Texas insurers and life and health agent license types

Certificates of Authority and the Business of Insurance

An insurance company is defined in Texas as a company engaged as a principal in the business of insurance (Tex. Ins. Code §982.001(5)). An insurer is the issuer of an insurance policy that is issued to another person in consideration of a premium and that insures against an insurable loss (Tex. Ins. Code §801.001(2)). Under Chapter 801, the term insurer includes a stock company, a mutual company of any kind, a fraternal benefit society, a Lloyd's plan, a reciprocal or interinsurance exchange, a group hospital service corporation, and a health maintenance organization (Tex. Ins. Code §801.001(2)).

The Texas Department of Insurance must approve, deny, or disapprove an insurer’s application for a certificate of authority; an issued certificate authorizes the insurer to engage in the business of insurance (Tex. Ins. Code §§801.051(a), 801.052). If the department determines that an applicant has complied with the law, it issues under its seal a certificate of authority to act as an insurer (Tex. Ins. Code §801.051(b)). This certificate authorizes the insurer to engage in the business of insurance in Texas and must state the specific kinds of insurance authorized under it (Tex. Ins. Code §801.052). Once issued, a certificate of authority is effective until it is suspended or revoked (Tex. Ins. Code §801.053). If the department denies an application, the commissioner must hold a hearing on that denial if the applicant requests one (Tex. Ins. Code §801.051(c)). The commissioner must request a hearing date not later than the 30th day after the date of the applicant's request (Tex. Ins. Code §801.051(c)).

Texas law specifically outlines what conduct constitutes engaging in the business of insurance. It includes making or proposing to make an insurance contract as an insurer, or making or proposing to make a guaranty or suretyship contract as a vocation and not merely as an incident of another legitimate business or activity (Tex. Ins. Code §101.051(b)(1), (2)). It also includes taking or receiving an insurance application, receiving or collecting any consideration for insurance such as a premium, commission, membership fee, assessment, or dues, and issuing or delivering an insurance contract to a Texas resident or to a person authorized to do business in Texas (Tex. Ins. Code §101.051(b)(3), (4), (5)). Furthermore, it includes contracting to provide indemnification or expense reimbursement for a medical expense in Texas to a person domiciled in Texas or for a risk located in Texas (Tex. Ins. Code §101.051(b)(7)). In this context, medical expense includes surgical, chiropractic, physical therapy, speech pathology, audiology, professional mental health, dental, hospital, or optometric expenses (Tex. Ins. Code §101.051(a)).

The business of insurance also encompasses intermediary activities. It includes directly or indirectly acting as an agent in soliciting, negotiating, procuring, or effectuating insurance (Tex. Ins. Code §101.051(b)(6)(A)). It covers representing or assisting an insurer or person in disseminating coverage or rate information, forwarding applications, delivering policies, inspecting risks, setting rates, or investigating or adjusting claims or losses (Tex. Ins. Code §101.051(b)(6)(B), (C), (D), (E), (F), (G)). Finally, an act constituting the business of insurance by an unlicensed or unauthorized person or insurer that occurs in Texas and affects a person in another jurisdiction also constitutes the business of insurance in Texas (Tex. Ins. Code §101.051(c)). An act listed in §101.051(b) that an unlicensed or unauthorized person performs in Texas constitutes the business of insurance in Texas even if it affects a person in another jurisdiction (Tex. Ins. Code §101.051(c)).