9.5 License Denial, Suspension, Revocation & Departmental Sanctions
Key Takeaways
- TIC section 4101.201 authorizes the commissioner to discipline an adjuster or deny a license application under a department rule or any applicable Texas insurance law, and department rules may mirror the disciplinary grounds applied to other license holders.
- TIC section 4005.101(b) lists eleven grounds for denial or discipline, including wilfully violating a Texas insurance law, intentionally making a material misstatement in the application, obtaining a license by fraud, misappropriating money belonging to an insurer or an insured, engaging in fraudulent or dishonest acts, materially misrepresenting policy terms, and being convicted of a felony.
- TIC section 4005.102 lets the department deny an application, suspend, revoke, or deny renewal of a license, place a suspended license holder on probation, assess an administrative penalty, or reprimand a license holder, in addition to any Chapter 82 remedy.
- TIC section 4101.202 prohibits the commissioner from reinstating or reissuing a suspended, revoked, or non-renewed adjuster license until the commissioner determines the cause for the action no longer exists.
- Chapter 82 supplies the department's general sanction and hearing machinery, while Chapter 83 authorizes emergency cease and desist orders when a person's conduct is fraudulent, hazardous, or an immediate danger to the public.
9.5 License Denial, Suspension, Revocation & Departmental Sanctions
Quick Reference: TIC § 4101.201 gives the commissioner authority to discipline an adjuster or deny an application under a department rule or any applicable insurance law of this state, and allows department rules to adopt grounds comparable to those used for other license holders. The operative catalogue of grounds is TIC § 4005.101(b), and the menu of sanctions is TIC § 4005.102. Once a license is suspended, revoked, or non-renewed, TIC § 4101.202 bars reinstatement until the commissioner determines the cause no longer exists.
1. The Grounds: TIC § 4005.101(b)
The department may deny a license application or discipline a license holder if the applicant or license holder — individually or through an officer, director, or shareholder — has done any of the following:
| # | Ground | What It Looks Like on an Adjuster's Desk |
|---|---|---|
| 1 | Wilfully violated an insurance law of this state | Knowingly ignoring a Chapter 542 deadline or a Chapter 541 prohibition |
| 2 | Intentionally made a material misstatement in the license application | Concealing a prior administrative action or a criminal history |
| 3 | Obtained or attempted to obtain a license by fraud or misrepresentation | Falsified course completion certificate or proctoring affidavit |
| 4 | Misappropriated, converted, or illegally withheld money belonging to an insurer, an HMO, or an insured, enrollee, or beneficiary | Diverting a settlement draft; failing to remit funds held in a fiduciary capacity |
| 5 | Engaged in fraudulent or dishonest acts or practices | Fabricating an inspection that was never performed; altering photographs or dates |
| 6 | Materially misrepresented the terms and conditions of a policy or contract | Telling a policyholder a covered loss is excluded, or overstating what a deductible does |
| 7 | Made or caused incomplete comparisons to induce replacement of a contract | More common on the agent side, but it applies to every license under the subchapter |
| 8 | Been convicted of a felony | Any felony; the department reviews the relationship to the occupation |
| 9 | Offered or given a rebate of premium or commission | An adjuster steering work in exchange for value |
| 10 | Is not actively engaged in soliciting or writing insurance for the public generally, as § 4001.104(a) requires | Aimed at inactive or shell licensing |
| 11 | Obtained a license primarily to place coverage on the license holder, family, or business associates rather than to serve the public | "Controlled business" licensing |
Read Ground 4 Carefully. Misappropriation is the fastest route from a licensed adjuster to a revoked one. A claim draft is not the adjuster's money at any stage, and an adjusting firm that commingles claim funds with operating funds has created the fact pattern the statute describes. This is also the ground most likely to be accompanied by a criminal referral.
2. The Sanctions: TIC § 4005.102
Section 4005.102 states that in addition to any other remedy available under Chapter 82, the department may:
- Deny an application for an original license or a Chapter 4008 certificate;
- Suspend, revoke, or deny renewal of a license or a Chapter 4008 certificate;
- Place on probation a person whose license has been suspended;
- Assess an administrative penalty;
- Reprimand a license holder; or
- Require the license holder to qualify or re-qualify for a product-line certificate designated by rule under Chapter 4008.
The "in addition to" language matters: a single course of conduct can produce a reprimand plus an administrative penalty plus a probated suspension, and a separate Chapter 82 sanction, at the same time. An adjuster reading a TDI consent order for the first time is often surprised by how many of these appear together.
Chapter 82 and Chapter 83 — The Machinery Behind the Sanctions
- Chapter 82 — Sanctions. Supplies the department's general authority to impose sanctions after notice and opportunity for hearing, including cease and desist orders, suspension or revocation of authority, and administrative penalties. Contested cases are heard at the State Office of Administrative Hearings (SOAH).
