HBA-TYH H.B. 2790 76(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 2790 By: Eiland Insurance 4/6/1999 Introduced BACKGROUND AND PURPOSE Article 21.15-7, Insurance Code, requires the commissioner of insurance to review and evaluate the current agents' licensing statute and make recommendations to the legislature to reduce the number and type of agent licenses, determine which statutory provisions should apply uniformly to all insurance licenses, address new marketing methods, and to address any other problems which may exist. H.B. 2790 consolidates agent licenses and promotes uniformity in the regulation of 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 (Section 4, Article 21.01, Insurance Code), SECTION 1.02 (Sections 1 and 3, Article 21.01-1, Insurance Code), SECTION 1.06 (Section 5A, Article 21.01-2, Insurance Code), SECTION 1.11 (Section 2, Article 21.07, Insurance Code), and SECTION 4.04 (Section 5, Article 21.11, Insurance Code) of this bill. SECTION BY SECTION ANALYSIS ARTICLE 1. GENERAL PROVISIONS APPLICABLE TO ALL INSURANCE AGENTS SECTION 1.01. Amends Article 21.01, Insurance Code, as follows: Art. 21.01. PURPOSE; CONSOLIDATION OF LICENSES; APPLICATION; CERTIFICATE OF AUTHORITY OR LICENSE REQUIRED; RULEMAKING AUTHORITY Sec. 1. PURPOSE. Sets forth the purpose of this subchapter. Sec. 2. CERTIFICATE OF AUTHORITY OR LICENSE REQUIRED. Requires any person acting as an agent or in any manner aiding in the transaction of the business of any insurance company to procure a licence or certificate of authority form the Texas Department of Insurance (department). Deletes reference to the State Board of Insurance (board) and replaces it with the department. Makes conforming and nonsubstantive changes. Sec. 3. APPLICATION. (a) Provides that except as otherwise provided, this subchapter applies to each person licensed as surplus lines agents, variable contract agents, prepaid legal service agents, agents for fraternal benefit societies, agents for a farm mutual insurer, agents for a county mutual insurer, agents to solicit insurance generally, legal reserve life insurance agents, life insurance counselors, managing general agents, insurance adjusters, third party administrators, reinsurance intermediaries, nonresident agents, local recording agents and solicitors, risk managers, agricultural agents nonprofit legal service agents, and agents for a specialty license program established by the department. (b) Provides that except as otherwise provided by law, each reference in this code and other laws of this state to a particular type of license authorizing an agent to engage in the business of insurance in this state means a license designation as made by amendment, enactment, or reenactment of or to Subchapter A (Agents and Agent's Licenses), Chapter 21, of this code by the 76th Legislature, Regular Session, 1999, or subsequent amendments to that subchapter. Provides that a reference in this subchapter to a statutory provision applies to all reenactments, revisions, or amendments of that provision. Sec. 4. RULES. Authorizes the commissioner of insurance (commissioner) to adopt rules as necessary to implement this subchapter and to meet the minimum requirements of federal law and regulations. SECTION 1.02. Amends Article 21.01-1, Insurance Code, as follows: Art. 21.01-1. New title: AGENTS' QUALIFYING EXAMINATION; CONTINUING EDUCATION REQUIREMENTS FOR AGENTS Sec. 1. New title: EXAMINATION ADMINISTRATION. Deletes references to the board and replaces with the commissioner. Deletes authorization for the board, at its discretion, to accept certain examinations as satisfying the examination requirements of persons seeking certain licenses. Deletes reference to solicitors seeking a license as agents. Requires the commissioner to hold a public hearing in accordance with Chapter 2001 ,Government Code, rather than Section 3, Article 6252-13a, V.T.C.S. (Administrative Procedures and Texas Register Act). Makes nonsubstantive changes. (b) Makes conforming changes. (c) Authorizes the commissioner to adopt rules relating to the scope, type, and conduct of the written examinations and the times and places in this state at which the examinations will be conducted. Authorizes the commissioner's rules to designate textbooks, manuals, and other materials to be studied by applicants in preparation for examinations conducted under this subsection. Authorizes those textbooks, manuals, or other materials to consist of material available to an applicant by purchase from the publisher or of material prepared at the direction of the commissioner and distributed to an applicant on request and on payment of the reasonable cost of the material. Requires all examination questions to be prepared from the contents of the textbooks, manuals, and other materials designated or prepared by the commissioner under this subsection. (d) Makes a nonsubstantive change. Sec. 2. EXAMINATION OF LICENSE APPLICANT. (a) Provides that each applicant for a license to act as an insurance agent in this state must submit to a personal written examination that is prescribed by the department and administered in the English or Spanish language, and must pass the examination to the satisfaction of the department. Requires the examination to determine the applicant's competence with respect to the enumerated topics. (b) Requires the department to charge each applicant an examination fee in an amount determined by the department as necessary for administration of the examination. Provides that the fee must accompany each application to take the examination. Provides that the fee is nonrefundable other than for failure of the applicant to appear and take the examination after the applicant has given at least 24 hours' notice of an emergency situation to the department and received the department's approval of refund of the fee. (c) Requires the commissioner to prescribe a limited written licensing examination for applicants for a limited license under Article 21.07-1 (Legal Reserve Life Insurance Agent; Examination; Licenses) or Article 21.14 (Licensing of Local Recording Agents and Solicitors; Life, Health and Accident Insurance Excepted; Other Exceptions) of this code. Requires a limited examination to be administered according to the provisions of this article and shall determine the applicant's competence and understanding of the enumerated topics. (d) Prohibits the department from requiring a person to take an examination under this article if the person meets any of the enumerated conditions. Sec. 3. CONTINUING EDUCATION REQUIREMENTS. (a) Provides that the department has exclusive jurisdiction for all matters relating to the continuing education of insurance agents who are licensed under this code. (b) Requires each individual who holds a license issued by the department to complete continuing education, except as provided by Subsection (d). Provides that all required continuing education hours must be completed before the expiration date of the individual's license. Requires an individual who holds a life, accident, and health license, a life and health insurance counselor license, or a property and casualty license to complete 15 hours of continuing education annually. Prohibits the agent from being required to complete more than 15 continuing education hours annually, including an agent who holds more than one license for which continuing education is required. Requires an individual who holds a limited life, accident, and health license or a limited property and casualty license to complete five hours of continuing education annually. Requires each individual who holds a license issued by the department to complete 10 hours of continuing education in ethics during each license renewal period. Provides that at least 50 percent of all required continuing education hours must be completed in a classroom setting or a classroom equivalent setting approved by the department. Authorizes the department to grant reciprocity to license holders who complete continuing education requirements in other professions or in association with professional designations in an insurance-related field. (c) Authorizes the department, on a timely written request of an agent, to extend the time for the agent to comply with the continuing education requirements or to exempt the agent from some or all of the requirements for a licensing period if the department finds that the agent is unable to comply with the requirements because of illness, medical disability, or another extenuating circumstance beyond the control of the agent. Requires the commissioner, by rule, to prescribe the criteria for an exemption or extension under this subsection. (d) Exempts an individual who has continuously held a license issued under this code to operate as an insurance agent for the 20 years preceding September 1, 1999, from the continuing education requirements of this section. Authorizes the commissioner, by rule, to provide for other reasonable exemptions. (e) Requires the department to certify continuing education programs for agents. Authorizes only a program that satisfies the criteria established by rule by the commissioner to receive certification. Requires the certification criteria to be designed to ensure that continuing education programs enhance the knowledge, understanding, and professional competence of the license holder. Provides that a nonrefundable certification fee, in an amount set by the commissioner as necessary for administering the program, must accompany each application