2005 Texas Insurance Code CHAPTER 4051. PROPERTY AND CASUALTY AGENTS

TITLE 13. REGULATION OF PROFESSIONALS

SUBTITLE B. AGENTS

CHAPTER 4051. PROPERTY AND CASUALTY AGENTS

SUBCHAPTER A. GENERAL PROVISIONS


	§ 4051.001. APPLICABILITY OF CHAPTER.  (a) This 
subchapter and Subchapters B-E and G apply to each agent of an 
insurer authorized to engage in the business of property and 
casualty insurance in this state.
	(b)  This subchapter and Subchapters B-E and G apply to each 
person who performs the acts of an agent, as described by Section 
4001.051, whether through an oral, written, electronic, or other 
form of communication, by soliciting, negotiating, procuring, or 
collecting a premium on an insurance contract offered by any kind of 
insurer authorized to engage in the business of property and 
casualty insurance in this state, including:
		(1)  a fidelity or surety company;                                            
		(2)  a mutual insurance company, including a farm 
mutual or a county mutual;
		(3)  a reciprocal or interinsurance exchange;  and                            
		(4)  a Lloyd's plan.                                                          

Added by Acts 2003, 78th Leg., ch. 1274, § 7, eff. April 1, 2005.          


	§ 4051.002. REQUIREMENTS APPLICABLE TO CERTAIN AGENT 
CONTRACTS.  An agent's contract entered into on or after August 27, 
1973, by an insurer engaged in the business of property and casualty 
insurance in this state is subject to Article 21.11-2.

Added by Acts 2003, 78th Leg., ch. 1274, § 7, eff. April 1, 2005.          

SUBCHAPTER B. GENERAL PROPERTY AND CASUALTY LICENSE


	§ 4051.051. LICENSE REQUIRED.  A person is required to 
hold a general property and casualty license if the person acts as:
		(1)  an agent who writes property and casualty 
insurance for an insurer authorized to engage in the business of 
property and casualty insurance in this state;
		(2)  a subagent of a person who holds a license as an 
agent under this chapter who solicits and binds insurance risks for 
that agent;  or
		(3)  an agent who writes any other kind of insurance as 
required by the commissioner for the protection of the insurance 
consumers of this state.

Added by Acts 2003, 78th Leg., ch. 1274, § 7, eff. April 1, 2005.          


	§ 4051.052. AUTHORITY TO WRITE ADDITIONAL LINES.  A 
person who holds a general property and casualty license may, in 
addition, write the kinds of insurance contracts described by:
		(1)  Section 4051.101 and Subchapter E;  or                                   
		(2)  Chapter 4055.                                                            

Added by Acts 2003, 78th Leg., ch. 1274, § 7, eff. April 1, 2005.          


	§ 4051.053. AUTHORITY TO WRITE CERTAIN ACCIDENT AND 
HEALTH INSURANCE.  A person who holds a general property and 
casualty license may, without holding a license under Chapter 4054, 
write health and accident insurance for a property and casualty 
insurer authorized to sell those insurance products in this state.

Added by Acts 2003, 78th Leg., ch. 1274, § 7, eff. April 1, 2005.          


	§ 4051.054. DECEASED, DISABLED, OR INSOLVENT AGENTS;  
EMERGENCY LICENSE.  (a) If a property and casualty agent dies, 
becomes disabled, or is found to be insolvent and unable to pay for 
premiums as they become due to an insurer, the department may issue, 
without examination, to an applicant for a property and casualty 
agent license an emergency license on receipt of proof satisfactory 
to the department that the emergency license is necessary to 
preserve the agency assets of the deceased, disabled, or insolvent 
agent.
	(b)  An emergency license is valid for 90 days in any 12 
consecutive months and may be renewed by the department for an 
additional 90 days during the 12-month period if the other 
requirements of Subtitle A are satisfied.

Added by Acts 2003, 78th Leg., ch. 1274, § 7, eff. April 1, 2005.          

