SUBCHAPTER I. LICENSING FEES 28 TAC §§19.801

The Texas Department of Insurance proposes amending §§19.801 and 19.802 and adding new §19.803 concerning licensing, registration, examination, and appointment fees. The proposed sections clarify instructions on submitting fee payments; clarify the status of refunds, transfers, and reductions of fees; increase the original application fee for managing general agents; increase the original application and renewal fees for insurance service representatives; set a standard examination fee; set a standard appointment fee; and set licensing and registration fees for general lines - property and casualty agents, general lines - life, accident and health agents, adjusters, limited lines agents, surplus lines agents, specialty insurance agent, county mutual agents, funeral prearrangement life insurance agents, life insurance not exceeding $15,000 agents, risk managers, life and health insurance counselors, and full-time home office salaried employee registrants as required under amendments to the Insurance Code by Senate Bill 414, 77th Legislature, and amendments to Government Code §2054.252(g), by Senate Bill 187, 77th Legislature.

The proposed sections are necessary to implement changes required by amendments to Government Code §2054.252(g) and also to maintain effective regulation of insurance licensees by establishing fees sufficient to cover department administration costs, which include licensure, enforcement of disciplinary requirements, and market conduct examinations, among other regulatory protections.

Proposed amendments to §19.801 instruct original license applicants and full-time home office salaried employee registrants when and to whom fee payments are required to be made. Proposed §19.801(e) and (f) provide that fees paid to the department for original applications, renewal applications, home office registrations, appointments, and examinations are not refundable, transferable, or reducible except as provided.

Proposed amendments to §19.802(b) list the license types created by Senate Bill 414 and propose application, renewal, appointment, and department administered examination fees for these license types. The proposed amendments to §19.802(b) also list the county mutual agent, funeral prearrangement life insurance, and life insurance not exceeding $15,000 agent license types and full-time home office salaried employee registration, and set application, renewal, and appointment fees for these license types and the full-time home office salaried employee registration fee. The proposed amendments to §19.802(b) also set all department administered examination fees at $50 subject to the provision in the existing rule that the examination fees will only apply if the department does not contract with a designated testing service.

As a part of setting fees, the proposed amendments to §19.802(b) reflect the $3 subscription fee that has been assessed against each license type that is renewable online through the Texas OnLine Authority. Government Code §2054.252 requires the department to raise licensing fees in an amount sufficient to cover the Texas OnLine Authority subscription fee. The purpose of the subscription fees, which are being assessed against the licensees of 26 state agencies, is to fund the Texas OnLine Project, which provides licensees and the public with access to state government over the internet. The subscription fee applies to each renewal whether or not the renewal is actually made online or by some other method. As such, by setting all renewal fees at $50, the proposed amendments to §19.802(b) effectively reduce by $1 the existing $48 renewal fee for continuing license types renewable over the internet then increases the fee by $3 in compliance with Government Code §2054.252. The proposed renewal fee for new license types and the insurance service representatives is being set at $50, which includes the Texas OnLine Project subscription fee.

Setting original application and renewal fees for these license types at the same $50 amount will simplify the administration and collection of licensing fees and reduce confusion created by having different fees for different license types as well as different fees for application and renewal of the same licenses. Simply adding the $3 renewal fee to the existing fee structure would create an unusual situation where the renewal fee would be one dollar greater than the application fee. Further, the adjuster and risk manager license types are limited by statute to a maximum license renewal fee of $50 and could not be increased to the full $51 amount.

A structure with multiple fees for similar actions tends to create and increase confusion among applicants, causing possible delays in licensing, increased renewal rejections, increased inquiries to the department, and overall effect of diminishing the efficiency of the licensing process, which is adverse to the interests of both the insurance industry and the public.

The proposed amendments to §19.802(b)(7)(A) and (B) increase the original application and renewal fee for insurance service representatives to $50. The proposed amendments to §19.802(b)(8)(A) and (E) increase the original application fee for managing general agents to $50 and sets an emergency application fee of $50. Proposed amendments to §19.802(b)(11) clarify that each of the six license authorities available for specialty license holders requires a separate license and renewal fee. The proposed amendment to §19.802(b)(18) sets a standard fee for the expanded range of temporary license applications authorized under Insurance Code Article 21.07 §3A. The proposed amendments to §19.802(c) clarify the fee requirements for the limited lines agent license type authorized by Insurance Code Articles 21.07-1 §4 and 21.14 §6. The proposed amendments to §19.802(d) clarify the fee requirements for the general lines agents appointed as subagents. The proposed amendment to §19.802(e) clarifies that fees are the same for residents and nonresidents and that Insurance Code Article 21.11 does not create a license type.