for certification of a continuing education program. Requires the fee to be established by rule and based on a graduated scale according to the number of hours required to complete the program. (f) Requires each continuing education program provider to register with the department as a course provider. Requires the department to assess a registration fee for each application for registration as a provider, set by the commissioner in an amount necessary for the proper administration of this section. Authorizes the commissioner to adopt rules establishing the requirements for continuing education program providers. Authorizes the department to negotiate agreements with independent contractors under which the independent contractor certifies and registers continuing education programs and providers. Authorizes the department to require those independent contractors to correspond directly with providers with regard to the administration of continuing education programs, and authorizes the contractors to collect fees from the providers for administration of the programs. Provides that the department retains the authority to establish the scope and type of continuing education requirements for each type of license. (g) Authorizes the commissioner to appoint an advisory council to furnish the commissioner with information and assistance in the conduct of the continuing education program for agents licensed under this subchapter. Provides that if an advisory council is appointed, it must be composed of nine members, four of whom must be public members. Entitles the public members to reimbursement for their reasonable travel expenses in attending meetings of the advisory council, subject to any applicable limit in the General Appropriations Act. Provides that certain persons are ineligible to be appointed as a public member. SECTION 1.03. Amends Section 2, Article 21.01-2, Insurance Code, is redesignated as Section 1A, Article 21.01-2, Insurance Code, and amending it as follows: Sec. 1A. New Title: EXPIRATION AND RENEWAL OF LICENSES. (a) Provides that each agent license issued by the department expires on the fifth anniversary of the date of issuance unless suspended or revoked by the commissioner, except as provided by a staggered renewal system adopted under Subsection (h) of this section. Authorizes a person to renew a license, rather than an unexpired license, that has not expired or has not been suspended or revoked by filing a properly completed renewal, rather than by filing a renewal, application with the department in the form prescribed by the department and paying to the department before the expiration date of the license the required renewal fee. (b) Provides that upon filing a completed renewal application no later than the expiration date of the license accompanied by the renewal fee set by the commissioner, the original license continues in force until the department issues the renewal license or the commissioner issues an order revoking the license. (c) Authorizes a person, if the person's license has been expired for 90 days or less, to renew the license by filing a renewal application with the department in the form prescribed by the department and paying to the department the required renewal fee and an additional fee that is equal to one-half of the renewal fee, rather than license fee, for the license. Redesignated from Subsection (b). Makes nonsubstantive changes. (d) Prohibits a person, if the person's license has been expired for more than 90 days but less than one year, from renewing the license, but entitles the person to a new license without taking the applicable examination if the person submits to the department a new application, the license fee, and an additional fee equal to one-half of the license fee. (e) Prohibits a person, if the person's license has been expired for one year or more, rather than longer than 90 days, from renewing the license. Redesignated from Subsection (c). (f) Authorizes the department to renew without reexamination an expired license of a person who was licensed in this state, moved to another state, and is currently licensed and has been in continual practice, rather than has been in practice, in the other state for the two years preceding application. Redesignated from portions of Subsection (c). (g) Makes a nonsubstantive change. Redesignated from Subsection (d). (h) Requires license fees, for the licensing period in which the license expiration is changed, to be prorated, rather than prorated on a monthly basis, so that each license holder is required to pay only that portion of the license fee that is allocable to the period, rather than number of months, during which the license is valid. Redesignated from Subsection (e). (i) Includes a license in Article 21.07-7, (Reinsurance Intermediary Act), Insurance Code, as an article that this section is not applicable to. SECTION 1.04. Amends Article 21.01-2, Insurance Code, by adding Section 2A, as follows: Sec. 2A. PROHIBITED ACTIVITIES. (a) Prohibits a person licensed under this code who receives a commission or other consideration for services as an insurance agent from receiving an additional fee for those services provided to the same client except for a fee described by Article 21.35A (Permissible Reimbursement) or 21.35B (Permissible Payments), Insurance Code. (b) Prohibits an insurer or licensed insurance agent engaged in the business of insurance in this state from paying, directly or indirectly, and from accepting, any commission or other valuable consideration to or from any person for services performed by that person as an insurance agent in this state unless the person holds a license to act as an insurance agent as required by the laws of this state. Provides that this subsection does not prevent the payment or receipt of renewal or other deferred commissions to or by any person solely because the person has ceased to hold a license to act as an insurance agent. (c) Prohibits an insurance agent licensed under this code from paying, allowing, or giving, or offering to pay, allow, or give, directly or indirectly, to any person who is not a licensed insurance agent, any rebate of premiums payable, commission, paid employment, or contract for service, or any other valuable consideration or inducement, that is not specified in the policy or contract of insurance for or on account of the solicitation or negotiation of contracts of insurance. (d) Provides that in addition to any other penalty imposed under this code, a person who is determined by the department to have committed conduct described by this subsection is barred from receiving a license as an insurance agent before the fifth anniversary of the date of the determination. Sets forth persons to whom this subsection applies. (e) Prohibits a person who has had an insurance license revoked in this state or any other state from soliciting or otherwise transacting business under Chapter 10 (Fraternal Benefit Societies), Insurance Code, unless it is determined by the department to be in the public interest, for good cause shown, to allow the person to act in that capacity. (f) Prohibits a person who has had an insurance license revoked in this state or any other state from acting as an officer, director, member, manager, or partner, or as a shareholder with a controlling interest, of an entity licensed under this subchapter unless it is determined by the department to be in the public interest, for good cause shown, to allow the person to act in that capacity. (g) Prohibits a property and casualty agent from knowingly granting, writing, or permitting a greater amount of insurance against loss by fire than the reasonable value of the subject of the insurance. SECTION 1.05. Amends Section 5, Article 21.01-2, Insurance Code, is redesignated as Section 3A, Article 21.01-2, Insurance Code, as follows: Sec. 3A. New Title: DENIAL OR REFUSAL OF LICENSE APPLICATION; SUSPENSION OR REVOCATION OF LICENSES; DISCIPLINE OF LICENSE HOLDERS. (a) Authorizes, rather than requires, the department, in addition to any other remedy available under Section 7 (May Order Sanctions), Article 1.10 (Duties of the Department), Insurance Code, to refuse to issue an original license, revoke, suspend, or refuse to renew a license, place on probation a person whose license has been suspended, assess an administrative penalty, or reprimand a license holder for a violation of this code, another insurance law of this state, or a rule of the commissioner, rather than commissioner or board. (b) Makes no change. (c) Authorizes the department to discipline a license holder or deny a license application if it determines that the applicant or license holder, individually or through any officer, director, or shareholder: (1) has wilfully violated any provision of the insurance laws of this state; (2) has intentionally made a material misstatement in the license application; (3) has obtained, or attempted to obtain, a license by fraud or misrepresentation; (4) has misappropriated, converted to the applicant's or holder's own use, or illegally withheld money belonging to an insurer; a health maintenance organization; or an insured, enrollee, or beneficiary; (5) has engaged in fraudulent or dishonest acts or practices; (6) has materially misrepresented the terms and conditions of an insurance policy or contract, including a contract relating to membership in a health maintenance organization; (7) has made or issued, or caused to be made or issued, any statement misrepresenting or making incomplete