requirement, may be granted due to the licensee's illness, medical disability, or other circumstances beyond his or her control. Business reasons do not qualify as circumstances beyond the licensee's control. The licensee must apply for an extension, and the TDI will determine whether, or for how long, it will be granted.
Insurer's Deposit with Comptroller [Ins. 481.001 to.009]
An insurer may voluntarily deposit funds with TDI as a condition to transacting business in Texas if it is required to do so in its home state. TDI will hold these funds for the protection of the insurer's policyholders and creditors. When the Commissioner is assured that there is no longer a need to hold the deposited funds, they may be returned to their owner.
Written communication
Any communication that is documented by publication or otherwise being written onto a medium which is capable at the point of receipt of being viewed, stored, retrieved and reproduced by the recipient without any transcription. Such communication expressly includes, but is not limited to, facsimile transmissions and electronic mail transmissions.
Complaints [Ins. 521.003, .004]
Any written communication to an insurer, not solicited by the insurer, expressing a grievance relating to an unfair claims settlement practice is considered a complaint. However, a misunderstanding or a problem of misinformation that is resolved promptly by clearing up the misunderstanding and/or supplying the appropriate information to the person's satisfaction is not considered a complaint. If a written complaint is filed with TDI, the department will notify each complaining party of the status of the complaint at least once per quarter unless giving the notification would jeopardize an undercover investigation. The department will keep records of every complaint it receives.
Complaint
Any written communication to an insurer, not solicited by the insurer, expressing a grievance relating to an unfair claims settlement practice. A complaint is not a misunderstanding or a problem of misinformation that is resolved promptly by clearing up the misunderstanding and/or supplying the appropriate information to the person's satisfaction.
Required Exam and License [Ins. 4101.051, .054]
Anyone acting as an adjuster or representing himself or herself to be an adjuster in Texas must be licensed. To obtain an adjusters license, a person must complete the prescribed application form, meet certain qualifications, and pass a licensing exam which, of course, must be taken in person. The TDI may also require an oral examination. The examination tests the applicant's knowledge concerning the types of insurance that the licensee may deal with. It also tests the applicant's knowledge concerning a licensed adjuster's duties and applicable state laws. The commissioner may prohibit an applicant who fails to pass an exam from being retested until a reasonable waiting period has passed.
Code Enforcement
As the head of the state's Insurance Department, the Commissioner is responsible for enforcing and administering all laws pertaining to insurance in the state of Texas, as well as other laws that grant jurisdiction to the TDI or apply to the TDI or to the commissioner
Powers and Duties of the Commissioner [Ins. 404.051 to .053]
As the head of the state's Insurance Department, the Commissioner is responsible for enforcing and administering all laws pertaining to insurance in the state of Texas, as well as other laws that grant jurisdiction to the TDI or apply to the TDI or to the commissioner. The Commissioner derives authority from the Insurance Code and other state insurance laws and from Title 5 of the Labor Code and other Texas workers compensation laws.
At least once every five years—
At least once every five years—more often if necessary--the principal office of every insurance carrier that is organized under Texas law or authorized to do business in Texas should be visited by a representative of the TDI. The examiner examines the carrier's financial condition and determines its ability to meet its liabilities and comply with relevant state laws. This audit may be conducted together with representatives of other state insurance departments. The examination covers a period extending from the last day covered by the most recent examination through December 31 of the year preceding the current examination.
Authorization
Authorization means a permit, license, certificate of authority, certificate of registration, or other authorization issued or existing under the commissioner's authority or the Texas Insurance Code.
Examination Fees [Sec. 19.601]
Before taking the examination, an applicant for an adjuster's license must submit the required nonrefundable examination fee along with the application. An applicant who fails to take the exam or who takes it but does not pass it is not entitled to a refund.
First-party coverage
Benefits and other rights provided by an insurance contract to an insured. Fire insurance, for example, provides first-party coverage.
Third-party coverage
Benefits and other rights provided by an insurance contract to any person other than the insured. Liability coverage, for example, provides coverage against claims brought by a third party who makes a claim against an insured.
If a major hurricane strikes Houston, many insurers will bring in catastrophe (CAT) adjusters from other states to deal with the surge in claims. How, if at all, may these CAT adjusters be licensed?
CAT adjusters in Texas may qualify for an emergency adjuster license. Texas law permits an emergency adjusters license to be issued when an emergency results from a disaster.
Commissioner
Commissioner refers to the commissioner of insurance.
Criminal Penalty [Ins. 4101.203]
Criminal penalties of up to $500 and/or six months in the county jail may be imposed on an unlicensed person who acts as an adjuster or represents that he or she is an adjuster. An adjuster who adjusts claims of a type for which the adjuster is not licensed is subject to the same sanctions.