SUBCHAPTER C. LIMITED PROPERTY AND CASUALTY LICENSE


	§ 4051.101. LICENSE REQUIRED.  (a) Except as provided by 
Section 4051.052, a person is required to hold a limited property 
and casualty license if the person acts as an agent who writes:
		(1)  job protection insurance as defined by Article 
25.01;                  
		(2)  exclusively, insurance on growing crops under 
Subchapter F;            
		(3)  any form of insurance authorized under Chapter 911 
for a farm mutual insurance company;
		(4)  exclusively, any form of insurance authorized to 
be solicited and written in this state that relates to:
			(A)  the ownership, operation, maintenance, or 
use of a motor vehicle designed for use on the public highways, 
including a trailer or semitrailer, and the motor vehicle's 
accessories or equipment;  or
			(B)  the ownership, occupancy, maintenance, or 
use of a manufactured home classified as personal property under 
Section 2.001, Property Code;
		(5)  a prepaid legal services contract under Article 
5.13-1 or Chapter 961; 
		(6)  exclusively, an industrial fire insurance policy:                        
			(A)  covering dwellings, household goods, and 
wearing apparel;             
			(B)  written on a weekly, monthly, or quarterly 
basis on a continuous premium payment plan;  and
			(C)  written for an insurer exclusively engaged in 
the business as described by Section 912.310;
		(7)  credit insurance, except as otherwise provided by 
Chapter 4055;  or    
		(8)  any other kind of insurance, if holding a limited 
property and casualty license to write that kind of insurance is 
determined necessary by the commissioner for the protection of the 
insurance consumers of this state.
	(b)  Subsection (a)(2) applies to an entity chartered by the 
federal Farm Credit Administration, as provided by the farm credit 
system under 12 U.S.C. Section 2001 et seq., as amended.
	(c)  This section does not apply to a person who wrote for the 
previous calendar year:
		(1)  policies authorized by Chapter 911 for a farm 
mutual insurance company that generated, in the aggregate, less 
than $50,000 in direct premium;  or
		(2)  industrial fire insurance policies that 
generated, in the aggregate, less than $20,000 in direct premium.

Added by Acts 2003, 78th Leg., ch. 1274, § 7, eff. April 1, 2005.          


	§ 4051.102. DESIGNATION OF KINDS OF INSURANCE.  A person 
who holds a limited property and casualty license may write only the 
kind of insurance designated on the license.

Added by Acts 2003, 78th Leg., ch. 1274, § 7, eff. April 1, 2005.          

SUBCHAPTER D. INSURANCE SERVICE REPRESENTATIVE LICENSE


	§ 4051.151. LICENSE REQUIRED.  A person is required to 
hold an insurance service representative license if the person is a 
salaried employee who performs assigned duties only in an office of 
a property and casualty agent, including explaining insurance 
coverage, describing an insurance product, quoting insurance 
premium rates, and issuing insurance binders only with the express 
approval of the property and casualty agent who supervises the 
license holder.

Added by Acts 2003, 78th Leg., ch. 1274, § 7, eff. April 1, 2005.          


	§ 4051.152. APPLICABILITY OF CERTAIN REQUIREMENTS.  The 
provisions of this title that apply to the holder of a general 
property and casualty license apply to the holder of a license 
issued under this subchapter, except that proof of financial 
responsibility is not required for a person licensed only under 
this subchapter.

Added by Acts 2003, 78th Leg., ch. 1274, § 7, eff. April 1, 2005.          

SUBCHAPTER E. COUNTY MUTUAL AGENT LICENSE


	§ 4051.201. LICENSE ISSUANCE.  The department shall issue 
a license to an individual applicant to act as an agent for a county 
mutual insurance company under Chapter 912 on receipt of 
certification from the company that the applicant has:
		(1)  completed a course of study and instruction in 
compliance with this subchapter;  and
		(2)  passed without aid a written examination 
administered by the company.  

Added by Acts 2003, 78th Leg., ch. 1274, § 7, eff. April 1, 2005.          


	§ 4051.202. COURSE.  (a) To be eligible to receive a 
license under this subchapter, an applicant must complete a course 
of study and instruction offered by the applicable company on motor 
vehicle insurance and insurance covering dwellings.
	(b)  The course of study and instruction must:                                 
		(1)  be at least five hours in duration;  and                                 
		(2)  include instruction on:                                                  
			(A)  the policies to be sold;  and                                           
			(B)  the laws relating to the regulation of 
insurance in this state.       

Added by Acts 2003, 78th Leg., ch. 1274, § 7, eff. April 1, 2005.          


	§ 4051.203. EXAMINATION.  (a) The commissioner shall 
prescribe a uniform examination for applicants that fairly tests 
knowledge of the information contained in the course provided under 
Section 4051.202.
	(b)  The department shall authorize a county mutual 
insurance company to administer the examination after approval by 
the department of a complete outline and explanation of the course 
and the manner of conducting the examination.