comparisons regarding the terms or conditions of an insurance or annuity contract legally issued by an insurer or a membership issued by a health maintenance organization to induce the owner of the contract or membership to forfeit or surrender the contract or membership or allow it to lapse for the purpose of replacing the contract or membership with another; (8) is convicted of a felony; (9) has offered or given a rebate of an insurance premium or commission to an insured or enrollee; (10) is not actively engaged in the soliciting or writing of insurance for the public generally as required by Section 2(c), Article 21.07 (Licensing of Agents), of this code; or (11) has obtained or attempted to obtain a license, not for the purpose of holding the license holder or applicant out to the general public as an agent, but primarily for the purpose of soliciting, negotiating, or procuring insurance or annuity contracts or memberships covering the applicant or license holder; a member of the applicant's or license holder's family; or a business associate of the applicant or license holder. (d) Prohibits an individual whose license application is denied or whose license has been revoked from applying for a license as an insurance agent before a specified time period. (e) Authorizes the commissioner to deny a timely application filed under Subsection (d) of this section if the applicant does not show good cause why the denial or revocation of the previous license application or license should not be considered a bar to the issuance of a new license. Provides that this subsection does not apply to an applicant whose license application was denied for failure to pass a required written examination or submit a properly completed license application. (f) Authorizes the department, instead of or in addition to taking disciplinary action under this section, to order that a license holder who is currently afflicted with a disability be placed on disability probation under the terms and conditions specified under Article 21.15-6 (Probation of Agent Based on Certain Disabilities) of this code and department rules. (g) Provides that this section applies to a person, other than a title insurance company, licensed under Chapter 9 of this code. Deletes language requiring the commission to prescribe procedures by which all decisions to deny, suspend, revoke, or to refuse to renew a license, are made by or are appealable to the commissioner. SECTION 1.06. Amends Article 21.01-2, Insurance Code, by adding Sections 4A, 5A, and 6A, as follows: Sec. 4A. JUDICIAL REVIEW. Authorizes a license applicant or license holder to appeal pursuant to Article 1.04 of this code if the commissioner refuses an application for a license as provided by this article or suspends, revokes, or refuses to renew a license at a hearing as provided by this article, or the applicant or license holder is dissatisfied with another action of the commissioner. Sec. 5A. AUTOMATIC FINES. (a) Authorizes the commissioner, to expedite the department's processing of certain violations of this code, to establish by rule monetary fines for certain violations. Authorizes the assessment of fines for a violation for a failure to obtain the total number of continuing education hours before the renewal date of the license; timely report a change of address to the department; or notify the department of an administrative action taken against the agent by another state's insurance regulator. (b) Prohibits this section from being construed to limit the department's authority to take any other disciplinary action against a license holder as provided under another provision of this code. (c) Provides that if a person disputes the assessment of a fine under this section, the matter is a contested case subject to Chapter 2001 (Administrative Procedure), Government Code. Sec. 6A. ENFORCEMENT OF SUBCHAPTER. Authorizes the attorney general, a district or county attorney, or the department acting through the commissioner to institute an injunction proceeding or another proceeding to enforce this subchapter and to enjoin any person, firm, corporation, or bank from engaging or attempting to engage in the business of insurance in violation of this code or any other insurance law of this state. Provides that the provisions of this section are cumulative of the other penalties or remedies provided by this article. SECTION 1.07. Amends Article 21.04, Insurance Code, as follows: Art. 21.04. New title: LICENSE HOLDER DEEMED COMPANY'S AGENT. Adds "license holder" and deletes "solicitor" from existing title. SECTION 1.08. Amends Article 21.06, Insurance Code, as follows: Art. 21.06. New title: AUTHORITY TO APPOINT AGENTS. Provides that the authority of a designee to act as an agent or officer on behalf of the insurance company continues until the first day of March next after its issuance, unless it is revoked or canceled sooner than that date, and provides that the authority must be renewed annually. Deletes language requiring the board, upon receipt of this notice, to issue the designee a certificate which includes a copy of the certificate of authority authorizing the company requesting to do business in this state, and the name and title of the person to whom the certificate is issued. Adds "authority to appoint" and deletes "certificates for" from existing title. Makes conforming and nonsubstantive changes. SECTION 1.09. Amends Section 1, Article 21.07, Insurance Code, as follows: Sec. 1. New title: APPLICABILITY OF ARTICLE. Prohibits a person from acting as an agent of an insurance company, health maintenance organization, or other type of insurance carrier that is licensed to do business in the State of Texas and is required to be licensed under this code, unless the person has procured a license from the department pursuant to this chapter and is designated by the insurance company. Deletes language prohibiting a person, corporation or a bank from acting as an agent of a local mutual aid association, local mutual burial association, statewide mutual assessment corporation, or stipulated premium company, unless the individual or entity has procured a license from the department pursuant to this chapter and is designated by the insurance company. Adds "article" and deletes "act" from existing title. Makes conforming and nonsubstantive changes. SECTION 1.10. Amends Section 1A, Article 21.07, Insurance Code, as follows: Sec. 1A. DEFINITIONS. Defines "agent," "bank," "control," "corporation," "individual," "insurance company," " insurance carrier," "insurer," "partnership" "person," and "subagent." Deletes existing definitions of "person," "partnership" and "agency partnership." SECTION 1.11. Amends Section 2, Article 21.07, Insurance Code, as follows: Sec. 2. APPLICATION FOR LICENSE; TO WHOM LICENSE MAY BE ISSUED. (a) Requires any person that desires to become an agent for an insurance company or health maintenance organization, the agents of which are required to be licensed under this subchapter, to submit to the department an application for a license in the form required by the department. Deletes existing text relating to corporation or bank application requirements to become a type of insurance carrier licensed to do business in the State of Texas. (b) Requires each applicant for a license to act as an insurance agent in this state to file with the commissioner a completed application on forms developed by the department. Requires the commissioner to establish by rule the requirements for a properly completed application. (c) Prohibits the commissioner from granting a license as an insurance agent to write any form of insurance unless the department finds that the applicant is or intends to be actively engaged in the soliciting or writing of insurance for the public generally and is to be actively engaged in the business of insurance; and the application is not made to evade the laws against rebating and discrimination, either for the applicant or for some other person. (d) Provides that this section does not prohibit an applicant insuring property that the applicant owns or in which the applicant has an interest, but it is the intent of this section to prohibit coercion of insurance and to preserve to each individual the right to choose that individual's own agent or insurance company, and to prohibit the licensing of a person to engage in the insurance business principally to handle business that the applicant controls only through ownership, mortgage or sale, family relationship, or employment. Provides that an applicant for an original license must have a bona fide intention to engage in business in which, in any calendar year, at least 25 percent of the total volume of premiums is derived from persons other than the applicant and from property other than that on which the applicant controls the placing of insurance through ownership, mortgage, sale, family relationship, or employment. (e) Prohibits the department from denying a license application solely on the ground that the applicant will act only part-time as an agent. (f) Requires the department to issue a license to an individual, rather than to an individual or to a general partnership, to engage in the business of on insurance if the individual meets certain enumerated qualifications, subject to Article 21.11 (Nonresident Agent). Deletes the information needed to be found on the application for licensure as an insurance agent. Makes a conforming change. (g) Adds this subsection to authorize an individual engaging in the business