Because Jacob M. Pierce had a felony record, he stated in his adjusters license application that his full legal name was Jake Pierce. If the TDI discovers this intentional misstatement, it may
Deny Jake's license. The department may deny a license to individuals who have intentionally made a material misrepresentation on the license application.
Department or TDI
Department or TDI refers the Texas Department of Insurance.
Even if a licensee has another type of license
Even if a licensee has another type of license, he or she must complete at least half the required CE hours in a certified classroom or classroom equivalent course.
Although he was an honors student in college, Berto did not pass the Texas adjusters license exam. Under what circumstances, if any, is Berto entitled to a refund of the exam fee?
He is not entitled to a refund. An applicant who takes the exam but does not pass it is not entitled to a refund.
Reporting Requirements [Ins. 542.006; Sec. 21.204]
If the Commissioner decides that the insurer's record on handling of complaints requires it to be subject to closer supervision, TDI can require it to file regular reports on the number of claims filed, denied, and settled, as well as the number of claims that have resulted in lawsuits.
Hearings
If the Commissioner intends to bring disciplinary action against a licensee for violating the insurance code, the Commissioner may schedule a hearing no earlier than 21 days after giving notice to the licensee. An adjuster facing potential disciplinary action may also request a hearing.
Prohibited Examination of Tax Returns [Inc. 542.004]
In addition to the practices listed above, it is an unfair practice to require a claimant, as a condition of settling a claim, to produce the claimant's federal income tax returns for examination or investigation by the insurer unless a court orders the claimant to produce those tax returns, the claim involves a fire loss, or the claim involves a loss of profits or income.
Texas General Insurance Laws
Insurance is one of the most highly regulated businesses in the United States. Insurance attracts regulatory attention because insurance protects individuals from large losses from which they otherwise would not be able to recover. The disparity of economic power between an insurer and individuals needing insurance can lead to abusive business practices. Therefore, governmental entities have enacted and enforced laws to regulate the insurance industry for the protection of consumers and for the preservation of the insurance system as a whole.
Insurers and their representatives may be disciplined as the result of a complaint.
Insurers and their representatives may be disciplined as the result of a complaint. A complaint is defined as any written communication to an insurer, not solicited by the insurer, expressing a grievance relating to an unfair claims settlement practice. However, a complaint is not a misunderstanding or a problem of misinformation that is resolved promptly by clearing up the misunderstanding or supplying the appropriate information to the person's satisfaction.
Many property and casualty insurance products and procedures are more or less common to all states.
Many property and casualty insurance products and procedures are more or less common to all states. However, each state has its own rules and regulations, however, some of which are different from those that apply elsewhere. In the following lessons, we examine those laws and regulations that apply specifically to property and casualty insurance transactions in the state of Texas.
continuing education (CE)
Many states that require licensing also require a specified number of continuing education (CE) credits in order to renew the license. CE is important for adjusters because new state laws and court decisions frequently affect how claims are handled or who is covered under various insurance policies.
Emergency Adjuster License [Ins. 4101.101]
Natural catastrophes, such as a hurricane, produce many more claims than an insurer's normal claims team in that area is equipped to handle on a timely basis. Therefore, insurers often bring in adjusters (sometimes called catastrophe adjusters or CAT adjusters) from other states to help handle the resulting claims load. Texas law permits an emergency adjusters license to be issued when an emergency results from a disaster such as an act of God, a riot or civil commotion, or a wildfire.
Homer's insurance is written by Moe Insurance Company. When a diamond ring is stolen from his locked car, Homer files an auto insurance claim against Moe. Ned, the claims adjuster, denies the claim and tells Homer that auto insurance does not apply to personal property inside the car. Later Ned discovers that Moe also writes Homer's homeowners insurance, which would cover the theft claim. What, if anything, should Ned do to avoid engaging in an unfair claims settlement practice?
Ned should notify Homer that he appears to have coverage under another of his Moe Insurance policies. Ned should notify Homer that he appears to have coverage and his homeowners policy; Ned should not knowingly misrepresent pertinent facts or policy provisions relating to the coverage at issue.
Insurer Impairment Prohibited [Ins. 404.051 to .053]
Once an insurer is issued a license and becomes admitted, different state regulations require it to maintain minimum amounts of working capital on a going-forward basis. This is generally considered to be insurance regulators' most important activity. An insurer that cannot keep its promise to pay for a covered loss because of its bankrupt condition can be devastating to an insurance consumer.