Proposed §19.803 clarifies that the increases in renewal fees required by the Government Code §2054.252 will affect only licensees having a license renewal date on or after November 1, 2002, and sets the renewal fee for licensees with license renewal dates before that date.

Matt Ray, deputy commissioner, licensing division, has determined that for the first five years the proposed sections will be in effect, there will be an increase in revenue to state government in the approximate amount of $242,500 annually as a result of the enforcement and administration of these rules due to the renewal fee increases as a result of the Texas OnLine Project subscription fee and the increase in the license fees for managing general agents and insurance service representatives. The department estimates that of the licenses subject to the Texas OnLine Project subscription fee, approximately 100,000, including 1,000 insurance service representatives, will be renewed annually. For the approximately 99,000 license renewals affected by raising the renewal fee for continuing license types by a net amount of $2 and establishing a renewal fee of $50 for converted license types, these proposals should annually generate approximately $198,000. The subscription fees to be paid on the 36 expected annual reinsurance intermediary license renewals will be paid from their current licensing fee and will not significantly impact these estimates. The department projects that approximately 100 original managing general agent and 350 original insurance service representative license applications will be filed annually and that the fee increase to $50 will annually generate an additional $12,500. The department projects that approximately 1000 insurance service representatives will renew their licenses annually and that the fee increase to $50 will annually generate an additional $32,000. The department will not receive an overall increase in fees generated by these proposals, but will annually transfer directly to the Texas OnLine Authority an estimated $300,000. The $57,500 difference in funds raised and funds transferred will come from licensing fees. Because the subscription fee and managing general agent and insurance service representative license fees will be collected through existing administrative processes, there will be no additional costs to the state as a result of enforcing or administering these sections. Mr. Ray has determined that for the first five years the remainder of the sections will be in effect, there will be no fiscal impact on state government as a result of the enforcement or administration of these rules. Mr. Ray has determined that for each year of the first five years the proposed sections will be in effect, there will be no fiscal impact to local governments as a result of the enforcement or administration of these rules. There will be no measurable effect on local employment or the local economy as a result of the proposal.

Mr. Ray has determined that for each year of the first five years the proposed sections are in effect, the anticipated public benefit of the sections is that the licensing fees assessed in the proposed rule will be sufficient to cover department administration costs, which include licensure, enforcement of disciplinary requirements, and market conduct examinations, among other regulatory protections. The anticipated public benefit of the renewal fee increase will be increased access to state government over the internet for the public and licensees.

