Texas statutes common to life and health

This section is broad because it governs the people and entities doing insurance business before the outline separates life from health. Its questions tend to ask who holds a permission, who owes a duty and what conduct triggers enforcement.

The rule in one view

Transacting insurance is defined by acts, not by intentions

The Code lists the acts that constitute the business of insurance in this state, and the list is long: making an insurance contract as an insurer, taking or receiving an application, receiving or collecting a premium, commission, membership fee, assessment or dues, issuing or delivering a contract to a Texas resident, and acting as an agent in soliciting, negotiating, procuring or effectuating insurance.

Doing any of those acts without authority is prohibited outright. A person, including an insurer, may not directly or indirectly do an act that constitutes the business of insurance except as authorized by statute.

The penalty is not administrative. Intentionally, knowingly or recklessly transacting unauthorized insurance is a felony of the third degree, and the only defense stated is that the section by its terms does not apply to the person charged.

Notice what is missing from the list: the word insurance. An arrangement that indemnifies or reimburses medical expense for a Texas risk is inside the definition however it describes itself, which is why unlicensed discount and reimbursement schemes get prosecuted.

A certificate of authority licenses the company; a license licenses you

A certificate of authority is issued to an insurer and states the specific kinds of insurance the insurer may write. It is effective until suspended or revoked, so there is no renewal date to remember for it.

A foreign life, accident or health company may not do business in Texas at all without one, and it obtains the certificate by showing that it has complied fully with Texas law.

Domestic, foreign and alien describe where the company was organized, not where it sells. An alien insurance company is one organized under the laws of a foreign country; a foreign company is organized in another state; a domestic company is organized here. All three can be authorized in Texas.

Fraternal benefit societies sit outside almost all of it. A fraternal has a lodge system, a representative form of government, no capital stock, and exists for the mutual benefit of its members. It is governed by its own chapter and exempt from the other insurance laws unless a statute names fraternals expressly.

A license and an appointment are separate permissions

Holding a license does not let you write business. A person who obtains a license may not engage in business as an agent unless an authorized insurer has appointed the person to act for it.

The license is yours and the appointment is the insurer relationship. An appointment continues in effect without renewal until it is terminated or withdrawn by the insurer or the agent, and a renewal license carries every appointment the agent already holds.

Timing runs in your favor. An appointed agent may act on behalf of the appointing insurer before the department receives the notice of appointment, so the agent is not idle while paperwork clears.

Without a license the door is shut in both directions. A person may not solicit or receive an application or aid in the transaction of an insurer business, and an insurer may not appoint an unlicensed person as its agent.

The unfair trade practices are a family of named acts

Misrepresentation is the first and widest. It is an unfair method of competition to circulate an estimate, illustration or statement misrepresenting the terms, benefits or dividends of a policy, to misrepresent the financial condition of an insurer or the legal reserve system it operates on, or to use a policy name that misrepresents its true nature.

False advertising is misrepresentation aimed at the public. Publishing or circulating an advertisement, announcement or statement containing an untrue, deceptive or misleading assertion about the business of insurance is prohibited, whether it appears in print, on radio or television, through the Internet, or in any other manner.

Defamation is aimed at a competitor. A statement that is false, maliciously critical of or derogatory to the financial condition of an insurer, and calculated to injure a person engaged in the business of insurance, is an unfair practice.

Boycott, coercion and intimidation require concerted action. The prohibition reaches an act committed through concerted action or an agreement to commit one, that results in or tends to result in unreasonable restraint of or monopoly in the business of insurance. A single agent acting alone is doing something else.

The guaranty association exists, and saying so to make a sale is illegal

A candidate expects a safety net to be a selling point. It is the opposite. No person may make, publish or circulate any advertisement, announcement or statement, oral or written, that uses the existence of the Texas Life and Health Insurance Guaranty Association to sell, solicit or induce the purchase of insurance the association covers.

Doing it is unfair competition and an unfair practice under the unfair trade practices chapter, with everything that follows from that. The prohibition reaches newspapers, circulars, letters, posters, radio, television and any other manner.

The one authorized mention runs the other way. The association prepares a summary document that a member insurer must deliver with the policy, and it has to warn the holder that coverage may not exist, that it is subject to substantial limitations and requires continuous residence in this state, that using the association to sell insurance is forbidden, and not to rely on it in selecting an insurer.

Know the shape of the protection anyway. Participation is a condition of holding a certificate of authority, and the ceilings are $300,000 in death benefits and $100,000 in net cash surrender value on a single life, $250,000 in annuity present value, and $500,000 for health benefit plans.

How the distinction appears in a question

Build the section around actors. The insurer holds a certificate of authority. The individual holds a license. An appointment connects the licensed agent to an insurer. The commissioner and Department enforce the Code. Mixing those documents and relationships creates many of the plausible wrong answers.

A practical way to study it

For study purposes, reduce texas statutes common to life and health to the decision the examiner is testing. Write the trigger on one side of a card and the consequence on the other. Then change one fact in the scenario and decide whether the answer changes. That method is slower than rereading once and much faster than relearning the distinction after a practice test.

Spend more time here than on any other Texas-law heading. The published outline assigns fourteen of the thirty Texas questions to the common-statutes area, so one clean map of the actors pays across nearly half of the state portion.

Where the summary stops

The Insurance Code supplies much of the framework, while detailed rules also sit in Title 28 of the Texas Administrative Code. This course holds the Code in full but does not reproduce Title 28, so rule-based detail is identified without pretending the text is held.