Requirements for Prelicense and Continuing Education Courses [Sec. 19.1001 to .1018]
Prelicensing courses may only be offered as a complete course of study for a particular adjuster's license. The prelicensing course must include topics specified by the TDI. Classroom, classroom equivalent, and self-study instruction are the available options. Licensed adjusters are required to complete 30 hours of CE by taking certified courses within each reporting period. A reporting period, usually a two-year period, is the period from the issue date or last renewal date of the license to the expiration date of the license. Licensees may only count CE courses completed during the reporting period. Licensees with more than one license are not required to complete more than 30 hours of CE courses, but they are required to complete two hours of ethics or consumer protection courses.
Three types of adjuster's licenses may be issued:
Property, casualty, and surety. Workers compensation, employers liability, and USL&H (U.S. Longshore and Harbor Workers Compensation Insurance) All lines (for adjusters who qualify to handle claims in the two foregoing categories)
According to weather reports, there were no storms in or near Plainfield on the date Franklin says his home was struck by lightning. Therefore, Adjuster Jeremy did not examine Franklin's damaged home before denying the claim. What unfair claims practice did Jeremy commit?
Refusing to pay a claim without conducting a reasonable investigation It is an unfair practice to refuse to pay a claim without conducting a reasonable investigation based on all available information.
License Expiration and Renewal [Ins. 4101.061]
Rules concerning license expiration and renewal are set by the Commissioner or any applicable provision of Texas insurance law.
Investigations and Examinations [Ins. 38.001; 401.051 to .062]
State departments of insurance periodically audit the market conduct of insurers and their representatives by conducting market conduct exams. A market conduct exam is an investigation by insurance regulators to determine if an insurer has followed state laws relating to marketing, advertising, sales, underwriting, rating, and claims handling practices. State regulation is not uniform, so conduct that might be permissible in another state is not necessarily legal in Texas.
Complaints, Discipline, and Remedies
State insurance departments answer hundreds of insurance questions every day. Many of these involve complaints concerning an insurer's claim handling. Complaints may form the basis for legal enforcement actions. These actions sometimes result in restitution to consumers.
Insurer
Stock and mutual life, health, accident, fire, casualty, fire and casualty, hail, storm, title, and mortgage guarantee companies; mutual assessment companies; local mutual aid associations; local mutual burial associations; statewide mutual assessment companies; stipulated premium companies; fraternal benefit societies; group hospital service organizations; county mutual insurance companies; Lloyds; reciprocal or interinsurance exchanges; and farm mutual insurance companies.
Following receipt of a written complaint, the Texas Department of Insurance uncovers evidence of an elaborate money-laundering operation and determines that an undercover investigation is necessary to obtain enough evidence to pursue a conviction of the company's officers.
TDI can withhold any notices to the complaining party until the investigation is completed. When a written complaint is filed with TDI, the Department will notify the complaining party of the complaint's status at least once per quarter unless giving the notification will jeopardize an undercover investigation, in which case notices can be withheld until the investigation is completed.
Commissioner as Department Chief [Ins. 31.021]
TDI is headed by the Commissioner of Insurance, who is the department's chief executive and administrative officer. The Commissioner is appointed by the governor and serves a two-year term.
Insurer's Reserve Computed [Ins. 491.051, .052]
TDI will compute the reinsurance reserve necessary for all risks that an authorized insurer is covering in the state. A reinsurance reserve is a fund providing for the return of unearned premiums on policies that are canceled. Unearned premium is that portion of the policy premium that has not yet been "earned" by the company because the policy still has some time to run before expiration. A property or casualty insurer must carry all unearned premiums as a liability in its financial statement since, if the policy should be canceled, the insurer would have to pay back a certain part of the original premium.
The number of complaints against Malo Insurance Company that the TDI has received indicate that it does not meet minimum performance standards. Who is responsible for investigating these complaints?
Texas Department of Insurance The Texas Department of Insurance (TDI) is required to investigate an insurer if the number and type of complaints against the insurer indicate that it does not meet minimum performance standards.
Marva wants to bring a problem to the attention of the person or agency responsible for administering Texas' workers compensation system. Who or what has that responsibility?
Texas Department of Insurance (TDI) Among other things, the Texas Department of Insurance (TDI) is responsible for administering the state's workers compensation system.
While reading the Texas Insurance Code, Dana came across a statement that referred to "the Commissioner." "Whom," he asked, "does this refer to?"
Texas Department of Insurance's chief executive and administrative officer The Commissioner of Insurance is the Texas Department of Insurance's chief executive and administrative officer.
What agency is responsible for enforcing the insurance laws passed by the Texas state legislature?
Texas Department of Insurance. The TDI is responsible for enforcing insurance laws passed by the legislature and for developing rules and regulations to aid in that enforcement.