Added by Acts 2003, 78th Leg., ch. 1274, § 7, eff. April 1, 2005.          


	§ 4051.204. INVESTIGATION BY DEPARTMENT.  The department 
may investigate as necessary the manner of instruction and the 
examination administered by a company under this subchapter.

Added by Acts 2003, 78th Leg., ch. 1274, § 7, eff. April 1, 2005.          


	§ 4051.205. WITHDRAWAL OF COMPANY'S AUTHORITY.  The 
department may withdraw from a county mutual insurance company the 
authority under this subchapter to offer instruction and administer 
an examination.

Added by Acts 2003, 78th Leg., ch. 1274, § 7, eff. April 1, 2005.          


	§ 4051.206. APPLICABILITY OF LIMITED LICENSE 
LAWS.  Except as specifically provided by this subchapter, the 
provisions of this title that apply to the holder of a limited 
license apply to the holder of a license issued under this 
subchapter.

Added by Acts 2003, 78th Leg., ch. 1274, § 7, eff. April 1, 2005.          

SUBCHAPTER F. AGRICULTURAL INSURANCE AGENT


	§ 4051.251. APPOINTMENT OF AGENT.  (a) An insurer that 
holds a valid certificate of authority to engage in the business of 
insurance in this state and whose authority in this state and each 
other jurisdiction in which the insurer is authorized to engage in 
the business of insurance is limited to the business of insuring 
risks on growing crops may, subject to this subchapter, appoint and 
act through an agent licensed under Subchapter B, C, or E.
	(b)  An agent appointed under Subsection (a) may act as an 
agent for more than one insurer but may act as an agent under this 
subchapter only with respect to the business of insuring risks on 
growing crops.
	(c)  This title applies to the licensing and regulation of an 
agent appointed under this subchapter.

Added by Acts 2003, 78th Leg., ch. 1274, § 7, eff. April 1, 2005.          


	§ 4051.252. REQUIREMENTS FOR APPOINTMENT;  
PROCEDURE.  (a) To appoint an agent under this subchapter, an 
insurer must submit a completed appointment form to the department 
and pay a nonrefundable fee in an amount set by the department.
	(b)  The appointment form must be signed by a representative 
of the insurer. 
	(c)  The department shall approve an appointment unless the 
department determines that the applicant does not meet the 
requirements of this title.
	(d)  The department may waive any examination requirement 
imposed by this title for a license applicant seeking an 
appointment under this subchapter who has passed an examination as 
required by Federal Crop Insurance Corporation guidelines for 
administering the federal crop insurance program.

Added by Acts 2003, 78th Leg., ch. 1274, § 7, eff. April 1, 2005.          


	§ 4051.253. ACCEPTANCE OF CERTAIN CONTINUING 
EDUCATION.  The department may accept continuing education hours 
completed under the guidelines of the Federal Crop Insurance 
Corporation as satisfying the continuing education requirements 
imposed under this title.

Added by Acts 2003, 78th Leg., ch. 1274, § 7, eff. April 1, 2005.          


	§ 4051.254. RULES.  The commissioner may adopt rules 
necessary to implement this subchapter and to meet the minimum 
requirements of federal law, including regulations.

Added by Acts 2003, 78th Leg., ch. 1274, § 7, eff. April 1, 2005.          

SUBCHAPTER G. REGISTRATION OF HOME OFFICE EMPLOYEES


	§ 4051.301. REGISTRATION AND DISCLOSURE REQUIRED;  
FEE.  (a) A person is required to be registered with the department 
if the person acts as a full- time home office salaried employee who 
solicits or receives an application for the sale of insurance 
through an oral, written, or electronic communication for an 
insurer authorized to engage in the business of insurance in this 
state.
	(b)  A person who registers under this section must submit a 
nonrefundable registration fee in an amount set by the department.
	(c)  A person registered under this section shall disclose 
that the person is registered on making an oral, written, or 
electronic communication to solicit or receive an application for 
the sale of insurance.

Added by Acts 2003, 78th Leg., ch. 1274, § 7, eff. April 1, 2005.          