The economic cost to comply with the proposed sections raising the license renewal fees results from the legislative enactment of Government Code §2054.252 and not as a result of the adoption, enforcement, or administration of the proposed sections. The economic costs to comply with the proposed sections establishing original application, registration, renewal, examination, and appointment fees result from the legislative enactment of Senate Bill 414 and its requirement that the department adopt fees sufficient to cover the cost of license administration. Following adoption, the costs for each separate general lines - life, accident and health agent, general lines - property and casualty agent, limited lines agent, funeral prearrangement life insurance agent, life insurance not exceeding $15,000 agent and insurance service representative license would be $50 per original application in each year of the first five years the sections are in effect. The costs of renewing each separate surplus lines, general lines - life, accident and health agent, funeral prearrangement life insurance agent, general lines - property and casualty agent, limited lines agent, surplus lines agent, life insurance not exceeding $15,000 agent, managing general agent, county mutual agent, adjuster, risk manager, insurance service representative, life and health insurance counselor license and/or specialty insurance agent authority would be $50 per biennial renewal. The cost of a full time home office employee registration would be a fee of $50 per registration. Costs for temporary license applicants as authorized by Insurance Code Article 21.07 §3A would be $100 per temporary application in addition to the original license application fee. The cost of an emergency license issued under Insurance Code Article 21.07-3 §7 would be $50 per application. The cost of an emergency license issued under Insurance Code Article 21.14 §5 would be $50 per application and will have no charge for the single renewal authorized under that article. The cost for each additional appointment would be $10 for all general lines - life, accident and health, general lines - property and casualty, limited lines, funeral prearrangement life insurance, and life insurance not exceeding $15,000 agent license types. The cost of each department administered examination or reexamination would be $50 for life and heath counselors, insurance service representatives, and surplus lines, general lines - life, accident and health, general lines - property and casualty, limited lines, and managing general agent license types, with the exception that the fee shall apply only if the department does not contract with a designated testing service to administer examinations, in which case the fee shall be the amount authorized to be charged pursuant to the department's agreement with the testing contractor. There is no difference in the costs of compliance between a large and small business as a result of the proposed sections as the costs set forth in these proposed sections apply equally to each licensee. In addition, the cost of labor per hour is not affected by the proposed sections and thus there is no disproportionate economic impact on small or micro businesses. The effect on small and micro businesses will be the fees established under this proposal. It is neither legal nor feasible to waive the provisions of the proposed subchapter for small or micro businesses since the Insurance Code requires that the department collect fees sufficient to cover the cost of license administration from each agent and does not authorize the department to discriminate in the application of those fees among persons holding the same license type.

To be considered, written comments on the proposal must be submitted no later than 5 p.m. on August 26, 2002 to Lynda H. Nesenholtz, General Counsel and Chief Clerk, Mail Code 113-2A, Texas Department of Insurance, P. O. Box 149104, Austin, Texas 78714-9104. An additional copy of the comments must be simultaneously submitted to Matt Ray, Deputy Commissioner, Licensing Division, Mail Code 107-1A, Texas Department of Insurance, P.O. Box 149104, Austin, Texas 78714-9104. Any requests for a public hearing should be submitted separately to the Office of the Chief Clerk.

The amendments and new sections are proposed under Government Code §2054.252 and Insurance Code Articles 1.14-2, 21.01, 21.01-1, 21.01-2, 21.07, 21.07-4, 21.07-7, 21.09, 21.14-1, 21.14-2 and §36.001. Government Code §2054.252 (g) requires the department to raise licensing fees in an amount sufficient to cover the Texas OnLine Authority subscription fee cost. Insurance Code Article 1.14-2 §§3A and 4(b) authorize the department to charge and set licensing fees for surplus lines agent licenses and adopt necessary rules. Article 21.01 §4 authorizes the commissioner to adopt rules necessary to implement Insurance Code, Chapter 21, Subchapter A. Article 21.01-1 §2(b) authorizes the department to charge and set agent licensing examination fees. Article 21.01-2 §1A(b) authorizes the department to set license renewal fees. Article 21.07 §6 (a) and (d) authorize the department to charge and set agent appointment fees. Article 21.07 §6C(a) authorizes the department to collect a nonrefundable license fee from each agent of an insurance carrier writing business in this state. Article 21.07 §6C(c) authorizes the department to set fees that are reasonable and necessary to implement Insurance Code, Chapter 21, Subchapter A. 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 §§14 and 24 authorize the department to establish licensing and examination fees for adjusters and adopt necessary rules. Article 21.07-7 §§4 and 11 authorize the department to establish licensing fees for reinsurance intermediary managers and brokers and adopt rules. Article 21.09 §1(b)(3) authorizes the department to establish licensing fees for specialty insurance agents. Article 21.14-1 §§7 and 15 authorize the department to establish licensing and examination fees for risk managers and adopt rules. Article 21.14-2 §§2 and 5 authorize the department to establish an appointment fee for agricultural insurance agents and adopt rules. Section 36.001 provides that the Commissioner of Insurance may adopt rules to execute the duties and functions of the Texas Department of Insurance as authorized by statute.

The following statutes are affected by the proposal: Government Code §2054.252; Insurance Code Articles 1.14-2; 21.01; 21.01-1; 21.01-2; 21.07 21.07-1; 21.07-2; 21.07-3; 21.07-4; 21.07-7 21.09, 21.11; 21.14; 21.14-1; and 21.14-2.

§19.801. General Provisions Regarding Licensing Fees and License Renewal.

