7.1 Texas Department of Insurance & Producer Licensing

The Texas Department of Insurance (TDI)

The Texas Department of Insurance (TDI) is the state agency that regulates the business of insurance in Texas. It enforces the Texas Insurance Code, adopts rules found in Title 28 of the Texas Administrative Code, licenses agents and adjusters, reviews policy forms and rates, investigates complaints, and takes disciplinary action against violators.

TDI is headed by the Commissioner of Insurance, who is appointed by the Governor with the advice and consent of the Senate and serves a two-year term. The Commissioner is the chief executive and administrative officer of the department and has broad authority to issue rules, hold hearings, and enter cease-and-desist and disciplinary orders.

Three offices work alongside TDI and are frequently tested:

• The Office of Public Insurance Counsel (OPIC) represents the interests of insurance consumers in rate and rule proceedings.
• The State Fire Marshal's Office operates within TDI.
• The Texas Department of Insurance, Division of Workers' Compensation (DWC) regulates the workers' compensation system.

TDI's authority is divided between financial regulation (monitoring insurer solvency, reserves, and admitted status) and market conduct (how companies and agents treat consumers — advertising, claims, and sales practices). A company must hold a certificate of authority from TDI before transacting insurance in Texas; companies without one are unauthorized (non-admitted) insurers, and placing business with them outside the limited surplus-lines exceptions is itself a violation. The Commissioner may also place a troubled insurer into supervision, conservatorship, or receivership to protect policyholders.

Getting Licensed: Exam, Application, and Fingerprints

To sell life and health products in Texas you obtain a General Lines — Life, Accident, Health and HMO license. This single general-lines license authorizes you to transact life insurance, accident and health insurance, and HMO coverage. The companion property/casualty authority is the separate General Lines — Property and Casualty license.

The licensing exam is administered by Pearson VUE. The Life, Accident, and Health exam contains 130 scored-content questions with a 2.5-hour time limit and is divided into general (national) content and a Texas state-law portion. Texas does not mandate pre-licensing education, but exam-prep courses are strongly recommended. Holders of the CLU (Chartered Life Underwriter) designation are exempt from the general lines life, accident, and health exam.

After passing, the applicant must:

1. Apply within one year of the exam date (otherwise the exam must be retaken).
2. Submit the electronic application through Sircon or NIPR and pay the $50 application fee.
3. Complete an IdentoGO fingerprint background check and send TDI the IdentoGO receipt showing the prints were forwarded to the Texas Department of Public Safety (DPS) for a state and FBI criminal history check.

TDI reviews the application, fingerprint results, and any disclosed background issues before issuing the license.

Temporary Licenses, Appointments, and Renewal

Temporary license

TDI may issue a temporary license to an applicant being considered for appointment by an insurer, HMO, or another agent. The temporary license is valid for 90 days (it expires on the earlier of the 90th day or the date the regular license is issued or the application is denied). A temporary licensee must work under supervision and complete required training; no exam is required for the temporary license, but it is not renewable.

Appointment by an insurer

An agent may not act for an insurer until that insurer files a Notice of Appointment with TDI. The insurer must file the appointment (or an appointment termination) generally within 30 days. The appointment ties the agent to a specific company; an agent may hold appointments with multiple insurers.

Continuing education and renewal

Resident agents renew their license every two years and must complete 24 hours of continuing education (CE) each renewal period, including 3 hours of ethics. At least half of the hours (12) must be classroom or classroom-equivalent. Failure to complete CE or renew on time can result in license expiration and penalties.

Nonresident licensing

A producer licensed and in good standing in their home state may obtain a Texas nonresident license for the equivalent line of authority through reciprocity without taking the Texas exam, as authorized by the federal Gramm-Leach-Bliley reciprocity provisions and the Texas Insurance Code. The nonresident must maintain the home-state license; if the home-state license lapses, the Texas nonresident license is affected. A nonresident generally satisfies Texas CE by meeting their home-state CE requirements (CE reciprocity), so they do not complete a second set of Texas hours.

Reporting changes and maintaining the license

An agent must keep TDI informed of changes that affect licensure. Texas requires a licensee to report an administrative action taken by another state's regulator and any criminal prosecution (felony or certain misdemeanors) generally within 30 days of the event. A licensee must also keep a current mailing and email address on file, since TDI sends official notices there. Acting as an agent without a license, or after a license has lapsed, exposes the person to administrative penalties and possible criminal liability.