of insurance as a licensed sole proprietorship to incorporate. Provides that the corporation does not have greater license authority than that granted to the license holder in the holder's individual capacity. (h) Requires each individual license holder to notify the department on a monthly basis of a change of the license holder's mailing address, a conviction of the license holder of a felony, or an administrative action taken against the license holder by the insurance regulator of another state. Deletes the provision that a partner in the partnership must be licensed individually as an agent. (i) Includes a partnership among the entities that are required to receive a license from the department if the department finds that: (1) the corporation or partnership is organized under the laws of this state or any other state or territory of the United States, admitted to conduct business in this state by the secretary of state, if so required, and authorized by its articles of incorporation or its partnership agreement to act as an insurance agent (Deletes qualification needed to be demonstrated by a corporation if it is to receive a license from the department); (2) the corporation or partnership meets the definition of that entity adopted under Section 1A of this article (Deletes qualification needed to be demonstrated by a corporation and its officers, directors, and shareholders if the corporation is to receive a license from the department); (3) at least one officer of the corporation or one active partner of the partnership and all other persons performing any acts of an agent on behalf of the corporation or partnership in this state are individually licensed by the department separately from the corporation or partnership; (4) Requires a corporation or partnership to maintain, rather than prove, its ability to pay any sums up to $25,000 which it might become legally obligated to pay (Deletes the deposit of cash or securities by a corporation or partnership as one of the ways in which a corporation or partnership could prove that it maintains an ability to pay any sums up to $25,000 which it might become legally obligated to pay); (5) Adds this subdivision to set forth that the corporation or partnership intends to be actively engaged in the business of insurance as required under Subsection (c) of this section; (6) Adds this subdivision to set forth that each branch location from which the corporation or partnership will conduct its business in this state under authority of an insurance license is separately registered with the department; (7) Adds this subdivision to set forth that the corporation or partnership has submitted the application, appropriate fees, and any other information required by the department; and (8) Adds this subdivision to set forth that an officer, director, member, manager, partner, or any other person who has the right or ability to control the license holder has not had a license suspended or revoked or been the subject of any other disciplinary action by the insurance regulator of this or any other state, or has not committed an act for which a license may be denied under Article 21.01-2 (General Provisions Applicable to Certain License Holders). Makes conforming and nonsubstantive changes. (j) Prohibits the construction of anything in this section to permit any unlicenced employee or agent of any corporation or partnership to perform any act of an agent under this subchapter, rather than this article, without obtaining a license. (k) Requires each corporation or partnership licensed as an agent to file, under oath, on a form developed by the department, biographical information for each, rather than a list of the names and addresses of all, of its executive officers and directors, rather than officers, or unlicenced partners who administer the entity's operations in this state, and shareholders who are in control of the corporation, or any other partners who have the right or ability to control the partnership. Provides that if any corporation or partnership is owned, in whole or in part, by another entity, a biographical form is required for each individual who is in control of the parent entity. Deletes the requirement that a list of the names and addresses of all shareholders must be provided by the corporation with its application for renewal license. Deletes the provision that requires the cancellation of a corporation's agent's license if it does not maintain the necessary qualifications. Deletes the provision that should any person acquire shares in a corporation holding a license an agent by devise or descent fails to dispose of the shares in a timely manner to a licensed agent, then they must be purchased by the corporation for their book value. Deletes the provision that requires the cancellation of a corporation's license should it fail or refuse to so purchase such shares. Deletes the provision that grants a corporation the power to redeem the shares of any shareholder. (l) Adds this subsection to require each corporation or partnership to notify the department on a monthly basis of: the addition or removal of licensed agents employed by the corporation or partnership to perform any act of an agent in this state, a felony conviction of a licensed agent of the entity or any individual associated with the corporation or partnership who is required to file biographical information with the department, an event that would require notification under Article 1.30 (Notification), and the addition or removal of an officer, director, partner, member, or manager. (m) Adds this subsection to require the department to issue a license to a bank in the manner provided for the licensing of a corporation. (n) Adds this subsection to prohibit a person from acquiring any ownership interest in an entity licensed as an agent if the person is, or after the acquisition would be, directly or indirectly, in control of the license holder, or otherwise acquire control of or exercise any control over the license holder, unless the person has filed certain enumerated information with the department under oath. (o) Adds this subsection to authorize the commissioner, if a person required to file a statement under Subsection (n) of this section is a partnership, limited partnership, syndicate, or other group, to require that the information required by that subsection for an individual be provided regarding each partner of the partnership or limited partnership, each member of the syndicate or group, and each person who controls the partner or member. Authorizes the commissioner, if the partner, member, or person is a corporation or the person required to file the statement under Subsection (n) of this section is a corporation, to require that the information required by that subsection be provided regarding the corporation, each individual who is an executive officer or director of the corporation, and each person who is directly or indirectly the beneficial owner of more than 10 percent of the outstanding voting securities of the corporation. (p) Adds this subsection to authorize the department to disapprove an acquisition of control if, after notice and opportunity for hearing, the commissioner determines that immediately on the change of control the license holder would not be able to satisfy the requirements for the issuance of the license to solicit the line or lines of insurance for which it is presently licensed; the competence, trustworthiness, experience, and integrity of the persons who would control the operation of the license holder are such that it would not be in the interest of the insurance consumers of this state to permit the acquisition of control; or the acquisition of control would violate this code or another law of this state, another state, or the United States. (q) Adds this subsection to provide that a change in control is considered approved if the department has not proposed to deny the requested change before the 91st day after the date of receipt by the department of all information required by this section. (r) Adds this subsection to require the commissioner to be the corporation's or partnership's attorney for service of process on whom all lawful process, notice, or demand may be served in any legal proceeding against the corporation or partnership if the licensed corporation or partnership fails to appoint or maintain an attorney for service in this state, an attorney for service cannot with reasonable diligence be found; or the license of a corporation or partnership is revoked. (s) Adds this subsection to require the department to deny, revoke, or suspend the license of a corporation or partnership to act as an agent as provided by Article 21.01-2 if the corporation or partnership that holds an agent's license does not maintain the qualifications necessary for issuance of the license. Deletes the requirement that each corporation must notify the department upon any change in its officers, directors, or shareholders. Deletes the prohibition against a corporation owning any interest in another licensed corporation. Deletes the requirement that each owner of an interest in a licensed corporation be a natural person who holds a valid license. Deletes qualification needed to be demonstrated by a bank if it is to receive a license from the department. Deletes definition of "customer." Deletes required criteria of a bank's ability claims against it up to $25,000 by certain enumerated standards. SECTION 1.12. Amends Section 6, Article 21.07, Insurance Code, as