Texas Property & Casualty: Texas Statutes — Common to P&C

Correct

The answer is B: Twisting

Twisting is the act of inducing a policyholder to lapse, cancel, or replace an existing insurance policy through misrepresentation or incomplete comparison (Insurance Code §541.051(5), §4005.101(b)(7)). The agent used false claims about inferior coverage to persuade the client to cancel. Churning is different: it is needless, repeated replacement of a client's policies to generate new commissions, often with the same insurer. What makes this twisting is the misrepresentation that induced the cancellation, not which company issues the new policy.

Source: Insurance Code §541.051(5) · Insurance Code §4005.101(b)(7)

Correct

The answer is A: Premium finance companies must be licensed by TDI

Premium financing is legal and regulated in Texas under Insurance Code ch. 651. A person may not engage in the business of financing insurance premiums unless licensed by TDI (§651.051). A premium finance agreement must be in writing on a form the commissioner approves and must disclose the finance charge and the annual percentage rate (§§651.151, 651.152). If the insured defaults, the finance company may have the policy cancelled only after mailing the insured a written notice that sets a cure date no earlier than the 10th day after mailing (§651.161).

Source: Insurance Code §651.051 · Insurance Code §651.151 · Insurance Code §651.161

Correct

The answer is A: Travel insurance may be sold under a specialty license

Texas allows travel insurance to be sold under a specialty license, which requires no exam (Insurance Code §§4055.152(a), 4055.006). A travel agency can act as a travel retailer, offering travel insurance to its customers under the license and direction of a supervising entity designated by the insurer, such as a licensed agent or managing general agent, and the retailer itself does not need a license (§§4055.152(b), 4055.1515). The retailer must provide required disclosures and may offer the coverage only in connection with the sale or arrangement of travel for its customers (§§4055.153, 4055.154).

Source: Insurance Code §4055.152(a) · Insurance Code §4055.152(b) · Insurance Code §4055.153

Correct

The answer is B: TDI's process typically takes an average of 30 to 40 days

When TDI receives a consumer complaint, it sends the complaint to the insurer and asks for a response and documentation; the insurer has about 15 days to respond or to ask for a 10-day extension. A TDI specialist then analyzes the complaint and the responses, and the case is closed or escalated. TDI reports that this process takes an average of 30 to 40 days, though complex matters may take longer. Texas law also requires TDI to update the parties on a complaint's status at least quarterly until it is resolved (Insurance Code §521.003). If TDI finds a violation, it may require corrective action, impose penalties, or refer the matter for enforcement proceedings.

Source: Insurance Code §521.003

Correct

The answer is A: None; Texas sets no pre-licensing hour minimum

Texas does not require pre-licensing education for a general lines P&C license. Under Insurance Code §4001.105, TDI issues the license to an individual who is at least 18, has passed the licensing exam within the past 12 months, is not disqualified under Chapter 4005, and has submitted the application and fees. A prep course is optional. The 40-hour figure comes from the training an appointing agent or insurer must give a temporary-license applicant (§4001.160).

Source: Insurance Code §4001.105 · Insurance Code §4001.160

Correct

The answer is C: Insurance agent

In Texas, a person who solicits an application for insurance is considered the agent of the insurer, not of the insured, in any controversy between the insurer and the insured (Insurance Code §4001.052(a)), and an agent may have authority to bind coverage on the insurer's behalf. A broker, by contrast, is a professional who represents the buyer and shops coverage among insurers.

Source: Insurance Code §4001.052(a)