CHAPTER 4051. PROPERTY AND CASUALTY AGENTS - Texas Statutes

INSURANCE CODE

TITLE 13. REGULATION OF PROFESSIONALS

SUBTITLE B. AGENTS

CHAPTER 4051. PROPERTY AND CASUALTY AGENTS

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 4051.001. APPLICABILITY OF CHAPTER. (a) This subchapter

and Subchapters B-E, G, and I 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, G, and I 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, Sec. 7, eff. April 1,

2005.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

548, Sec. 2.23, eff. September 1, 2007.

Sec. 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 Chapter 444.

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

2005.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

730, Sec. 2J.003, eff. April 1, 2009.

SUBCHAPTER B. GENERAL PROPERTY AND CASUALTY LICENSE

Sec. 4051.051. LICENSE REQUIRED. (a) 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.

(b) Notwithstanding Subsection (a), a person is not required to

hold a general property and casualty license to engage in an

activity described by Subsection (a) if the person:

(1) holds a license under this chapter as a personal lines

property and casualty agent; and

(2) limits activities described by Subsection (a) to those

activities authorized under the scope of the person's license.

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

2005.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

548, Sec. 2.24, eff. September 1, 2007.

Sec. 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, Sec. 7, eff. April 1,

2005.

Sec. 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, Sec. 7, eff. April 1,

2005.

Sec. 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, Sec. 7, eff. April 1,

2005.

SUBCHAPTER C. LIMITED PROPERTY AND CASUALTY LICENSE

Sec. 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 Section 962.002;

(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, Sec. 7, eff. April 1,

2005.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

730, Sec. 2J.004, eff. April 1, 2009.

Sec. 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, Sec. 7, eff. April 1,

2005.

SUBCHAPTER D. INSURANCE SERVICE REPRESENTATIVE LICENSE

Sec. 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, Sec. 7, eff. April 1,

2005.

Sec. 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, Sec. 7, eff. April 1,

2005.

SUBCHAPTER E. COUNTY MUTUAL AGENT LICENSE

Sec. 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, Sec. 7, eff. April 1,

2005.

Sec. 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, Sec. 7, eff. April 1,

2005.

Sec. 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, Sec. 7, eff. April 1,

2005.

Sec. 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, Sec. 7, eff. April 1,

2005.

Sec. 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, Sec. 7, eff. April 1,

2005.

Sec. 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, Sec. 7, eff. April 1,

2005.

SUBCHAPTER F. AGRICULTURAL INSURANCE AGENT

Sec. 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, Sec. 7, eff. April 1,

2005.

Sec. 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, Sec. 7, eff. April 1,

2005.

Sec. 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, Sec. 7, eff. April 1,

2005.

Sec. 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, Sec. 7, eff. April 1,

2005.

SUBCHAPTER G. REGISTRATION OF HOME OFFICE EMPLOYEES

Sec. 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, Sec. 7, eff. April 1,

2005.

Sec. 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, Sec. 7, eff. April 1,

2005.

Sec. 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, Sec. 7, eff. April 1,

2005.

SUBCHAPTER H. TERMINATION OR SUSPENSION OF AGENT CONTRACTS BY

PROPERTY AND CASUALTY INSURERS

Sec. 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, Sec. 7, eff. April 1,

2005.

Sec. 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, Sec. 7, eff. April 1,

2005.

Sec. 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, Sec. 7, eff. April 1,

2005.

Sec. 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, Sec. 7, eff. April 1,

2005.

Sec. 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, Sec. 7, eff. April 1,

2005.

Sec. 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, Sec. 7, eff. April 1,

2005.

Sec. 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, Sec. 7, eff. April 1,

2005.

Sec. 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, Sec. 7, eff. April 1,

2005.

Sec. 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, Sec. 7, eff. April 1,

2005.

Sec. 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, Sec. 7, eff. April 1,

2005.

Sec. 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, Sec. 7, eff. April 1,

2005.

Sec. 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, Sec. 7, eff. April 1,

2005.

SUBCHAPTER I. PERSONAL LINES PROPERTY AND CASUALTY AGENT

Sec. 4051.401. PERSONAL LINES PROPERTY AND CASUALTY LICENSE;

LICENSE REQUIRED. A person is required to hold a personal lines

property and casualty license if the person acts as:

(1) an agent who writes property and casualty insurance sold to

individuals and families primarily for personal or household use

for an insurer authorized to engage in the business of property

and casualty insurance in this state; or

(2) a subagent of a person who holds a license as an agent under

this subchapter who solicits and binds insurance risks for that

agent.

Added by Acts 2007, 80th Leg., R.S., Ch.

548, Sec. 1.01, eff. September 1, 2007.

Sec. 4051.402. AUTHORITY TO WRITE ADDITIONAL LINES. (a) A

person who holds a personal lines property and casualty license

may write the kind of insurance contracts described by:

(1) this subchapter;

(2) Subchapters C and E; and

(3) Chapter 4055.

(b) In addition to any of the insurance contracts described by

Subsection (a), a person who holds a personal lines property and

casualty license may write accident and health insurance

contracts for individuals and families for personal, family, or

household purposes for a property and casualty insurer authorized

to sell those insurance products in this state.

Added by Acts 2007, 80th Leg., R.S., Ch.

548, Sec. 1.01, eff. September 1, 2007.

Sec. 4051.403. PERSONAL LINES INCLUDED IN GENERAL PROPERTY AND

CASUALTY LICENSE. Notwithstanding Section 4051.401, a person who

holds a general property and casualty license under Subchapter B

may write the kinds of insurance described by this subchapter.

Added by Acts 2007, 80th Leg., R.S., Ch.

548, Sec. 1.01, eff. September 1, 2007.

Sec. 4051.404. FEES. Section 4001.006 applies to all fees

collected under this subchapter.

Added by Acts 2007, 80th Leg., R.S., Ch.

548, Sec. 1.01, eff. September 1, 2007.