CHAPTER 4002. EXAMINATION OF LICENSE APPLICANTS
INSURANCE CODE
TITLE 13. REGULATION OF PROFESSIONALS
SUBTITLE A. GENERAL PROVISIONS
CHAPTER 4002. EXAMINATION OF LICENSE APPLICANTS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 4002.001. EXAMINATION REQUIRED. (a) Except as otherwise
provided by this code, an applicant for a license to act as an
agent in this state must:
(1) take a personal written examination prescribed by the
commissioner; and
(2) pass the examination to the satisfaction of the department.
(b) The examination must determine the applicant's competence
with respect to:
(1) the type of insurance contracts for which the applicant
seeks a license;
(2) the laws of this state regulating the business of insurance;
and
(3) the ethical obligations and duties of an agent.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 7, eff. April 1,
2005.
Sec. 4002.002. EXAMINATION FOR LIMITED LICENSE. (a) The
commissioner shall prescribe a limited written examination for an
applicant for a limited agent' s license under Chapter 4051 or
4054.
(b) The examination must determine the applicant's competence
and understanding of:
(1) the basic principles of insurance contracts;
(2) the basic laws of this state regulating the business of
insurance; and
(3) the ethical obligations and duties of an agent.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 7, eff. April 1,
2005.
Sec. 4002.003. EXEMPTIONS FROM EXAMINATION REQUIREMENT. (a)
The department may not require a person to take an examination
under this chapter if the person is:
(1) an applicant for the renewal of an unexpired license issued
by the department;
(2) an applicant whose license issued by the department expired
less than one year before the date of the application, if the
previous license was not denied, revoked, or suspended by the
commissioner;
(3) a partnership, corporation, or depository institution;
(4) an applicant for a life, accident, and health license who is
designated as a chartered life underwriter (CLU);
(5) an applicant for a life and health insurance counselor
license who is designated as a chartered life underwriter (CLU),
chartered financial consultant (ChFC), or certified financial
planner (CFP);
(6) an applicant for a property and casualty license who is
designated as a chartered property casualty underwriter (CPCU);
(7) an applicant for a specialty license issued under Chapter
4055;
(8) a nonresident individual who is exempt from the examination
requirement under Chapter 4056; or
(9) an applicant for a general life, accident, and health
license or a life agent license who was authorized to solicit or
procure insurance on behalf of a fraternal benefit society on
September 1, 1999, if the applicant:
(A) solicited or procured insurance on behalf of the fraternal
benefit society for at least 24 months preceding September 1,
1999; and
(B) does not, on or after September 1, 1999, solicit or procure:
(i) insurance for any other insurer or a different fraternal
benefit society;
(ii) an insurance contract from anyone other than a person who
is eligible for membership in the fraternal benefit society; or
(iii) an interest-sensitive life insurance contract that exceeds
$35,000 of coverage on an individual life, unless the applicant
is designated as a "Fraternal Insurance Counselor" at the time
the contract is solicited or procured.
(b) A license to which the exemption authorized by Subsection
(a)(9) applies must be held by the applicant in an individual
capacity and is not transferable.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 7, eff. April 1,
2005.
Amended by:
Acts 2007, 80th Leg., R.S., Ch.
548, Sec. 2.19, eff. September 1, 2007.
Sec. 4002.004. ADVISORY BOARD. (a) The commissioner may
appoint one or more advisory boards to make recommendations to
the commissioner or the testing service regarding:
(1) the scope, type, and conduct of examinations required by
this chapter; and
(2) the times and locations in this state where the examinations
shall be held.
(b) The commissioner may appoint to an advisory board any
combination of the following:
(1) a person who holds a license for which an examination is
intended;
(2) an employee of an insurer that appoints license holders for
which an examination is intended;
(3) a person who acts as a general agent or manager;
(4) a person who teaches insurance at an accredited college or
university in this state; or
(5) a resident of this state who is not described by
Subdivisions (1)-(4).
(c) A member of an advisory board serves without compensation
but is entitled to reimbursement for reasonable expenses incurred
in attending meetings of the advisory board.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 7, eff. April 1,
2005.
Sec. 4002.005. EXAMINATION FEE. (a) The department shall
charge each applicant an examination fee in an amount determined
by the department as necessary to administer the examination.
(b) The examination fee must accompany each application to take
the examination.
(c) An applicant may receive a refund of the examination fee
only if:
(1) the applicant fails to take the examination because of an
emergency;
(2) the applicant notifies the department of the emergency at
least 24 hours before the time of the examination; and
(3) the department agrees to refund the fee.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 7, eff. April 1,
2005.
Sec. 4002.006. BILINGUAL EXAMINATION. An examination
administered under this chapter shall be offered in English and
Spanish.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 7, eff. April 1,
2005.