(a) Original application.

(1) Applicants for an original license required to qualify for the license type by examination through the department's designated testing service, including temporary licenses, [ ~~The applicant~~] shall submit the required original application fee , the testing service's examination fee and, if applicable, the temporary license fee, at the time of filing an application for license and/or request for examination, to the department's designated testing service. [ ~~The original application fee is fully earned at the time of application, and shall not be reduced for any reason.~~]

(2) Applicants for an original license not required to qualify for the license type by examination from the department's designated testing service, or all applicants in the event the department does not have a designated testing service, shall submit all required fees at the time of filing an application for license and/or request for examination to the department.

(3) Insurance carriers utilizing registered home office salaried employees will submit the registration fee to the department at the time of filing the registration application.

(b) Renewal of license.

(1) - (2) (No change.)

(3) The department [ ~~commissioner's staff~~] may designate one expiration date per licensee, to apply to all licenses held by that licensee. The designated date shall be the date on which one license would normally expire. For licenses which normally would expire after the newly designated expiration date, renewal fees shall be reduced pro rata on a monthly basis. The fee reduction shall be for the renewal immediately following the institution of the designated expiration date. On each subsequent renewal, the licensee shall pay the full renewal fee for each license.

(c) Appointment. The fee for appointment of a currently licensed general lines agent as subagent by another general lines agent [ ~~solicitor~~], or for appointment of an agent to represent additional insurers, health maintenance organizations, or nonprofit legal services corporations, shall accompany the notice of appointment. An appointment fee is not required for the first appointment filed with the original license application.

(d) Submission [ ~~Submissions~~] of fees. All fees shall be submitted by [ in] check or money order made payable to the Texas Department of Insurance, except for applicants who must qualify by examination, where the application is to be submitted to the department's designated [ ~~a national~~] testing service, as provided under the Insurance Code, Article 21.01-1 , or if the license is renewable over the internet, where the renewal application is to be submitted under the Texas OnLine Project, in which case fees shall be submitted as directed by the designated testing service or the Texas OnLine Authority. Should the department authorize other online or electronic original applications or other transactions, persons shall submit fees with the transaction as directed by the department, the Texas OnLine Authority, or the department's designated service provider.

(e) All fees are fully earned at the time the application, registration, and/or appointment is filed with the department, or the department's designated testing service, and are not refundable or transferable to another application, registration or appointment whether such fee is submitted to the department or the department's designated testing service. These fees shall not be reduced for any reason, except when the term of the license is prorated as set forth under subsection (b)(3) of this section.

(f) All fees for examination, whether administered by the department or the department's designated testing service, are fully earned when the examination is scheduled and are not refundable or transferable to any other applicant or examination, except where approved by the department as provided under Insurance Code Article 21.01-1 §2(b). A separate fee is required for each new examination and reexamination. Examination fees shall not be reduced for any reason.

§19.802. Amount of Fees.

(a) (No change.)

(b) The amounts of fees are as follows:

(1) General lines - life, accident, and health agent [ ~~Group I, legal reserve life insurance agent~~]:

(A) original application -- $50;

(B) renewal -- $50[ ~~$48~~];

(D) qualifying examination -- $50.[ ~~$20;~~]

[ ~~(E) in addition to the original application fee listed in subparagraph (A) of this paragraph, an application filing fee for a temporary license of $100.~~]

(2) County mutual agent [ ~~Group II insurance agent~~]:

(A) original application -- $50;

(B) renewal -- $50[ ~~$48~~];

[ ~~(D) qualifying examination -- $20;~~]

[ ~~(E) in addition to the original application fee listed in subparagraph (A) of this paragraph, an application filing fee for a temporary license of $100.~~]

(3) Insurance adjuster:

(A) (No change.)

(B) renewal -- $50[ ~~$48~~];

(4) (No change.)

(5) General lines - property and casualty agent [ ~~Local recording agent~~]:

(A) original application -- $50;

(B) renewal -- $50[ ~~$48~~];

(D) qualifying examination -- $50 ;[ .]

(E) emergency application for license issued under Insurance Code Article 21.14 §5 -- $50 (for original application with no additional charge for renewal).

