Texas Laws and Rules Pertinent to Insurance Lecture Notes

Comprehensive vocabulary flashcards covering Texas insurance laws, duties of the Commissioner, licensing, trade practices, and health/life insurance regulations based on the lecture transcript.

Texas Department of Insurance

The state department that regulates the business of insurance, administers the worker’s compensation system, ensures execution of insurance laws, protects consumers, and ensures fair competition.

Inquiry Response Requirement

A response to a reasonable inquiry from the Department of Insurance regarding an insurance company's condition or transactions is required within $10$ days.

Commissioner of Insurance

The chief executive and administrative officer of the Department of Insurance, appointed by the Governor for a $2$-year term ending on February 1st of each odd-numbered year.

Examination of Records

A financial examination of insurance companies conducted by the Commissioner at least once every $5$ years to determine solvency.

Notice of Hearing (Unfair Practice)

The amount of notice the Insurance Commissioner MUST give before holding a hearing regarding an agent's unfair or deceptive practice, which is $30$ days.

Administrative Penalty Limit

The maximum penalty for a violation of the Insurance Code or insurance law, which may not exceed $\$25,000$ unless otherwise specified.

Transacting Insurance

Activities including solicitation, inducement, negotiations, effectuation of a contract of insurance, and advising individuals concerning coverage or claims.

Agent

An individual who sells, solicits, or negotiates insurance on behalf of insurance companies for compensation.

Counselor

A life and health insurance professional who offers insurance advice for a fee or commission.

Broker

In Texas, a representative of the insured.

Fraternal Benefit Society

An association, order, or society without capital stock that has a representative form of government, is organized through a lodge system, and provides insurance only to its members.

Controlled Business

Insurance policies written on people or companies over which the agent has direct influence, such as family, employers, or entities where the agent has stock control.

Temporary License

An insurance agent license issued by the Commissioner for a maximum of $90$ days without requiring an examination.

License Renewal (CE)

Requirements for resident agents to renew their license every $2$ years, including $24$ hours of continuing education with $2$ hours covering ethics.

Twisting

Making or issuing statements misrepresenting insurance terms or making incomplete comparisons to induce a policyholder to forfeit, surrender, or replace a contract.

Fiduciary Responsibility

The position of trust an agent holds because they handle money belonging to the insured and the insurer.

Commingling

A prohibited act where an agent combines premiums collected with personal funds.

Domestic Insurance Company

An insurance company that is resides and is incorporated under the laws of the state in which its home office is located.

Foreign Insurance Company

An insurance company whose home office is located in another state.

Alien Insurance Company

An insurance company chartered and organized in any country other than the United States.

Authorized Insurer

An insurance company that has received a Certificate of Authority from the Insurance Department; also called an admitted company.

Stock Insurance Company

An insurance company owned and controlled by stockholders who provide capital and share in profits or losses, typically issuing nonparticipating policies.

Mutual Life Insurance Company

An insurance company owned and controlled by its policyowners, who share in profits via dividends and elect the governing body.

Defamation

The illegal practice of making false statements or unsubstantiated criticisms intended to harm or malign an insurance company.

Rebating

Offering a prospective client something of value not specified in the contract to induce the purchase of insurance.

Texas Life and Health Guaranty Association

An entity that provides claim payments for admitted, insolvent insurers, funded by assessments from insurance companies.

Backdating

The practice of dating a policy earlier than its actual issue date, which is limited to a maximum of $6$ months in Texas.

Grace Period

The $31$ day period during which a policy remains in force after the premium is due but not paid.

Incontestability Period

A provision making policy terms incontestable after the policy has been in force for $2$ years from its date of issue, except for fraud.

Notice Regarding Replacement

A document that must be signed by the agent and applicant if a transaction involves replacing an existing policy.

Free-Look Period (Life Insurance)

A minimum period of $10$ days upon policy delivery during which the policyowner can decide whether to keep the policy or receive a full refund.

Activities of Daily Living (ADL’s)

The basic tasks of everyday life, such as dressing, eating, bathing, and mobility, used to determine eligibility for long-term care.

Small Employer Health Benefit Plan

Health coverage available to small employers if at least $75\%$ of eligible employees elect to be covered ($100\%$ if there are only $2$ employees).

Metal Levels (ACA)

The four tiers of qualifying health plans based on actuarial value: Bronze ($60\%$), Silver ($70\%$), Gold ($80\%$), and Platinum ($90\%$).

Grandfathered Plans

Health plans purchased before March $23$, $2010$, which are exempt from some ACA regulations but cannot impose lifetime limits on coverage.