	§ 4051.302. CONTINUING EDUCATION REQUIREMENTS.  (a) An 
insurer authorized to engage in the business of insurance in this 
state whose general plan of operation includes the use of employees 
described by Section 4051.301 shall certify to the department that 
each of those employees receives at least 15 hours of continuing 
education annually.
	(b)  Each continuing education course provided by the 
insurer must be submitted to the department for certification as 
provided by Chapter 4004.
	(c)  A person registered under this subchapter shall comply 
with the continuing education requirements imposed by Chapter 4004 
as if the person were a licensed agent.
	(d)  The continuing education required by this section must 
be designed to give the employees:
		(1)  reasonable familiarity with:                                             
			(A)  the broad principles of insurance;                                      
			(B)  insurance licensing and regulatory laws;  and                           
			(C)  the terms and conditions of the insurance 
that the employees transact;
		(2)  a fair and general understanding of the duties of 
an insurer to an insured;  and
		(3)  training in ethical considerations.                                      

Added by Acts 2003, 78th Leg., ch. 1274, § 7, eff. April 1, 2005.          


	§ 4051.303. SUSPENSION OF REGISTERED EMPLOYEE;  
DISCIPLINARY ACTION AGAINST INSURER.  The registration of an 
employee under this subchapter shall be suspended and the insurer 
who employs the registered employee may be disciplined for any act 
for which an agent may be disciplined under Subchapter C, Chapter 
4005.

Added by Acts 2003, 78th Leg., ch. 1274, § 7, eff. April 1, 2005.          

SUBCHAPTER H. TERMINATION OR SUSPENSION OF AGENT CONTRACTS BY 
PROPERTY AND CASUALTY INSURERS


	§ 4051.351. APPLICABILITY OF SUBCHAPTER.  (a) Except as 
provided by Subsection (b), this subchapter applies to each 
contract between an agent and an insurer engaged in the business of 
property and casualty insurance in this state.
	(b)  This subchapter does not apply to:                                        
		(1)  the termination or suspension by an insurer of an 
agent's contract because of:
			(A)  insolvency;                                                             
			(B)  abandonment;                                                            
			(C)  gross and wilful misconduct;                                            
			(D)  failure to pay the insurer money due to the 
insurer after receipt of a written demand;  or
			(E)  revocation of the agent's license by the 
department;  or              
		(2)  the termination or suspension by an insurer of an 
agent's contract if the insurance policies and insurance business 
are owned by the insurer rather than the agent.

Added by Acts 2003, 78th Leg., ch. 1274, § 7, eff. April 1, 2005.          


	§ 4051.352. SUSPENSION OF AGENT'S CONTRACT;  OTHER 
DEFINITIONS.  (a) For purposes of this subchapter, "suspension," 
with regard to an agent's contract, means the temporary cessation 
of business relations between an insurer and an agent and refusal by 
the insurer to accept insurance contracts submitted by the agent.  
The term does not include a situation in which business is suspended 
immediately after a natural disaster.
	(b)  The commissioner shall adopt reasonable rules to 
provide definitions necessary to accomplish the purposes of this 
subchapter.

Added by Acts 2003, 78th Leg., ch. 1274, § 7, eff. April 1, 2005.          


	§ 4051.353. NOTICE REQUIRED BEFORE TERMINATION OR 
SUSPENSION OF CONTRACT.  (a) An insurer may not terminate or 
suspend a contract with an appointed agent that has been in effect 
for at least two years unless the insurer provides written notice of 
the termination or suspension to the agent at least six months 
before the date the termination or suspension takes effect.
	(b)  A contract that replaces or revises a contract that has 
been in effect for at least two years is subject to this subchapter 
if there has not been a material change in the ownership of the 
agency.

Added by Acts 2003, 78th Leg., ch. 1274, § 7, eff. April 1, 2005.          


	§ 4051.354. AUTOMATIC TERMINATION OF CONTRACT ON 
WITHDRAWAL FROM STATE OR REDUCTION OF BUSINESS.  (a) An insurer 
that withdraws from this state or reduces the insurer's total 
annual premium volume by at least 75 percent in any year is 
considered to have terminated the contracts of the insurer's 
agents.  Except as provided by Subsection (b), the insurer shall 
comply with the requirements of this subchapter.
	(b)  An insurer described by Subsection (a) shall renew each 
contract for property and casualty insurance for the affected agent 
for 24 months from the date of the notice of termination or 
suspension of the contract.
	(c)  This section does not apply to the transfer of business 
from an insurer to another insurer with which the agent has a 
contract and that:
		(1)  is under common ownership;  and                                          
		(2)  is admitted to engage in the business of insurance 
in this state.      

Added by Acts 2003, 78th Leg., ch. 1274, § 7, eff. April 1, 2005.          