follows: Sec. 6. New title: FILING OF ADDITIONAL APPOINTMENTS. Deletes AGENT MAY BE LICENSED TO REPRESENT and INSURERS. (a) Authorizes an, rather than any, agent licensed under this subchapter to represent and act as an agent for more than one insurance carrier at any time while the agent's license is in force, if the agent so desires, except as specifically prohibited by another provision of this code. Requires any such agent and the insurance carrier involved to file with the department, rather than must give notice to the State Board of Insurance of, any additional appointment authorizing the agent to act as agent for an additional insurance carrier or carriers not later than the 30th day after the effective date of the appointment. Provides that the filing must include certain enumerated information. Makes nonsubstantive changes. (b) Provides that an appointment made under this article to authorize an agent to act as an agent for an insurance carrier continues in effect without the necessity of renewal until it is terminated or, rather than and, withdrawn by the insurance carrier or agent. Requires the insurance carrier to follow the procedures established under Section 6B of this article, if the agent is terminated for cause. Provides that each renewal license issued to the agent authorizes the agent to represent and act for the insurance carriers for which the agent holds an appointment until the appointment is terminated or withdrawn, and that agent is considered to be the agent of the appointing insurance carriers for the purposes of this code. Makes nonsubstantive changes. (c) Authorizes an agent appointed under this section to act on behalf of the appointing carrier before the department receives the filing made under this section. SECTION 1.13. Amends Article 21.07, Insurance Code, by adding Sections 6B, 6C, and 6D, as follows: Sec. 6B. INSURANCE CARRIER TO NOTIFY DEPARTMENT OF TERMINATION OF CONTRACT; COMMUNICATION PRIVILEGED. (a) Requires each insurance carrier, on termination of the appointment of an agent for cause, to immediately file with the department a statement of the facts relating to the termination of the appointment and the date and cause of the termination. Requires the department, on receipt of the statement, to record the termination of the appointment of that agent to represent the insurance carrier in this state. (b) Provides that a document, record, statement, or other information required to be made or disclosed to the department under this section is a privileged and confidential communication and is not admissible in evidence in any court action or proceeding except under a subpoena issued by a court of record. (c) Provides that an insurance carrier, an employee or agent of the carrier, or any other person, acting without malice, is not liable for providing the information required to be disclosed under this section. Sec. 6C. FEES; USE OF FUNDS. (a) Requires the department to collect from each agent of an insurance carrier writing insurance in this state under this code a nonrefundable license fee and a nonrefundable appointment fee for each appointment by an insurance carrier. Requires these fees, together with examination fees, license fees, and license renewal fees, to be deposited to the credit of the Texas Department of Insurance operating fund. (b) Authorizes the department to use any portion of the fees collected to enforce this subchapter, to employ persons as it considers necessary to investigate and make reports regarding alleged violations of this code and misconduct on the part of agents, and to pay the salaries and expenses of those persons and office employees and other expenses necessary to enforce this subchapter from the fees collected. Authorizes a person employed by the department under this section to administer the oath and examine under oath any person considered necessary in gathering information and evidence and to have that information and evidence reduced to writing if considered necessary. Requires all such expenses to be paid from the fees. (c) Requires the department to set the fees in amounts reasonable and necessary to implement this subchapter. Sec. 6D. DUPLICATE LICENSE FEE. Requires the department to collect in advance from an agent requesting a duplicate license a fee in an amount set by the department. Requires the fee collected under this section to be deposited to the credit of the Texas Department of Insurance operating fund. ARTICLE 2. LIFE, ACCIDENT, AND HEALTH LICENSES SECTION 2.01. Amends Subchapter A, Chapter 21, Insurance Code, by adding Article 21.07-1 as follows: Art. 21.07-1. TEXAS LIFE, ACCIDENT, AND HEALTH AGENTS LICENSE ACT Sec. 1. SHORT TITLE; APPLICATION. (a) Authorizes this article to be cited as the Texas Life, Accident, and Health Agents License Act. (b) Provides that each agent of an insurance company authorized to provide life, accident, and health insurance coverage in this state is subject to this article, and applies to each person who meets certain enumerated conditions. Sec. 2. GENERAL LIFE, ACCIDENT, AND HEALTH LICENSE; LICENSE REQUIRED. (a) Provides that a general life, accident, and health license is required for each person who acts as: (1) an agent writing life, accident, and health insurance for a life insurance company; (2) an agent writing only accident and health insurance; (3) an agent representing a health maintenance organization; (4) an agent writing fixed or variable annuity contracts; (5) an industrial life insurance agent for an industrial company that writes only weekly premium life insurance on a debit basis under Article 3.52 (Industrial Life Insurance)of this code; (6) an agent writing specified types of insurance. (7) an agent writing life, accident, and health insurance for any type of authorized life insurance company, including a legal reserve life insurance company, domiciled in this state, representing the insurer in a foreign country or territory and either on a United States military installation or with United States military personnel; or (8) an agent writing any other type of insurance as required by the commissioner for the protection of the insurance consumers of this state. (b) Provides that for the purposes of this subsection, a "combination company" is an insurer that writes weekly premium life insurance or monthly ordinary life insurance on a debit basis. Provides that a general life, accident, and health license is required for each person who acts as a combination life insurance agent for a combination company. Authorizes a combination company and a combination life insurance agent to also write ordinary contracts of life insurance. (c) Provides that a general life, accident, and health license is required for an agent writing life, accident, and health insurance for a fraternal benefit society under Chapter 10 (Fraternal Benefit Societies) of this code, except as otherwise provided by this subsection. Provides that a license is not required for an agent, representative, or member of a fraternal benefit society who devotes less than 50 percent of the person's time to the solicitation or procurement of insurance contracts for the society. Sets forth standards for making such a determination. Sec. 3. AUTHORITY TO WRITE ADDITIONAL PRODUCT LINES. Authorizes a person who holds a general life, accident, and health license issued under the requirements of this subchapter to write additional types of insurance contracts as provided under Section 5 of this article or under a specialty license program established by the department. Sec. 4. TEMPORARY LICENSE. Authorizes the department to issue a temporary agent's license to an applicant for a license under Section 2 of this article who is being considered for appointment as an agent by an insurer or health maintenance organization. Provides that an applicant for a temporary license is not required to pass a written examination, which is valid for the 90 days after the date of issuance. Requires the department to issue a temporary license immediately on receipt by the department of a properly completed application executed by the person in the form required by this code, accompanied by the nonrefundable filing fee set by the department and a certificate signed by an officer or properly authorized representative of the insurer or health maintenance organization stating certain enumerated information. (b) Authorizes the insurer or health maintenance organization to assume that the temporary license will be issued in due course and the applicant may proceed to act as an agent if the temporary license is not received from the department before the eighth day after the date on which the application, certificate, and nonrefundable fee are delivered or mailed to the department and the insurer or health maintenance organization has not been notified that the application is denied. (c) Prohibits a temporary license from being renewed or issued more than once in a consecutive six-month period to the same applicant. (d) Prohibits a temporary license from being granted to a person who does not intend to apply for a license to sell insurance or memberships to the public generally. (e) Prohibits a temporary license from being used to obtain commissions from sales made to persons who have family, employment, or business relationships with the temporary license holder. Prohibits an insurer or health maintenance organization from knowingly paying, directly or indirectly, to the holder of a temporary license under this section, and a temporary license holder