- Chapter 83 — Emergency Cease and Desist Orders. Authorizes the commissioner to issue an emergency cease and desist order without a prior hearing when the commissioner believes a person is engaged in conduct that is fraudulent or hazardous, or that poses an immediate danger to the public or to insureds. The hearing follows the order rather than preceding it, which is the whole point of the power. TIC § 4102.208 supplies a parallel emergency cease and desist authority aimed specifically at public insurance adjusters.
Administrative Penalties and Fines
Administrative penalties under § 4005.102(4) and fines under § 4005.109 are separate from the automatic continuing education fines covered earlier in this chapter. CE fines run $50 per deficient hour with a $500 per license type cap for terms expiring after June 1, 2018; administrative penalties for substantive misconduct are assessed case by case and are not subject to that cap.
3. Reinstatement Is Not Automatic
TIC § 4101.202 is short and absolute: the commissioner may not reinstate or reissue the license of a license holder or former license holder whose license has been suspended, revoked, or refused renewal until the commissioner determines that the cause for that action no longer exists.
Two consequences follow, and both are tested:
- Time alone does not cure a revocation. Waiting out a period does not restore eligibility; the applicant must demonstrate that the underlying cause — the unpaid restitution, the untreated conduct, the unresolved criminal matter — has been resolved.
- A revoked license is not the same as an expired license. The three tiers of TIC § 4003.007 (renewal within 90 days, new license without examination up to one year, new license with re-examination after one year) address a license that expired. A license that was revoked is governed by § 4101.202 and does not travel those tracks.
TWO DIFFERENT WAYS TO LOSE A TEXAS ADJUSTER LICENSE
EXPIRATION (you did not renew) DISCIPLINE (TDI acted against you)
------------------------------ ---------------------------------
Governed by TIC 4003.007 Governed by TIC 4101.201, 4101.202,
4005.101, 4005.102, Ch. 82, Ch. 83
<= 90 days: renew, fee + 1/2 fee Sanctions: denial, suspension,
91 days to <1 yr: NEW license, no exam revocation, non-renewal, probation,
1 year or more: NEW license WITH exam administrative penalty, reprimand
Cure = pay the fee, finish the CE Cure = the commissioner must find
the CAUSE NO LONGER EXISTS
4. Reporting Obligations Feed the Disciplinary System
The disciplinary grounds do not surface on their own. They arrive through mandatory reporting, and an adjuster's own reporting failures compound the original problem.
- TIC § 4001.252(a) requires an individual license holder to notify the department on a monthly basis of a change of mailing address, a felony conviction, and an administrative action taken by a financial or insurance regulator of this state, another state, or the United States. TDI instructs licensees to report contact-information changes immediately.
- TIC § 4001.252(c) gives a licensed corporation or partnership a 30-day deadline to report a felony conviction of a licensed agent of the entity or an individual required to file biographical information, an event requiring notification under § 81.003, and the addition or removal of an officer, director, partner, member, or manager.
- Failing to report is itself a violation. An adjuster disciplined in another state who does not report it to TDI has converted a single out-of-state matter into two Texas grounds — the underlying conduct under § 4005.101(b), and the reporting failure.
5. What Actually Gets Texas Adjusters Disciplined
The statutory list is abstract; the recurring patterns are not. Each of the following maps to a specific § 4005.101(b) ground:
| Conduct Pattern | Ground |
|---|---|
| Inspecting a roof from the driveway and writing an estimate as though it were a full scope | Fraudulent or dishonest practice |
| Backdating an acknowledgment letter to appear inside the Chapter 542 15-day window | Wilful violation of an insurance law; dishonest practice |
| Telling an insured that a policy excludes a loss the adjuster knows is covered | Material misrepresentation of policy terms |
| Holding a claim draft in a personal or operating account | Misappropriation or illegal withholding of money belonging to an insured |
| Handling workers' compensation claims on a Property and Casualty adjuster license | Wilful violation of an insurance law — unlicensed adjusting outside the license line |
| Adjusting a claim and then steering the repair to a company the adjuster owns | Fraudulent or dishonest practice; and for a public adjuster, a § 4102.158 conflict |
| Omitting a prior state administrative action from the Texas application | Intentional material misstatement in the license application |
Professional Discipline Is Public. TDI publishes disciplinary orders, and other states' departments read them. Because reciprocity and Designated Home State licensing depend on a license in good standing, a single Texas order can cascade into non-renewal across every state where the adjuster holds a nonresident license. The practical stakes of § 4005.101 are national, not local.
An independent adjuster deposits a $14,000 claim settlement draft into the adjusting firm's operating account and pays the insured six weeks later after the insured complains to TDI. Which ground for disciplinary action under TIC section 4005.101(b) most directly applies?
Which combination of sanctions may the Texas Department of Insurance impose under TIC section 4005.102?
An adjuster's Texas license was revoked in 2023 for fraudulent practices. In 2026 the adjuster applies for a new license, arguing that three years have passed. What does TIC section 4101.202 require?
Under what circumstances may the Texas Commissioner of Insurance issue a cease and desist order without first holding a hearing?