	§ 4051.355. RENEWAL OF INSURANCE CONTRACTS AFTER NOTICE 
OF TERMINATION OR SUSPENSION.  (a) Except as provided by Subsection 
(b), an insurer that terminates or suspends an agent's contract 
with an appointed agent shall renew all contracts for property and 
casualty insurance for the agent during the six months after the 
effective date of the termination or suspension of the contract.
	(b)  The insurer may decline to renew an insurance contract 
if any risk does not meet the insurer's current underwriting 
standards.  The insurer must provide at least 60 days' notice to the 
agent of the insurer's intent not to renew the contract.
	(c)  An insurer that renews an insurance contract under this 
section shall pay to the agent commissions for the renewal 
according to the commission schedule that was in effect for the 
agent before the insurer's decision to terminate or suspend the 
agent's contract.
	(d)  An insurer that renews an insurance contract under this 
section may not require the agent to convert from agency billing to 
company billing during the termination period unless the agent 
agrees in writing to the conversion.

Added by Acts 2003, 78th Leg., ch. 1274, § 7, eff. April 1, 2005.          


	§ 4051.356. INSURER REFUSAL TO RENEW AGENT'S BUSINESS 
PROHIBITED.  During the term of the agent's contract, the insurer 
may not refuse to renew business from the agent that complies with 
the underwriting standards in effect for agents of the insurer 
whose contracts have not been terminated or suspended.

Added by Acts 2003, 78th Leg., ch. 1274, § 7, eff. April 1, 2005.          


	§ 4051.357. INSURER APPROVAL FOR NEW BUSINESS OR INCREASE 
IN LIABILITY.  An agent who receives notice of termination or 
suspension of the agent's contract from an insurer may not write, 
without the written approval of the insurer:
		(1)  any new business;  or                                                    
		(2)  any increase in liability on a renewal policy or an 
existing policy.   

Added by Acts 2003, 78th Leg., ch. 1274, § 7, eff. April 1, 2005.          


	§ 4051.358. PROVISION OF UNDERWRITING STANDARDS TO AGENT 
WHOSE CONTRACT IS TERMINATED OR SUSPENDED.  (a) On providing notice 
to an agent of termination or suspension of the agent's contract 
under this subchapter, the insurer shall provide to the agent the 
insurer's written underwriting standards.  The standards must 
conform to the underwriting standards that were in effect for that 
agent before the insurer's decision to terminate or suspend the 
agent's contract.
	(b)  An insurer may provide different underwriting standards 
to different agents of the insurer if the standards are not used in 
a way that prevents or discourages the renewal of the insurance 
policies of an agent whose contract is terminated or suspended.

Added by Acts 2003, 78th Leg., ch. 1274, § 7, eff. April 1, 2005.          


	§ 4051.359. PAYMENT OF MONEY DUE INSURER.  An insurer 
shall allow an agent whose contract has been terminated or 
suspended under this subchapter to pay to the insurer all money due 
under the same accounts current payment terms in effect for agents 
of the insurer whose contracts have not been terminated or 
suspended.

Added by Acts 2003, 78th Leg., ch. 1274, § 7, eff. April 1, 2005.          


	§ 4051.360. REVISION OF TERMINATION PROVISIONS OF AGENT'S 
CONTRACT.  (a) This subchapter does not prohibit an amendment of or 
addendum to an agent's contract providing that the contract may be 
terminated before the time required by this subchapter if the agent 
agrees in writing to the earlier termination.
	(b)  An insurer that proposes to revise the termination 
provisions of an agent's contract must first present the agent with 
a separate written impact statement that summarizes any effect that 
the proposed amendment or addendum would have on the agent's rights 
under this subchapter.

Added by Acts 2003, 78th Leg., ch. 1274, § 7, eff. April 1, 2005.          


	§ 4051.361. ADMINISTRATIVE PENALTY.  If the department 
determines that an insurer has violated this subchapter, the 
insurer is subject to an administrative penalty as provided by 
Chapter 84 of not less than $1,000 or more than $10,000.

Added by Acts 2003, 78th Leg., ch. 1274, § 7, eff. April 1, 2005.          


	§ 4051.362. ACTION FOR DAMAGES.  An agent who has 
sustained actual damages as a result of an insurer's violation of 
this subchapter may bring an action against the insurer regardless 
of whether the department has determined that there has been a 
violation of this subchapter.

Added by Acts 2003, 78th Leg., ch. 1274, § 7, eff. April 1, 2005.