Texas unfair settlement claims practices law
Texas unfair settlement claims practices law, like the law in other states, is patterned after the National Association of Insurance Commissioners (NAIC) Unfair Claims Settlement Practices Act and the NAIC's Unfair Property/Casualty Claims Settlement Practices Model Regulation. However, no two states' unfair claims settlement practices acts and regulations read exactly the same. Texas adjusters must be aware of the act and regulations that apply to Texas claims.
The CE requirement may be prorated under certain circumstances.
The CE requirement may be prorated under certain circumstances. The TDI may prorate CE to coincide with renewal of another license. Proration may also apply to an adjuster who has resident claims adjuster's license in another state but becomes a Texas resident between renewals of the Texas license. In this situation, one credit hour of CE is required for each whole month between the issue or last renewal date of the license, or the date of Texas residency, and the next renewal date of the license, unless the reporting period is less than six complete months long. Licensees with prorated schedules must, however, complete at least two hours of certified ethics or consumer protection courses.
Minimum Standards [Ins. 542.007; Sec. 21.205]
The TDI can compare the claims handling performance of the insurer to minimum standards and, if the insurer does not meet those standards, hold hearings, issue cease and desist orders, and take further actions as necessary.
Investigation of Complaints against Insurers [Ins. 542.008]
The TDI is required to investigate an insurer if the number and type of complaints against an insurer indicate that it does not meet minimum performance standards, or an insurer receives a disproportionate number of complaints when compared with insurers writing similar business.
Duties of the Department of Insurance [Ins. 31.002]
The Texas Department of Insurance (TDI) regulates the state's insurance industry. TDI is responsible for enforcing insurance laws passed by the legislature and for developing rules and regulations to aid in that enforcement.
Authority to Make Rules [Ins. 4001.005]
The commissioner has the authority to adopt rules necessary to implement the Texas insurance code and to meet the minimum requirements of federal law, including regulations.
The commissioner is responsible for
The commissioner is responsible for conducting investigations to determine whether insurance law has been violated. The insurance code authorizes the TDI to address reasonable inquiries to insurance companies or other authorized insurance representatives concerning matters necessary to discharge the TDI's duties or other matters that the TDI considers necessary for the public good or for the public good.
The insurance code requires that
The insurance code requires that the insurance carrier give the examiner given free access to all books and papers of the carrier or the carrier's agents that relate to the carrier's business activities. The examiner is also authorized to examine officers, agents, or carrier employees under oath concerning the carrier's business activities. The commissioner may subsequently use information discovered during this examination in connection with legal or regulatory proceedings. However, the information obtained during the examination is confidential and is not to be publicly disclosed unless it is used as evidence in a hearing.
Penalties [Ins. 86.001, .002; 4005.102]
The insurance commissioner may revoke or modify the certificate of authority of any carrier that fails to meet the legal requirements under which the certificate is granted. At least 10 days' advance notice of this revocation or modification, the commissioner must notify the carrier of its intentions and state a specific reason for the action.
Policyholder
The owner of a policy, certificate, or binder of insurance, and any insured, named insured, or obligee under a bond.
Adjuster Licensing Requirements
The purpose of adjuster licensing requirements is to ensure that consumers are dealing with knowledgeable claims representatives, increasing the likelihood that the insured individual or business will receive a fair settlement. Licensing requirements for adjusters vary by state. Some states have few requirements, while others require the completion of prelicensing classes or passing a state licensing exam.
To ensure that insurance companies have the funds to pay claims and expenses
To ensure that insurance companies have the funds to pay claims and expenses, TDI examines the financial condition of companies licensed in Texas and requires insurers to maintain specified levels of surplus. TDI also publishes company profiles that show a company´s complaint record and other useful information, including enforcement actions taken against the company and company history.
To perform a market conduct exam
To perform a market conduct exam, state regulators comprehensively review the insurer's business records, including both underwriting and claims files. The examination focuses on general business patterns or practices of an insurer, not just specific errors. Afterwards, the department of insurance prepares a report that is made available to the public. The commissioner will then decide what action, if any, is appropriate based on the findings of the report. An insurer that is found to have committed improper market conduct may be subject to sanctions.
Continuing Education [Ins. 4101.059]
To renew his or her license, an adjuster must participate in a CE program. This must include at least two hours of CE in certified ethics or consumer protection courses. The consumer protection courses must relate to specific consumer protection laws specified by the department.
Unearned premium
Unearned premium is that portion of the policy premium that has not yet been "earned" by the company because the policy still has some time to run before expiration
Business day
a weekday; not a Saturday, a Sunday, or a holiday.