from receiving or accepting, a commission on the sale of a contract of insurance or membership covering specified license holders, their relatives, employers, and employees. (f) Prohibits a person who has been issued a temporary license under this section and is acting under the authority of the temporary license from engaging in any insurance solicitation, sale, or other agency transaction that results in or is intended to result in the replacement of any existing individual life insurance policy form or annuity contract that is in force, or receiving, directly or indirectly, any commission or other compensation that may or does result from such a solicitation, sale, or other agency transaction. Prohibits a person who holds a permanent license from circumventing or attempting to circumvent the intent of this subsection by acting for or with a person holding a temporary license. Provides that "replacement," as used in this subsection, means a transaction in which a new life insurance or annuity contract is to be purchased, and it is known or should be known to the temporary agent that by reason of the solicitation, sale, or other transaction the existing life insurance or annuity contract has been or is to be: (1) lapsed, forfeited, surrendered, or otherwise terminated; (2) converted to reduced paid-up insurance, continued as extended term insurance, or otherwise reduced in value by the use of nonforfeiture benefits or other policy values; (3) amended so as to effect either a reduction in benefits or in the term for which coverage would otherwise remain in force or for which benefits would be paid; (4) reissued with any reduction in cash value; or (5) pledged as collateral or subjected to borrowing, whether in a single loan or under a schedule of borrowing over a period of time, for amounts in the aggregate exceeding 25 percent of the loan value set forth in the policy. (g) Authorizes the department to cancel, suspend, or revoke the temporary appointment powers of an insurer or health maintenance organization if, after notice and opportunity for hearing, the commissioner finds that insurer or health maintenance organization has abused the temporary appointment powers. Provides that an appeal from the department's decision is subject to Article 1.04 of this code. Authorizes the department, in considering whether abuse has occurred, to consider enumerated provisions. (h) Requires the insurer or health maintenance organization to administer at least 40 hours of training to each applicant for a temporary license not later than the 14th day after the date on which the application, certificate, and nonrefundable fee are delivered or mailed to the department. Provides that at least 10 hours must be taught in a classroom setting, including an accredited college, university, junior college, or community college, a business school, or a private institute or classes sponsored by the insurer or health maintenance organization and especially established for this purpose. Provides that the training program must be designed to provide an applicant with basic knowledge of enumerated principles and obligations of an insurance agent. (i) Authorizes the commissioner, if the commissioner finds under Subsection (g) of this section that an abuse of temporary appointment powers has occurred, to require the affected insurer or health maintenance organization to file with the department a description of the insurer's or health maintenance organization's training program and to require the insurer or health maintenance organization to obtain the approval of the department before continuing to use the training program. (j) Requires each insurer or health maintenance organization to ensure that, during any two consecutive calendar quarters, at least 70 percent of the insurer's or health maintenance organization's applicants for temporary licenses sit for the required licensing examination. Provides that at least 50 percent of the applicants taking the examination must pass during that period. (k) Prohibits an insurer or health maintenance organization from making more than 250 appointments of temporary license holders during a calendar year. Sec. 5. LIMITED LIFE, ACCIDENT, AND HEALTH LICENSE. (a) Defines "funeral prearrangement life insurance agent" and "job protection insurance." (b) Provides that this section applies to specified agents. (c) Provides that a person to whom this article applies must hold a limited life, health, and accident license under this article. Authorizes the commissioner to adopt rules as necessary to implement this article. (d) Prohibits a funeral prearrangement life insurance agent from acting as an agent for an insurance company unless the agent acts under the supervision of a person, including a corporation, who holds a specified permit; writes any coverage or combination of coverages with an initial guaranteed death benefit in excess of $15,000 on any life; or acts as an agent for more than one insurance company. (e) Authorizes a person who holds a limited life, accident, and health license issued under this section to write only the types of insurance products described by this section. (f) Provides that an applicant for a limited life, accident, and health license is not eligible for a temporary license under Section 4 of this article. ARTICLE 3. PROPERTY AND CASUALTY LICENSES SECTION 3.01. Amends Article 21.14, Insurance Code, as follows: Art. 21.14. TEXAS PROPERTY AND CASUALTY AGENTS LICENSE ACT Sec. 1. SHORT TITLE; APPLICATION. (a) Authorizes this article to be cited as the Texas Property and Casualty Agents License Act. (b) Provides that each agent of an insurance company authorized to provide property and casualty insurance coverage in this state is subject to this article. Provides that this article applies to each person who performs the acts of an agent, as defined by Article 21.02 of this code, whether through oral, written, or electronic communications or otherwise, by the solicitation of, negotiation for, procurement of, or collection of premiums on an insurance contract offered by any type of insurance carrier authorized to sell property and casualty insurance products in this state, including: (1) a fidelity or surety company; (2) an inter-insurance exchange; (3) a mutual company, including a farm mutual or a county mutual; (4) a reciprocal exchange; or (5) a Lloyd's plan. Sec. 2. GENERAL LIFE, ACCIDENT, AND HEALTH LICENSE; LICENSE REQUIRED. Requires a general property and casualty license for each person who acts as: (1) an agent writing property and casualty insurance for an insurance carrier authorized to provide property and casualty insurance coverage in this state; (2) a sub-agent of a person licensed as an agent under this article who solicits and binds insurance risks on behalf of that agent; (3) a salaried employee of an agent or sub-agent described under Subdivision (1) or (2) of this subsection who performs assigned duties that include binding insurance risks; (4) an agent writing property and casualty insurance for a county mutual insurance company; or (5) an agent writing any other type of insurance as required by the commissioner for the protection of the insurance consumers of this state. Sec. 3. AUTHORITY TO WRITE ADDITIONAL PRODUCT LINES. Authorizes a person who holds a general property and casualty license issued under this subchapter to write additional types of insurance contracts as provided under Section 6 of this article or under a specialty license program established by the department. Sec. 4. AUTHORITY TO WRITE ACCIDENT AND HEALTH INSURANCE. Authorizes a person who holds a general property and casualty license issued under this subchapter to write health and accident insurance for a property and casualty insurer authorized to sell those insurance products in this state without holding a license issued under Article 21.07-1 of this code. Sec. 5. EMERGENCY LICENSE WITHOUT EXAMINATION. Authorizes the department to issue to an applicant for a property and casualty license, in the event of the death or disability of a property and casualty agent or if a property and casualty agent is found to be insolvent and unable to pay for premiums as they become due to an insurer, an emergency property and casualty license without examination if it is established to the satisfaction of the department that the emergency license is necessary for the preservation of the agency assets of a deceased, disabled, or insolvent property and casualty agent. Provides that an emergency license is valid for 90 days in any 12 consecutive months and authorizes the department to renew the emergency license for an additional 90 days during the 12-month period if the other requirements of this subchapter are met. Sec. 6. LIMITED PROPERTY AND CASUALTY LICENSE. (a) Requires a limited property and casualty license, notwithstanding any other law, for each person who desires to act as an agent writing: (1) insurance only on growing crops under Article 21.14-2 of this code; (2) only insurance for a farm mutual insurance company as provided by Article 16.24A of this code; (3) exclusively all forms of insurance authorized to be solicited and written in this state that cover the ownership, operation, maintenance, or use of a motor vehicle that is designed for use on the public highways, including a trailer or semitrailer, and the motor vehicle's accessories or equipment; (4) prepaid legal services contracts under Article 5.13-1 or Chapter 23 of this code; or (5) any other type of insurance as required by the