The Department has learned that some licensees have obligations to entities that are in receivership or in hazardous financial condition, and that licensees are forgoing honoring their commitments to these entities because of the entities' financial condition.
Texas Insurance Code Section 4005.101 provides that it is a violation of the Insurance Code for an agent to convert, misapply, or fail to provide to an insurer any funds as required by either statute or contract. An agent or agency's refusal to meet any such obligations to the insurer may constitute a breach of both statutory and fiduciary duties. These obligations and duties on the part of the agent/agency remain in place, even if the insurer is insolvent and/or placed in receivership.
The failure by any agent or agency to remit any funds owed to an insurer, even an insurer that is in hazardous financial condition and/or is in receivership, is a violation of the Insurance Code and makes the agent susceptible to a disciplinary action by the Department.
The Department urges agent/agencies and all other parties to comply with their fiduciary and contractual duties to an insurer regardless of the insurer's financial condition. For questions related to agents' balances owed to companies in receivership, contact the Department's Rehabilitation & Liquidation Division at RLO@tdi.state.tx.us.
For all other questions relating to agents' balances, contact for questions: License@tdi.state.tx.us or 512-322-3503.
Mike Geeslin
Commissioner of Insurance