(6) Full-time home office salaried employee registration: [ ~~Solicitor:~~]

[ ~~(A)~~] original application -- $50; .[ ~~$20;~~]

[ ~~(B) renewal-- $18;~~]

[ ~~C) qualifying examination--$20;~~]

[ ~~(D) appointment of a currently licensed solicitor--$10.~~]

(7) Insurance service representative:

(A) original application -- $50[ ~~$20~~];

(B) renewal -- $50[ ~~$18~~];

(D) (No change.)

(8) Managing general agent:

(A) original application -- $50[ ~~$30~~];

(B) renewal -- $50[ ~~$48~~];

(D) qualifying examination -- $50;

(E) emergency application for license issued under Insurance Code Article 21.07-3 §7 -- $50.

(9) Limited lines agent (includes agents licensed under Insurance Code Articles 21.01-1 §4 and 21.14 §6) [ ~~Prepaid legal~~]:

(A) original application -- $50;

(B) renewal -- $50[ ~~$48~~];

(D) qualifying examination -- $50[ ~~$20~~].

(10) Surplus lines agent:

(A) (No change.)

(B) renewal -- $50[ ~~$48~~];

(11) Specialty insurance agent:

(A) original application -- $50 (per license authority);

(B) renewal -- $50 (per license authority)[ ~~$48~~];

(12) (No change.)

(13) Life insurance not exceeding $15,000 [ ~~Variable contract agent~~]:

(A) original application -- $50;

(B) renewal -- $50[ ~~$48~~];

(14) Risk manager:

(A) (No change.)

(B) renewal -- $50[ ~~$48~~];

[ ~~(15) Agricultural agent:~~]

[ ~~(A) original application--$50;~~]

[ ~~(B) renewal--$50;~~]

(15)[ ~~(16)~~] Life and health insurance counselor:

(A) (No change.)

(B) renewal -- $50[ ~~$48~~];

(16)[ ~~(17)~~] Funeral prearrangement life insurance agent [ ~~Nonresident property and casualty agent~~]:

(A) original application -- $50;

(B) renewal -- $50;[ ~~$48.~~]

(17)[ ~~(18)~~] Reinsurance intermediary:

(A) (B) (No change.)

(18) Temporary license application -- For license types authorized by Insurance Code Article 21.07 §3A to be issued on a temporary basis, $100 in addition to the original license application fee for each license type.

(19) (No change.)

(c) The limited lines agent license is a single license type that is authorized under two Insurance Code articles. Persons licensed as limited lines agents may be appointed to sell or solicit any line authorized by Insurance Code Articles 21.07-1 §4 and/or 21.14 §6 without payment of additional license fees or examinations other than the necessary additional company appointment fees.

(d) A general lines agent appointed as subagent by another general lines agent is not a separate license type. All fees are the same for general lines agents appointed as subagents, as are fees for general lines agents appointed by insurance companies. Only general lines agents may appoint subagents and the subagent must be licensed as a general lines agent. General lines agents may simultaneously have multiple subagent and insurance company appointments.

(e) All fees are the same for both residents and nonresidents. Insurance Code Article 21.11 does not create an additional license type for nonresidents, but designates a procedure for licensing nonresidents under appropriate Texas license types.

§19.803. License Renewal Fees.

(a) The renewal fee for each license authority with a renewal date on or after November 1, 2002 will be the amount shown for the license type in §19.802 (b) of this title (relating to Amount of Fees). This fee shall apply even if payment for the renewal is received prior to November 1, 2002.

(b) The renewal fee for each license authority issued under Insurance Code Article 21.07-1 §§2, 4, 5, and 6 (general lines - life, accident, and health agent, limited lines agent, funeral prearrangement life insurance agent, and life insurance not exceeding $15,000); Article 21.07-2 (life and health insurance counselors); Article 21.07-3 (managing general agent); Article 21.07-4 (adjusters, all types); Article 21.09 (specialty insurance agent); Article 21.14 §§2, 6, and 9 (general lines - property and casualty agent, limited lines agent, and county mutual agent); and Article 21.14-1 (risk managers) with a renewal date prior to November 1, 2002, will be $48.

(c) The renewal fee for each license authority under Insurance Code Article 21.14 (insurance service representative) with a renewal date prior to November 1, 2002, will be $18.