A claimant is upset about the way his claim was handled. He files complaints with the Texas Department of Insurance (TDI) against his insurance agent, the adjuster, and his insurance company. Against whom may the TDI take disciplinary action?
adjuster, agent, and insurance company The grounds for discipline apply to insurers and the individuals who serve as their representatives.
Rhoda informed the TDI the insurer that denied her liability insurance claim was guilty of an unfair settlement practice. However, the denial was due to a misunderstanding that was quickly resolved. Therefore, the problem she reported to the TDI will not qualify as a(n)
complaint A misunderstanding or a problem of misinformation that is resolved promptly by clearing up the misunderstanding to the person's satisfaction is not considered a complaint.
Alyssa was certain that she had flood coverage, so when Bluebonnet Insurance Company denied coverage under her homeowners policy for flood damage to her home she called the TDI to report the company's denial. A TDI representative informed Alyssa that she should instead file a claim under her flood insurance policy. Alyssa's grievance with Bluebonnet's handling of her claim
does not count as a complaint because it was merely misinformation that was promptly resolved. A complaint is not a misunderstanding or a problem of misinformation that is resolved promptly by clearing up the misunderstanding or supplying the appropriate information.
Who appoints the chief officer of the Texas Department of Insurance?
governor The chief officer of the Texas Department of Insurance is the Commissioner of Insurance, who is appointed by the governor for a two-year term in each odd-numbered year and is confirmed by the Texas Senate.
Rocky is a Philadelphia-based property claims adjuster for Real Insurance Company, which has its home office in Los Angeles. If he is assigned to catastrophe duty to handle his company's Texas policyholders' claims following a natural disaster, he will qualify for an emergency license if
his application is certified by Real Insurance Company. To qualify for an emergency license, the adjuster's application must be certified by a licensed adjuster or an insurer authorized to do business in Texas. Rocky need not otherwise be a licensed adjuster, but he must pay a $20 license fee.
Madelyn left a polite voice message on Dennis' claims office phone asking him to let her know when the pending investigation of her claim was completed. Unfortunately, nothing has changed since their last contact. In this situation, Dennis should
immediately respond to Madelyn, give her that information, and note her query and his response in her claim file. Failure to promptly respond to a claimant's request for a review of the claim is an unfair practice.
One of the men conducting a TDI market conduct exam requests Luisa, a claims adjuster, to submit to an examination under oath. Under these circumstances, Luisa
is required to submit to the exam. Luisa should comply because the examiner is authorized to examine carrier employees under oath concerning the carrier's business activities.
A carrier or agent that does not permit an examination or require the requested information
is subject to disciplinary action.
Doug wanted to work as an insurance claims adjuster, but he learned that Texas law does not permit him to do so without "authorization." What type of authorization must Doug have?
license As used in Texas insurance laws, authorization means a permit, license, certificate of authority, certificate of registration, or other authorization issued or existing under the commissioner's authority or the Texas Insurance Code.
Alexander, who met the necessary qualifications and paid the required fee, has an emergency adjusters license that took effect on April 1 of this year. Unless the Commissioner extends this license, it will expire
on June 29. An emergency license is good for 90 days, but the Commissioner may extend it for an additional 90 days.
What can the Commissioner do if he or she decides that Malo Insurance Company's complaint-handling record requires it to be subject to closer supervision?
require Malo to file regular reports on the number of claims filed, denied, settled, or leading to lawsuits. TDI can require Malo to file regular reports on the number of claims filed, denied, and settled, as well as the number of claims that have resulted in lawsuits.
Texas unfair claims practices laws do not apply to
road hazard warranties sold by tire companies. Road hazard warranties are not subject to the Texas unfair claims settlement practices act.
Benito wants to become a Texas claims adjuster. Which one of the following is not one of the steps he will take to obtain an adjusters license?
take the licensing exam over the internet To become a Texas adjuster, Benito must complete the prescribed application form, meet certain qualifications, and take and pass a licensing exam in person.
Faye had her adjusters license revoked six years ago as the result of her alcoholism. After five years of sobriety, she would like to have her license reinstated. According to Texas insurance law,
the Commissioner may reinstate her license if the reason for the suspension or revocation no longer exists. An adjuster whose license has been revoked may apply for reinstatement, but the Commissioner will not restore the license without determining that the reason for the initial revocation no longer exists.
What is the purpose of the adjuster licensing requirements?
to ensure that consumers are dealing with knowledgeable claims representatives. The purpose of adjuster licensing requirements is to ensure that consumers are dealing with knowledgeable claims representative, increasing the likelihood that insured individuals or businesses will receive fair claims settlements.