commissioner for the protection of the insurance consumers of this state. (b) Provides that Subsection (a)(1) of this section applies to a production credit association or bank for a cooperative, as provided under the farm credit system under 12 U.S.C. 2001 et seq., as amended. (c) Authorizes a person who holds a limited property and casualty license issued under this subchapter to write only the types of insurance products designated on the license by the department. Sec. 7. FULL-TIME HOME OFFICE EMPLOYEES: MANDATORY REGISTRATION, CONTINUING EDUCATION REQUIREMENTS, AND NOTIFICATION TO CONSUMERS; DISCIPLINARY ACTIONS. (a) Requires each actual full-time home office salaried employee of an insurance carrier licensed to do business in this state who solicits or receives an application for the sale of insurance through an oral, written, or electronic communication to register with the commissioner. (b) Requires an insurance carrier licensed to do business in this state whose general plan of operation includes the use of employees described by Subsection (a) of this section to certify to the commissioner that each of those employees receives at least 15 hours of continuing education annually. Provides that the continuing education must be designed to give the employee: (1) reasonable familiarity with the broad principles of insurance; insurance licensing and regulatory laws; and the terms and conditions of the insurance that the registrant transacts; and (2) a fair and general understanding of the duties of an insurer to an insured, including training in ethical considerations. (c) Requires that the registration of an actual full-time home office. (d) Requires each registrant under this section to disclose the fact of the registration when making an oral, written, or electronic communication to solicit or receive an application for the sale of insurance. (e) Requires each person who registers under this section to submit a nonrefundable registration fee in an amount determined by the department. Deletes original text relating to division of classes of agents into local recording agents and solicitors, definitions, certain orders, societies and associations not affected, application for license, to whom license may be issued, persons other than licensed local recording agents who may share in profits of local recording agents, requirements as to knowledge or instruction for local recording agent's license, continuing education, advisory council, jurisdiction for continuing education, examination, death, disability or insolvency, emergency license without examination, conduct of examinations, notice, manual of questions and answers, expiration of license, renewal, fees payable before examination, renewal fees, issuance of license, notice to commissioner of insurance of appointment of local recording agent by insurance company, application for solicitor's license, notice to insurance commissioners of solicitor's appointment, authority to solicit, fire insurance in excess of value, suspension or revocation of license, appeal, notice to last address, life, health and accident insurance, full time home office solicitors, mandatory registration, notification to consumers, disciplinary actions, fees, disposition of fees, appropriations, prohibition of rebates or inducements, repeal, violation of act, enforcement of article, and administration of article. ARTICLE 4. NONRESIDENT AGENT LICENSE SECTION 4.01. Amends Section 1, Article 21.11, Insurance Code, as follows: Sec. 1. NONRESIDENT AGENT LICENSE. (a) Requires the department to license a person who is not a resident of this state to act as a nonresident agent if the department finds that: (1) the state in which the person resides accords the same privilege to a person who is a resident of this state; (2) the applicant for the nonresident license: (A) if an individual subject to Subsection (b) of this section holds a license as an agent in the state of residence and either obtained the license by passing a written examination or held the license before the time a written examination was required to obtain the license; or has passed the examination for an agent's license required under Article 21.01-1 of this code and satisfies the requirements adopted under Section 2, Article 21.07, of this code for licensing of an individual; or (B) if a corporation or partnership has provided evidence of the authority or ability to act as an agent in the entity's state of domicile; has satisfied the requirements adopted under Section 2, Article 21.07, of this code for licensing of a corporation or partnership; and is domiciled in a state that has entered into a reciprocal agreement with the commissioner as provided by Subsection (b) of this section; and (3) the applicant or any officer, director, shareholder, member, or partner of an applicant that is a business entity, required to file biographical information with the department under Article 21.07 of this code, has not: (A) committed an act that constitutes grounds for denial, suspension, or revocation of a license under Article 21.01-2 of this code; or (B) had an insurance license suspended or revoked by the department or the insurance regulator of another state. (b) Authorizes the commissioner to enter into a reciprocal agreement with the appropriate official of another state waiving the written examination requirement for an applicant who is a resident of that state if: (1) a written examination is required of applicants for an agent's license in the other state; (2) the appropriate official of the other state certifies that the applicant holds a license as an agent in the other state and either passed a written examination to obtain the license or was the holder of an agent's license before the time a written examination was required; and (3) in the other state, a resident of this state is entitled to obtain an agent's license under the same conditions and without discrimination as to fees or otherwise in favor of the residents of the other state. (c) Authorizes a person who resides in a town through which the state line runs and whose residence is located in the town in the adjoining state to be licensed as a resident agent if the person maintains the person's business office in this state. Deletes text providing that this section is subject to Article 21.14 of this code, subject to the limitations of this article. (d) Authorizes, rather than requires, the department to waive any license requirements for an applicant with a valid license from another state or jurisdiction that has license requirements substantially equivalent to those of this state. (e) Requires the commissioner to be the attorney for service of process on whom all lawful process, notice, or demand may be served in any legal proceeding against a nonresident agent licensed to transact business in this state if the nonresident agent fails to appoint or maintain an attorney for service in this state, an attorney for service is appointed but cannot with reasonable diligence be found, or the license of the nonresident agent is revoked. SECTION 4.02. Amends Sections 2(a) and (b), Article 21.11, Insurance Code, as follows: (a) Except as otherwise specifically provided by this code, rather than section, a license issued under this article, rather than under a license issued under Article 21.14 of this code, to an individual who is not a resident of this state grants the same rights and privileges afforded to a resident license holder. (b) Exempts a person who holds a license issued under this article and who is in compliance with the continuing education requirements of the person's state of residence, from the continuing education requirements imposed under Article 21.01-1 of this code. Deletes existing text prohibiting a person who holds a license issued under this article from maintaining an office in this state, soliciting insurance business, or employing solicitors or others to solicit insurance in this state. SECTION 4.03. Amends Section 3, Article 21.11, Insurance Code, as follows: Sec. 3. LIMITATIONS. (a) Deletes existing Subdivision (3) which provides that this article does not permit any person or firm who holds a license issued under this article to engage in any form of direct solicitation of insurance within this state. (b) Provides that this subchapter applies to licensing of a nonresident agent under this article. Deletes existing Subsections (c)-(f) relating to the commissioner's requirement to revoke certain nonresident agents' licenses, the license of the affected local agent and the requirement to order that any insurance transacted under an arrangement otherwise described by this section be canceled. SECTION 4.04. Amends Sections 4 and 5, Article 21.11, Insurance Code, as follows: Sec. 4. HOME OFFICE EMPLOYEE. Provides that this article does not affect the authority established under Section 7, rather than 20, Article 21.14, of this code of an actual full-time home office salaried employee of an insurance carrier licensed to do business in this state. Sec. 5. RULES. Authorizes the commissioner to adopt rules as necessary to implement this article and to meet the minimum requirements of federal law and regulations. ARTICLE 5. CONFORMING AMENDMENTS SECTION 5.01. Amends Section 1, Article 3.71, Insurance Code, to make conforming and nonsubstantive changes. SECTION 5.02. Amends Section 7, Article 3.75, Insurance Code, to make conforming changes. SECTION 5.03. Amends Subsection (c), Article 5.13-1, Insurance Code, to make conforming and nonsubstantive