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Texas Department of Insurance
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Subchapter D. Effect of Criminal Conduct on Licenses

28 TAC §1.501 and 1.502

The Commissioner of Insurance adopts the repeal of Subchapter D, §§1.501 and 1.502, concerning the effect of criminal conduct on licenses. The repeal is adopted without changes to the proposal as published in the February 27, 2004 issue of the Texas Register (29 TexReg 1840) and will not be republished.

The repeal of these sections was necessary to allow the department to adopt new rules that address the department´s determination of a person´s fitness for holding a license, authorization, or registration, or a person´s fitness to have the ability to control licensed and authorized entities.

The purpose of this repeal is to allow the department to adopt new rules that clarify and more fully describe the department´s policies and procedures and also eliminate obsolete references to licenses which no longer exist or have changed. Simultaneous to this repeal, adopted new Subchapter D, §§1.501 and 1.502, is published elsewhere in this issue of the Texas Register.

SUMMARY OF COMMENTS. No comments were received regarding adoption of the repeal.

Repeal of Subchapter D, §§1.501 and 1.502, is adopted under the Occupations Code, Government Code, and Insurance Code. Insurance Code §§801.101, 801.102, and 801.151 - 801.155 authorize the commissioner to review the fitness and reputation of officers, directors and persons in control of insurance companies and to refuse or revoke a certificate of authority to any company based on a determination that such officer, director or controlling person is not worthy of public confidence. Articles 9.37 (B), 9.44 §2, and 9.56 §8 authorize the commissioner to deny or revoke the license of a title insurance agent or direct operation, escrow officer, or title attorney if the person has been guilty of fraudulent or dishonest practices.Article 21.01 §§3 and 4 provide that, except as otherwise provided by the Insurance Code, the provisions of Insurance Code, Chapter 21, Subchapter A, apply to the persons licensed under the provisions listed in Section (3) and authorize the commissioner to adopt rules necessary to implement Insurance Code, Chapter 21, Subchapter A. The listed provisions include the following Insurance Code license, certificate and registration types: surplus lines agent, Section 981.202; general life, accident, and heath agent, Article 21.07-1 §2; limited life, accident, and health agent, Article 21.07-1 §4; funeral prearrangement life insurance agent, Article 21.07-1 §5; life insurance not exceeding $15,000 agent, Article 21.07-1 §6; life and health insurance counselor, Article 21.07-2; managing general agent, Article 21.07-3; adjuster, Article 21.07-4; public insurance adjuster, Article 21.07-5; third party administrator, Article 21.07-6; reinsurance intermediary manager and broker, Article 21.07-7; specialty license, Article 21.09; nonresident agent applicants, Article 21.11; general property and casualty agent, Article 21.14 §2; limited property and casualty agent, Article 21.14 §6; insurance service representative, Article 21.14 &s ect; ;8; full-time home office employee, Article 21.14 §7; county mutual agent, Article 21.14 §9; risk manager, Article 21.14-1; agricultural agent, Article 21.14-2. Each of these license, certification and registration types is subject, in addition to the provisions of Insurance Code Chapter 82, to the provisions of Article 21.01-2 §3A (a) and (c), which provide that the department may revoke or deny a license or registration subject to that article of a person who has been convicted of a felony or engaged in fraudulent or dishonest activities. Further, Article 21.07 §2(f), (i), (n), (o), and (s) require the department to find that an applicant for an agent's license or the applicant's officers, directors, partners and other persons with a right to control the applicant have not committed an act for which licensure can be denied or revoked under Article 21.01-2 §3A. Article 21.07-2 §5(a) states that life and health insurance counselors are subject to the same licensing requirements as are applicable to agents under Insurance Code, Chapter 21, Subchapter A. Article 21.07-4 §§7 and 17 also require adjusters to be trustworthy and authorize the department to discipline licensed adjusters and deny adjuster license applications under the applicable insurance laws of this state, which includes Article 21.01-2 §3A. Article 21.07-5 §§5, 5A, 15, 15A, 16, and 30 authorize the department to deny public insurance adjuster license and training certificate applications and revoke issued licenses and certificates based on a felony conviction or engaging in fraudulent of dishonest activities. Article 21.11 §1(e) authorizes the department to use the criminal history records of nonresident license applicants to determine eligibility for licensure in accordance with Texas law. Section 1111.005(a) (1), (5) and (8) provide that the commissioner may deny or revoke a viatical or life settlement registration if the commissioner finds the applicant, individually or through any o ffice r, director, or shareholder of the registrant or applicant, has been convicted of a felony or has been convicted of a misdemeanor involving moral turpitude or fraud. Article 21.58A §§3 and 13 authorize the commissioner to adopt rules regarding the certification of utilization review agents. Article 21.58C §2(a)(1) authorize the commissioner to adopt rules and standards for the certification, suspension and revocation of independent review organizations. Article 5.43-1 §8(a) and (b) authorize the commissioner to establish rules and evaluate the qualifications of persons and firms applying for licensure and permits for the design, installation and testing of fire extinguishing equipment. Article 5.43-2 §6(a) provides that the commissioner may adopt rules for licensees involved with fire alarm or fire detection devices or systems. Article 5.43-3 §7(a)(2) provides that the commissioner may establish the qualifications of applicants for certificates of registration and licenses regarding fire sprinkler systems. Occupations Code §2154.051(1) and (3) authorize the commissioner to establish qualifications for fireworks licenses and permits and pyrotechnic operators. Government Code §417.005 provides that the Commissioner of Insurance may adopt rules to guide the State Fire Marshal in the performance of duties for the commissioner. Insurance Code §36.001 provides that the Commissioner of Insurance may adopt any rules necessary and appropriate to implement the powers and duties of the Texas Department of Insurance under the Insurance Code and other laws of this state.

Subchapter D. Effect of Criminal Conduct on Licenses

§1.501. Purpose and Scope.

§1.502. Effect of Criminal Conduct of Applicants, Licensees, and Corporate Officials on Licensure.

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