HBA-JRA H.B. 2789 76(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 2789 By: Eiland Insurance 4/6/1999 Introduced BACKGROUND AND PURPOSE Subsequent to a review of the relevant statutes by the Agents' Licensing Advisory Committee and report thereon, the commissioner of insurance issued a report on the Agents' Licensing Statutes. This report recommended the creation of a new "specialty" license for businesses providing point of sale insurance products, such as credit insurance, rental car insurance and travel insurance; changes to the Life Insurance Counselor license; removal of the requirement of a place of business in Texas for the adjuster license; and changes to the agricultural agent license. H.B. 2789 provides for the creation of a new "specialty" license to be issued to the business entity/employer, instead of individual employees. Persons holding a Life, Accident and Health license or a property and casualty license are still able to sell these products and do not need to obtain the specialty license. This bill renames the Life Insurance Counselor license as the Life and Health Insurance Counselor license and removes the underlying 01-01 license requirement as well as the required three years prior experience as a life insurance agent. This bill provides for continuing education requirements for life and health insurance counselors. This bill removes the requirement to have a place of business in Texas for adjusters, and applies the provisions of Subchapter A to adjusters, life and health insurance counselors, and agricultural agents. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that rulemaking authority is expressly delegated to the commissioner of insurance in SECTION 1.01 (Article 21.09, Insurance Code), SECTION 2.01 (Article 21.07-2, Insurance Code), SECTION 3.01 (Article 21.07-4, Insurance Code), and SECTION 4.01 (Article 21.14-2, Insurance Code) and to the Texas Department of Insurance in SECTION 3.01 (Article 21.07-4, Insurance Code) of this bill. SECTION BY SECTION ANALYSIS SECTION 1.01. Amends Subchapter A, Chapter 21, Insurance Code, by adding Article 21.09, as follows: Art. 21.09. SPECIALTY LICENSES Sec. 1. GENERAL PROVISIONS. (a) Authorizes the commissioner of insurance (commissioner) to issue a specialty license to an applicant who is an entity and who has complied with the requirements of this article. Provides that a specialty license authorizes the license holder to act as an agent for the types of insurance specified in this article for any insurer authorized to write these types of insurance in this state. Provides that a person who holds a license under this articles is known as a "specialty license holder." (b) Provides that an applicant for a specialty license must submit to the commissioner a written application, signed by an officer of the applicant, on a form and supplements to the form prescribed by the commissioner, that contains the information prescribed by the commissioner; a signed and affirmed certification by the insurer authorized to do business in this state that is to be named in the specialty license that states certain information; and a nonrefundable license fee set by the Texas Department of Insurance (TDI) in an amount necessary to administer this article. (c) Provides that a specialty license issued under this article authorizes a salaried employee of the license holder to act as an agent with respect to the kinds of insurance specified in this article if the salaried employee is trained under Subsection (d) to act individually on behalf of the specialty license holder and is acting on behalf of and under the supervision of the license holder. (d) Requires each entity licensed under this article to conduct a training program for each individual who is acting on behalf of the license holder with respect to the specific type of insurance. Provides that the training program must be submitted to the commissioner for approval before being used and sets forth minimum standards. (e) Requires a specialty license holder acting under this article to comply with all applicable provisions of this subchapter. (f) Provides that, notwithstanding any other provision of this subchapter or any rule adopted by the commissioner, a specialty license holder is not required to treat premiums collected from a consumer purchasing insurance when completing an associated consumer transaction as money received in a fiduciary capacity if the insurer has consented in writing, signed by an officer of the insurer, that premiums need not be segregated from money received by the license holder on account of the associated consumer transaction and the charges for insurance coverage are itemized but not billed to the consumer separately from the charges for the associated consumer transaction. (g) Prohibits insurance from being issued under this article unless brochures containing