United States
Hong KongLicense denial, suspension and revocation in Texas
Section 4005.101 of the Insurance Code lists eleven grounds on which TDI may deny an application or discipline a license holder, from wilful violation of insurance law to misappropriating money, materially misrepresenting a policy, a felony conviction, and offering a rebate. Denial is not automatic and you are entitled to a hearing.
This is the section people should read before they spend USD 99 on a license, and almost nobody does. It is also the section every working agent should re-read once a year.
TDI's own general license requirements name it directly: the department issues a license to individuals who are at least eighteen, submit a completed application with fee and fingerprint receipt, and have not committed an act for which a license may be denied under section 4005.101.
The eleven grounds
| Ground | In plain terms |
|---|---|
| Wilfully violated an insurance law of this state | You broke a rule and knew you were doing it |
| Intentionally made a material misstatement in the application | You lied on the form |
| Obtained or attempted to obtain a license by fraud or misrepresentation | You lied to get the license itself |
| Misappropriated, converted or illegally withheld money | Belonging to an insurer, an HMO, an insured, an enrollee or a beneficiary |
| Engaged in fraudulent or dishonest acts or practices | The catch-all, and it is wide |
| Materially misrepresented policy terms and conditions | Including HMO membership contracts |
| Made incomplete comparisons to induce a replacement | Getting somebody to surrender or lapse a policy to sell them another |
| Been convicted of a felony | Any felony, not only a financial one |
| Offered or given a rebate of premium or commission | To an insured or enrollee |
| Not actively engaged in soliciting or writing insurance for the public | The condition in section 4001.104 |
| Obtained a license mainly to cover yourself, family or business associates | The license is for selling to the public |
Look at how much of that list is about honesty rather than competence. Three of the eleven are versions of lying, one is stealing, one is a felony conviction, and two are about selling in bad faith. The examination tests whether you know the products. This section tests something the examination cannot.
The two nobody expects
Rebating is the first. Offering or giving a rebate of premium or commission to a customer is a disciplinary ground in its own right, which surprises people who think of it as a discount rather than an offense. Texas treats it as unjust discrimination, and the prohibition is echoed across the code in the chapters governing individual lines. Compliance mistakes that cost agents their license covers what it actually looks like in practice.
The last two are the second surprise. A license obtained mainly to insure yourself, your family or your business associates is a ground for denial or discipline, and so is not being actively engaged in writing insurance for the general public. Texas does not issue this license so you can buy your own coverage at a commission. That is a specific, named misuse.
What TDI can actually do
Section 4005.102 sets out the remedies for a violation of the code, another insurance law or a commissioner's rule. The department may deny an original license application, suspend or revoke or refuse to renew, and it has the remedies in chapter 82 available on top.
It is not all or nothing. Section 4005.103 lets a suspension be probated with conditions attached, and section 4005.109 lets the commissioner establish fines by rule for certain violations, to expedite processing. Between doing nothing and revoking a license there is a graduated middle, which is how most regulatory systems actually work.
Section 4005.104 says that if the department proposes to deny an original license application, or to suspend, revoke or deny renewal, the applicant or license holder is entitled to a hearing conducted by the State Office of Administrative Hearings. An independent forum, not an internal one.
Coming back afterward
Section 4005.105 governs applying again after a denial or a revocation, and section 4005.106 sets a hard bar for certain determinations: a person the department determines has engaged in the conduct that section describes may not obtain an agent license before the fifth anniversary of the determination.
Section 4005.107 closes an obvious door. TDI may bring a disciplinary proceeding against a former license holder for conduct committed before a voluntary surrender or an automatic forfeiture, so handing your license back does not end an investigation into what you did while you held it.
If you have a record
A felony conviction is a ground for denial, and "may deny" is not "must deny". The section gives the department discretion, and the fingerprint check exists precisely so the department can exercise it on the facts.
So the practical advice is the same one the handbook gives: disclose. Failure to disclose criminal history information may itself result in denial of a license, which means concealment converts a discretionary decision into a straightforward one. Our opinion, and it is unambiguous: if there is something in your past, tell TDI about it on the application and let them weigh it, because the version where they find it themselves is strictly worse for you.
The concession: nothing on this page is legal advice, and eligibility is TDI's determination to make rather than ours. We hold the statute and can tell you what it says. What it means for one particular record, with one particular set of facts, is a conversation for the department and possibly for a lawyer.
Common questions
What can get a Texas insurance license denied?
Section 4005.101 lists eleven grounds, including wilfully violating insurance law, a material misstatement on the application, misappropriating money belonging to an insurer or insured, fraudulent or dishonest practices, materially misrepresenting a policy, a felony conviction, and offering a rebate.
Can you get a Texas insurance license with a felony?
A felony conviction is a ground on which TDI may deny an application, not one on which it must. The department has discretion and the fingerprint check exists so it can be exercised on the facts. Failing to disclose is separately treated as a reason for denial.
Is rebating really a licensing offense in Texas?
Yes. Offering or giving a rebate of an insurance premium or commission to an insured or enrollee is one of the eleven grounds in section 4005.101, and Texas treats rebating as unjust discrimination in the chapters governing individual lines of insurance.
Do you get a hearing before your license is revoked?
Yes. Section 4005.104 entitles an applicant or license holder to a hearing conducted by the State Office of Administrative Hearings where the department proposes to deny an original application, or to suspend, revoke or deny renewal of a license.
How long before you can reapply after revocation?
Section 4005.105 governs reapplication after a denial or revocation, and section 4005.106 sets a five-year bar following certain departmental determinations. Surrendering a license does not stop a proceeding: section 4005.107 lets TDI act on conduct committed before the surrender.