changes. SECTION 5.04. Amends Chapter 10, Insurance Code, by adding Article 10.37-3, as follows: Art. 10.37-3. AGENT'S LICENSE REQUIRED. (a) Prohibits a person from soliciting or procuring insurance contracts on behalf of a fraternal benefit society unless the person holds a license issued by the department or is specifically exempted from the license requirement as provided by Section 2, Article 21.07-1 (Acting for unauthorized companies prohibited). (b) Provides that the licensing and regulation of an agent for a fraternal benefit society under this chapter is subject to the requirements adopted under Subchapter A, Chapter 21 (Agents and Agents' Licenses), and other existing or subsequent applicable laws governing the licensing of such agent. Provides that a provision of such a law is applicable to a license applicant and license holder under this chapter (General Provisions). SECTION 5.05. Amends Article 16.24A, Insurance Code, by amending Subsections (a) and (b), as follows: Art. 16.24A. New title: LICENSING OF AGENTS. Deletes "For Crop Insurance" from title. (a) Makes conforming changes. (b) Makes a conforming change. SECTION 5.06. Amends Section 9, Article 17.25, Insurance Code, to make conforming changes. SECTION 5.07 Amends Sections 4, 19, and 21, Managing General Agents' Licensing Act (Article 21.07-3, V.T.I.C.), as follows: Sec. 4. New Title: REDEMPTION OF SHARES. Deletes "Application For License; To Whom License May Be Issued" from title. Deletes Subsections (a)-(d) and (f)-(j), relating to the application for and issuance of a managing general agent's license. Makes a conforming change. Sec. 19. New Title: ADMINISTRATION AND REGULATION OF MANAGING GENERAL AGENTS; Violations of Act. Provides that the licensing and regulation of a person acting as a managing general agent is subject to laws applicable to other agents under Subchapter A, Chapter 21, Insurance Code. Created from existing text; makes conforming changes. Sec. 21. Makes conforming changes. SECTION 5.08. Amends Article 22.14, Insurance Code, to make conforming changes. SECTION 5.09. Amends Chapter 23, Insurance Code, to make conforming changes. ARTICLE 6. REPEALER SECTION 6.01. Repealer: Repeals the following sections of the Insurance Code: Section 15 (Violation by Agent), Article 17.25 (County Mutual Insurance Companies) Sections 15 and 15A (Texas Health Maintenance Organization Act), Sections 20A.15 (Regulation of Agents) and 20A.15A (Agents for Single Health Care Service Plans) Sections 1 (Application), 3 (Licensing by Endorsement), 4 (Continuing Education), and 6 (Statutory References), Article 21.01-2 Article 21.02-1 (Penalty for Unlawfully Acting as Agent) Article 21.05 (Who May Not Be Agents) Section 1B (Licensing of Limited Liability Companies), Article 21.07 Section 1C (Licensing of Banks), Article 21.07 Section 3 (Issuance of License Under Certain Circumstances), Article 21.07, as amended by Chapter 596 and 972, Acts of the 75th Legislature, Regular Session, 1997 Sections 3B (Resident Status; Certain Nonresidents Maintaining Office In State), 4 (Examination of Applicant for License to Write Health and Accident Insurance), 4A (Examination of Applicant for License to Write Life Insurance Upon Any One Life in Excess of $10,000), 5 (Agent May Be Licensed to Represent Additional Insurers), 7 (Expiration and Renewal of License), 8 (Temporary License), 9 (Insurance Carrier to Notify State board of Insurance of Termination of Contract; Communications Privileged), 10 (Denial, Refusal, Suspension or Revocation of Licenses), 10A (Ineligibility Based on Felony Conviction), 11 (Licensing of Agents), 12 (Penalty), 13 (Texas Department of Insurance May Establish Rules and Regulations), 14 (Fees and Use of Funds), 15 (Dual Licensing), 15A (Certain Agents for Stipulated Premium Companies), 16 (Wording on License), 17 Expiration of Existing Licenses), 18 (Assignment of Agent's Commission), 19 (Agent for United States Military Personnel in Foreign Countries), and 20 (Duplicate License; Fees), Article 21.07 Section 21 (Rental Car Companies), Article 21.07, as added by Chapter 820, Acts of the 75th Legislature, Regular Session, 1997 Section 21 (Credit Insurance Agents), Article 21.07, as added by Chapter 1196, Acts of the 75th Legislature, Regular Session, 1997 Article 21.07A (Penalty for Acting As, or Employing, Life, Health, or Accident Insurance Without License) Article 21.07-1 (Legal Reserve Life Insurance Agents; Examination; Licenses) Sections 4A (Persons other than Licensed Managing General Agent who may Share in Profits of Managing General Agent), 4B (Continuing Requirements for Licensed Corporations), and 4C (Security for Liability), Article 21.07-3 Section 5(h) (Issuance of Licenses to those Presently Acting as Managing General Agents; Renewals), Article 21.07-3 Sections 6 (Examination Required; Exceptions) and 6A (Continuing Education), Article 21.07-3 Sections 8 (Conduct of Examinations), 9 (Expiration of License; Renewal), and 10 (Fees), Article 21.07-3 Section 12 (Denial, Refusal, Suspension, or Revocation of Licenses), 13 (Notice and Hearings), 14 (Judicial Review of Acts of Commissioner), and 15 (Notice to Last Address), Article 21.07-3 Section 17 (Fees Collected), Article 21.07-3 Section 20 (Enforcement of Act), Article 21.07-3 Section 14 (Penalty), Article 21.14-1 Article 21.15 (Revocation of Agent's Certificate) Article 21.15-2 (Penalty for Soliciting Without Certificate of Authority) Article 21.15-3 (Agent Procuring by Fraudulent Representation; Penalty) Article 21.15-4 (Agent or Physician Making False Statement; Penalty) Article 21.15-7 (Interim Study of Agents and Agents' Licenses Statutes by Commissioner) Section 10 (Unlawful and Prohibited Practices; Penalties), Article 21.58A Article 23.23 (Regulation of Agents) ARTICLE 7. GRANDFATHER CLAUSE; TRANSITION SECTION 7.01. Provides that on the effective date of this Act, a person who holds a license issued by department that is in good standing is considered licensed under the applicable licensing law as amended by this Act, entitled to act as an agent under the new license type, subject to this article, and subject to the provisions of the Insurance Code as amended by this Act. SECTION 7.02. (a) Entitles a person who, immediately before the effective date of this Act, holds an agent license issued by Department and who obtained that license by passing a written examination to the appropriate license as provided by Subchapter A, Chapter 21, as amended by this Act, without further examination. (b) Entitles a person who, immediately before the effective date of this Act, holds an agent license issued by department before January 1, 1999, and who obtained that license without taking a written examination to appropriate license as provided by Subchapter A, Chapter 21, as amended by this Act, but provides that the person must pass the appropriate license examination by the second anniversary of the date of issuance to retain the license. Provides that the license of a person who does not pass the license examination as required by this subsection expires on the second anniversary of the date of issuance and prohibits its renewal. (c) Entitles a person who, immediately before the effective date of this Act, holds an agent license issued by department on or after January 1, 1999, and who obtained that license without taking a written examination to appropriate license as provided by Subchapter A, Chapter 21, as amended by this Act, but provides that the person must pass the appropriate license examination by May 31, 2000, to retain the license. Provides that the license of a person who does not pass the license examination as required by this subsection expires on May 31, 2000. SECTION 7.03. (a) Authorizes department to issue a life, accident, and health license to a person who solicited insurance on behalf of a fraternal benefit society immediately before the effective date of this Act on submission to department by the person of a certified statement from the fraternal benefit society indicating the period of time the person has solicited insurance on behalf of the fraternal benefit society, a completed license application form, and a nonrefundable application fee in an amount determined by department. (b) Provides that, to retain the license issued under Subsection (a), a person who has solicited insurance on behalf of a fraternal benefit society for less than two years as of the effective date of this Act must pass the license examination required under Subchapter A, Chapter 21, Insurance Code, by the 180th day after the date of issuance of the license and prohibits its renewal. (c) Provides that, to retain the license issued under Subsection (a), a person who has solicited insurance on behalf of a fraternal benefit society two years or more as of the effective date of this Act must pass the license examination required under Subchapter A, Chapter 21, Insurance Code, by the second anniversary of the date of issuance of the license. Provides that the license of a person who does not pass the license examination as required by this subsection expires on the second anniversary of the date of the issuance of the license and prohibits its renewal. ARTICLE 8. EFFECTIVE DATE; TRANSITION; EMERGENCY SECTION 8.01. (a) Effective date: September 1, 1999. (b) Provides that Section 3, Article 21.01-1, Insurance Code, as amended by this Act, applies to continuing education requirements for insurance agents for a renewal of a license that occurs on or after January 1, 2001. SECTION 8.02. Emergency clause.