specific information about the terms of the insurance, possible duplication of coverage, filing process, and any additional information on the price, benefits, exclusions, conditions, or other limitations of the policies required by the commissioner, by rule, and evidence of coverage is provided to each consumer who elects to purchase the coverage. (h) Authorizes the commissioner, if a specialty license holder violates this subchapter, to impose any disciplinary action authorized by Article 21.01-2 (General Provisions Applicable to Certain License Holders), Insurance Code, or impose other penalties, after notice and opportunity for hearing, including suspending the transaction of insurance at specific locations where a violation of this subchapter has occurred, as the commissioner considers necessary or convenient to implement the purposes of this subchapter. (i) Prohibits a specialty license holder from advertising, representing, or otherwise holding out the license holder or any employee of the license holder as a licensed insurance agent under another article of this code unless the entity or individual actually holds the applicable license. (j) Provides that a person who holds a general agent's license issued under Article 21.071, Insurance Code (Legal Reserve Life Insurance Agents; Examination; Licenses) (Chapter 213, Acts of the 54th Legislature, Regular Session, 1955), or Article 21.14 (Licensing of Local Recording Agents and Solicitors; Life, Health and Accident Insurance Excepted; Other Exceptions), Insurance Code, is not required to obtain a specialty license but is subject to the other requirements of this article in the solicitation, sale, or delivery of an insurance product subject to this article. (k) Requires each insurance company appointing an agent under this article to submit a certification of the appointment signed by an officer of the insurer and affirm that the insurer has satisfied itself that the license holder is trustworthy and competent to act as an insurance agent on behalf of the insurer. Sec. 2. RENTAL CAR COMPANIES. Defines "rental agreement," "rental car company," "renter," and "vehicle." Requires the commissioner to issue a specialty license under Section 1 of this article to a rental car company that complies with this section only for the limited purposes set forth in this section. Authorizes the rental car company or franchisee licensed under Section 1 of this article to act as an agent for an authorized insurer only in connection with the rental of vehicles and only with respect to certain excess liability insurance, accident and health insurance, personal effects insurance, and any other coverage that the commissioner approves as meaningful and appropriate in connection with the rental of vehicles. Prohibits insurance from being issued unless the rental period does not exceed 30 consecutive days and the brochures or other written materials containing the disclosures required by Section 1(g) of this article are prominently displaced and readily available to the prospective renter. Sec. 3. CREDIT INSURANCE. (a) Defines "credit insurance," "credit insurance agent," and "credit insurance property." (b) Authorizes the commissioner to issue a license under Section 1 of this article to a retail distributor of goods, an automobile dealer, or a bank that complies with this section only for the limited purposes set forth in this section, notwithstanding any other provision of this article or this code. (c) Authorizes a credit insurance agent, on appointment by the insurance company, to act as the agent of any company authorized to engage in the business of insurance under this code in the sale of any type of credit insurance that the company is authorized to write. (d) Prohibits insurance from being issued under this section unless the brochures or other written materials containing the disclosures required by Section 1(g) of this article are prominently displayed and readily available to the prospective consumer. Sec. 4. ASSIGNMENT OF COMMISSIONS. (a) Authorizes certain banking institution employees or shareholders who are licensed as agents under this subchapter and who enter into a contract with an insurer to act as the insurer's agent in certain transactions to assign and to transfer to the banking institution any remuneration to be paid to the agent under the contract with the insurer, notwithstanding any other provision of this article or code. (b) Authorizes certain automobile dealership employees or shareholders who hold a valid state-issued dealer's general distinguishing number or of a retailer who holds a valid license issued as prescribed by this section who enters into a contract with an insurer to act as the insurer's agent in certain transactions to assign and to transfer to the dealer or retailer any remuneration to be paid to the agent under the contract with