Sec. 4002.007. EXAMINATION RESULTS. (a) The department shall
notify each examinee of the results of a licensing examination
administered under this code not later than the 30th day after
the date the examination is administered. If an examination is
graded or reviewed by a testing service, the department shall
notify each examinee of the results of the examination not later
than the 14th day after the date the department receives the
results from the testing service.
(b) The department may require a testing service to notify
examinees of the results of an examination.
(c) If the notice of the results of an examination graded or
reviewed by a testing service will be delayed for longer than 90
days after the examination date, the department shall notify the
examinee of the reason for the delay before the 90th day.
(d) If requested in writing by a person who fails a licensing
examination administered under this code, the department shall
provide to the person an analysis of the person's performance on
the examination.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 7, eff. April 1,
2005.
Sec. 4002.008. STANDARDS FOR EXAMINATION PASS RATES; ANNUAL
REPORT. (a) This section applies only to insurance agent
license examinations for limited and single lines licenses,
including agent licenses issued under:
(1) Subchapters C and I, Chapter 4051; and
(2) Subchapters C and G, Chapter 4054.
(b) The commissioner or, at the commissioner's discretion, a
vendor under contract with the department, shall review a license
examination subject to this section if, during any 12-month
period beginning on September 1 of a year, that examination
exhibits an overall pass rate of less than 70 percent for
first-time examinees.
(c) The department shall collect demographic information,
including, race, gender, and national origin, from an individual
taking a license examination subject to this section.
(d) The department shall compile an annual report based on the
review required under Subsection (b). The report must indicate
whether there was any disparity in the pass rate based on
demographic information.
(e) The commissioner by rule may establish procedures as
necessary to:
(1) collect demographic information necessary to implement this
section; and
(2) ensure that a review required under Subsection (b) is
conducted and the resulting report is prepared.
(f) The commissioner shall deliver the report prepared under
Subsection (d) to the governor, the lieutenant governor, and the
speaker of the house of representatives not later than December 1
of each year.
Added by Acts 2009, 81st Leg., R.S., Ch.
398, Sec. 1, eff. June 19, 2009.
SUBCHAPTER B. ADMINISTRATION OF EXAMINATION BY TESTING SERVICE
Sec. 4002.051. ADMINISTRATION BY TESTING SERVICE AUTHORIZED.
The commissioner may accept an examination administered by a
testing service to satisfy the examination requirements of a
person seeking a license as an agent, counselor, or adjuster
under this code.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 7, eff. April 1,
2005.
Sec. 4002.052. AGREEMENT WITH TESTING SERVICE. (a) The
commissioner may negotiate an agreement with a testing service to
perform examination services, including:
(1) developing an examination;
(2) scheduling an examination;
(3) arranging the site for an examination; and
(4) administering, grading, reporting, and analyzing an
examination.
(b) The commissioner may require a testing service to:
(1) correspond directly with applicants with regard to the
administration of examinations;
(2) collect fees for administering examinations directly from
applicants; and
(3) provide for the administration of examinations in specific
locations and at specified frequencies.
(c) The commissioner shall retain the authority to establish the
scope and type of each examination.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 7, eff. April 1,
2005.
Sec. 4002.053. HEARING REQUIRED BEFORE AGREEMENT. Before the
department may negotiate and enter into an agreement with a
testing service:
(1) a hearing must be held in accordance with Chapter 2001,
Government Code; and
(2) the commissioner must adopt any rules or standards that the
commissioner considers appropriate to implement the authority
granted by this chapter.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 7, eff. April 1,
2005.
SUBCHAPTER C. DUTIES OF DEPARTMENT
Sec. 4002.101. ADMINISTRATION BY DEPARTMENT. In the absence of
an agreement with a testing service, the department shall
administer any required examination in accordance with this
chapter.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 7, eff. April 1,
2005.
Sec. 4002.102. RULES. (a) The commissioner may adopt rules
relating to:
(1) the scope, type, and conduct of an examination;
(2) the time and location in this state at which an examination
is conducted; or
(3) the designation of textbooks, manuals, and other materials
to be studied by an applicant for an examination.
(b) The textbooks, manuals, or other materials designated by the
commissioner under Subsection (a)(3) may consist of:
(1) material available to an applicant by purchase from the
publisher; or
(2) material prepared at the direction of the commissioner and
distributed to an applicant on request and on payment of the
reasonable cost of the material.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 7, eff. April 1,
2005.
Sec. 4002.103. CONTENT OF EXAMINATION QUESTIONS. All
examination questions must be prepared from the contents of the
textbooks, manuals, and other materials designated or prepared by
the commissioner under Section 4002.102.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 7, eff. April 1,
2005.