Texas Bill Would Protect P/C Agent Ownership of Expiration Rights

A bill filed in the Texas Legislature for the 2015 session would clarify that insurance agents in the state have exclusive ownership of the expiration rights to property/casualty insurance policies they sell and place.

HB 686 by Rep. Kenneth Sheets, whose district includes parts of Dallas County, would amend the state insurance code to state that with certain exceptions, “a general property and casualty agent or surplus lines agent exclusively owns and has exclusive use of an expiration directly related to an insurance application submitted by or an insurance policy written through the agent for the purpose of soliciting, selling, or negotiating the renewal or sale of property and casualty insurance coverage, a property and casualty insurance product, or a property and casualty insurance service.”

The bill would not apply to captive, or exclusive, agents that are under contract to sell products solely for one insurance company or its affiliates.

Under an exception included in HB 686, an insurer or an insurer’s managing general agent may use a policy expiration to sell or renew the insurance coverage with the written consent of the agent who owns it.

It also may be used by the insurer or MGA “in the normal course of business, including underwriting, handling claims, and negotiating reinsurance;” or “on the request of the applicant or insured, to deliver, issue for delivery, or renew a policy other than the policy to which the expiration relates,” the text of the bill states.

The bill authorizes the Department of Insurance to establish a complaint resolution process to handle violations and allows for the imposition of sanctions.

It also clarifies that the insured’s right to privacy should not be impaired or affected by the conditions in the legislation.

If passed, the act would be effective Sept. 1, and only applies to applications or policies placed on or after that date.