the insurer, notwithstanding any other provision of this article or code. Sec. 5. TRAVEL INSURANCE LICENSE. (a) Defines "planned trip," "travel agency," and "traveler." (b) Authorizes the commissioner to issue a specialty license under Section 1 of this article to a travel agency, the franchisee of a travel agency, or a public carrier that complies with this section only for the limited purposes set forth in this section, notwithstanding any other provision of this article or code. (c) Authorizes the travel agency or franchisee licensed under Section 1 to act as an agent for any authorized insurer only in connection with the sale or arrangement of transportation or accommodations for travelers and only with respect to: (1) accident and health insurance that provides coverage to a traveler for accidental death or dismemberment and for medical expenses resulting from an accident involving the traveler that occurs during the planned trip; (2) insurance that provides coverage to a traveler for consequential damages due to trip cancellation or interruption; (3) personal effects insurance for damage occurred during a trip; (4) life insurance covering risks of travel during a planned trip up to $10,000 on any one life; or (5) any other coverage that the commissioner may approve as meaningful and appropriate in connection with the transportation or accommodations arranged through a travel agency. (d) Prohibits insurance from being issued under this section unless the brochures or other written materials containing the disclosures required by Section 1(g) of this article are prominently displayed and readily available to the prospective traveler. Sec. 6. RULES. Authorizes the commissioner to adopt rules necessary to implement this article and to meet the minimum requirements of federal law and regulation. ARTICLE 2. LIFE AND HEALTH INSURANCE COUNSELOR LICENSE SECTION 2.01. Transfers Chapter 29, Acts of the 54th Legislature, Regular Session, 1955 (Article 21.07-2, Vernon's Texas Insurance Code) to the Insurance Code, redesignates it as Article 21.07-2, Insurance Code, and amends it as follows: Art. 21.07-2. New Title: LIFE AND HEALTH INSURANCE COUNSELOR LICENSE Sec. 1. DEFINITION OF TERM. Includes accident and health insurance coverage under the provisions of this section. Makes conforming and nonsubstantive changes. Sec. 2. New Title: LICENSE REQUIRED; ISSUANCE BY DEPARTMENT. Prohibits a person from acting as a Life or Health Insurance Counselor, rather than just Life, as defined by Section 1 of this article, unless specifically authorized by a license issued by TDI, rather than the Board of Insurance Commissioners of the State of Texas, under this article. Sec. 3. EXEMPTIONS. Makes conforming and nonsubstantive changes. Sec. 4. CONTRACT, WRITING REQUIRED; DUPLICATES; OTHER REQUISITES. Makes conforming and nonsubstantive changes. Sec. 4a. PROHIBITION OF DUAL COMPENSATION. Prohibits a person licensed under the provisions of this article from being entitled to receive a fee for the same services to the same client as a Life and Health Insurance Counselor if the person is also licensed under Article 21.07-1, Insurance Code, and receives a commission or compensation for services as a licensed agent under that article. Makes conforming and nonsubstantive changes. Sec. 5. MODE OF LICENSING AND REGULATION. Requires licensing and regulation of a Life and Health Insurance Counselor to be in the same manner and subject to the same requirements as applicable to the licensing of agents under this subchapter, except as provided by this article. Provides that an applicant for a Life and Health Insurance Counselor's license must sit for an examination administered under Article 21.01-1 of this code that includes specific subject areas. Requires TDI, without further examination, to issue a license to an individual who, on September 1, 1999, holds a Life Insurance Counselor license issued by TDI. Deletes existing text relating to the submission of proof of licensure as a life insurance agent to the commissioner by an applicant for licensure. Makes conforming and nonsubstantive changes. Sec. 6. INTENT OF LEGISLATURE; STATUTES AND AMENDMENTS APPLICABLE. Makes conforming changes. Sec. 7. New title: VIOLATIONS. Deletes existing text establishing that a person commits a Class C misdemeanor for acting as a life insurance counselor without a license or otherwise violating this Act. Makes conforming changes. Sec. 8. PARTIAL INVALIDITY. Makes conforming and nonsubstantive changes. Sec. 9. CONTINUING EDUCATION. Requires a person who holds a license under this article to complete continuing education as required by rules of TDI or any applicable article of this code. Sec. 10. RULES. Authorizes the commissioner to adopt rules necessary to implement this article and to meet the minimum requirements of federal law and regulations. Sec. 11. REFERENCE IN OTHER LAW. Establishes that a reference in any law to Chapter 29, Acts of the 54th Legislature, Regular Session, 1995, means this article. ARTICLE 3. ADJUSTERS LICENSES SECTION 3.01. Amends Article 21.07-4, Insurance Code (Chapter 407, Acts of the 63rd Legislature, Regular Session, 1973), by amending Sections 15, 16, 17, and 23 and adding Section 24, as follows: Sec. 15. PLACE OF BUSINESS. Requires every licensed adjuster to promptly notify the commissioner of any change in the location of place of business. Makes conforming and nonsubstantive changes. Sec. 16. EXPIRATION AND RENEWAL OF LICENSES. Establishes that expiration and renewal of licenses issued under this Act are governed by rules of TDI or any applicable article of the Insurance Code to another insurance law of this state. Deletes existing text regarding license renewal. Sec. 17. DENIAL, SUSPENSION, OR REVOCATION OF LICENSE. Authorizes TDI to discipline an adjuster or deny an application under TDI rules or any other applicable article of the Insurance Code or another insurance law of this state. Authorizes the rules to specify grounds for discipline of other license holders under this subchapter. Deletes existing text relating to causes for disciplinary actions. Deletes existing text regarding the renewal of a denied, refused, or revoked license. Sec. 23. DUPLICATE LICENSE; FEE. Requires TDI, rather than the commissioner, to collect a fee for a duplicate license in an amount determined by TDI. Makes conforming and nonsubstantive changes. Sec. 24. RULES. Authorizes the commissioner to adopt rules necessary to implement this Act and to meet minimum federal law and regulations. ARTICLE 4. AGRICULTURE AGENTS SECTION 4.01. Amends Article 21.14-2, Insurance Code, as follows: ARTICLE 21.14-2. New title: AGRICULTURAL INSURANCE AGENTS Sec. 1. New title: APPOINTING CERTAIN AGRICULTURAL INSURANCE AGENTS. Authorizes an insurance company that is authorized to engage in the insurance business in this state and whose authority in this state and in each other jurisdiction in which the company is licensed to do business is limited, rather than limiting the insurance business only, to the transaction of the business of crop insurance to appoint and act through agents who hold, rather than qualify for, a license under Article 21.14, subject to this article. Sec. 2. New title: REQUIREMENTS FOR APPOINTMENT. (a) Provides that an insurance company, to appoint a license holder, must submit a completed appointment form to TDI and pay a refundable fee in an amount determined by the commissioner. Provides that the appointment form must bear an endorsement signed by a representative of an insurance company that meets the requirements of Section 1 of this article. Delete language regarding an requirements for an applicant obtaining a license. (b) Makes conforming changes. (c) Authorizes TDI to waive any examination requirement imposed under this subchapter (Agents and Agents' Licenses) for a license applicant seeking a company appointment under this article if the applicant has successfully completed an examination as required under the Federal Crop Insurance Corporation guidelines for delivery of the federal crop insurance program. Deletes language regarding the renewal of a license. (d) Authorizes TDI to accept continuing education hours completed under the guidelines of the Federal Crop Insurance Corporation as satisfying the continuing education requirements imposed under this subchapter. Deletes language regarding continuing education requirements as relating to license renewal. Sec. 3. MULTIPLE APPOINTMENTS AUTHORIZED. Authorizes a license holder under this article to act as an agent for more than one insurance company. Deletes language regarding the suspension or cancellation of a license. Sec. 4. APPLICATION OF OTHER LAW. Provides that this subchapter applies, rather than providing the nonapplicability of Article 21.14, to the licensing and, rather than or, regulation of an agent appointed under this article. Sec. 5. RULES. Authorizes the commissioner to adopt rules necessary to implement this article and to meet the minimum requirements of federal law and regulations. ARTICLE 5. REPEALER SECTION 5.01. Repeals: Section 21 (Rental Car Companies), Article 21.07, Insurance Code, as added by Chapter 820, Acts of the 75th Legislature, Regular Session, 1997; Section 21 (Credit Insurance Agents), Article 21.07, Insurance Code, as added by Chapter 1196, Acts of the 75th Legislature, Regular Session, 1997; and Sections 18 (relating the automatic revocation of an adjuster license) and 19 (relating to the duration of suspension of an adjuster license), Article 21.07-4, Insurance Code. ARTICLE 6. GRANDFATHER PROVISIONS; EFFECTIVE DATE; EMERGENCY SECTION 6.01. Effective date: September 1, 1999. SECTION 6.02. Sets forth grandfather provisions. SECTION 6.03. Emergency clause.