TITLE insurance

Part I. Texas Department of Insurance

Chapter 5. Property and Casualty Insurance

Subchapter E. Texas Catastrophe Property Insurance Association

Manual

28 TAC §5.4501

The Commissioner of Insurance, at a public hearing held on November 26, 1996, under Docket Number 2269, at 9:00 a.m., in Room 100 of the Texas Department of Insurance Building, 333 Guadalupe Street in Austin, Texas, adopted with changes an amendment to 28 TAC §5.4501, concerning the adoption by reference of a revised Texas Catastrophe Property Insurance Association Manual (TCPIA Manual), containing rules governing the writing of windstorm and hail insurance by the Texas Catastrophe Property Insurance Association (TCPIA), pursuant to the Catastrophe Property Insurance Pool Act (Insurance Code, Article 21.49). The Commissioner determined that the effective date of the TCPIA Manual should be revised from December 1, 1996, as had been set forth in the proposed text published in the October 18, 1996, issue of the Texas Register (21 TexReg 10271), to February 1, 1997.

The adoption by reference into 28 TAC §5.4501 of the TCPIA Manual is necessary to incorporate rule amendments in the TCPIA Manual reflecting adjustments to the maximum limits of liability for risks insured by the TCPIA. Rule J, relating to Limits of Liability, in Section I--General Rules of the TCPIA Manual, has been amended to reflect adjustments to the maximum limits of liability applicable to risks being insured by the TCPIA. Pursuant to Article 21.49 §8D(c), the Commissioner, as part of the annual residential benchmark rate hearing, adjusted the liability limits for inflation, including the statutory limits specified in subsection (a) of §8D, at a rate that reflects any change in the BOECKH Index or other index that may accurately reflect changes in the cost of construction or residential values in the catastrophe area. Pursuant to these adjustments, which were reflected in Commissioner's Order Number 96-0836 (July 29, 1996), the limits of liability for TCPIA coverage have been increased by 2.9 percent on an annual basis for dwellings and contents coverage, 2.2 percent on an annual basis for governmental buildings and commercial buildings, and by 2.3 percent on an annual basis for apartments, condominiums, and townhouses. These annual percentage increases were applied to the maximum limits of liability effective August 1, 1995, to derive the current maximum limits of liability, which became effective October 1, 1996. Following the application of the annual percentage factors, the resulting maximum limits of liability are rounded up to the nearest $1000 to produce the new applicable maximum limits of liability. The Commissioner has determined that the originally proposed effective date of the TCPIA Manual, of December 1, 1996, should be changed to February 1, 1997, because this Order is being adopted and published after December 1, and the February 1 date will more closely coincide with the effective date of this amendment.

The amended 28 TAC §5.4501 adopts by reference the TCPIA Manual, which contains rule amendments reflecting adjustments to the maximum limits of liability for risks insured by the TCPIA. The rule amendments are contained in Rule J, relating to Limits of Liability, in Section I--General Rules of the TCPIA Manual. These new maximum limits of liability, as specified in the amendments to Rule J, are $288,000 (changed from $279,000) for a dwelling and its contents; $288,000 (changed from $279,000) for a townhouse unit and its contents; $823,000 (changed from $804,000) per building for an apartment, condominium or townhouse and the contents of the owner of the structure in which the apartment, condominium or townhouse is located; $111,000 (changed from $108,000) for individually owned contents in an apartment, residential condominium or townhouse unit; $2,192,000 (changed from $2,144,000) for a governmental building and its contents; and $1,108,000 (changed from $1,084,000) for a commercial building and its contents. Pursuant to Commissioner's Order Number 96-0836 the new maximum limits of liability are applicable on policies effective on and after October 1, 1996.

No comments were received regarding adoption of the amendment.

The amendment is adopted pursuant to the Insurance Code, Articles 21.49 and 1.03A. Pursuant to Article 21.49 §8D(c), the Commissioner, as part of the annual residential benchmark rate hearing, adjusts the liability limits for inflation, including the statutory limits specified in subsection (a) of §8D, at a rate that reflects any change in the BOECKH Index or other index that may accurately reflect changes in the cost of construction or residential values in the catastrophe area. Article 21.49, §5A authorizes the Commissioner, after notice and hearing, to issue any orders which the Commissioner considers necessary to carry out the purposes of Article 21.49, including, but not limited to, maximum rates, competitive rates and policy forms. Article 21.49, §8 authorizes the Commissioner to approve every manual of classifications, rules, rates, rating plans, and every modification of any of the foregoing for use by the TCPIA. Articles 21.49 §§5A, 8, and 8D, by their terms, delegate the foregoing authority to the State Board of Insurance; however, under Article 1.02 of the Insurance Code, a reference in the Insurance Code or another insurance law to the State Board of Insurance means the Commissioner of Insurance or the Texas Department of Insurance, as consistent with the respective powers and duties of the Commissioner and the Department under Article 1.02. Article 1.03A authorizes the Commissioner of Insurance to adopt rules and regulations, which must be for general and uniform application, for the conduct and execution of the duties and functions of the Texas Department of Insurance only as authorized by a statute.

§5.4501.Rules and Regulations for the Texas Catastrophe Property Insurance Association (association).

The Texas Department of Insurance adopts by reference a rules manual for the association as amended effective February 1, 1997. Copies of the rules manual may be obtained by contacting the Property/Casualty Division, Mail Code 104-2F, Texas Department of Insurance, 333 Guadalupe Street, P.O. Box 149104, Austin, Texas, 78714-9104.

This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority.

Issued in Austin, Texas, on December 20, 1996.

TRD-9618565

Caroline Scott

General Counsel and Chief Clerk

Texas Department of Insurance

Effective date: February 1, 1997

Proposal publication date: October 18, 1996

For further information, please call: (512) 463-6327


Chapter 19. Agents Licensing

Subchapter K. Agents and Adjusters Continuing Education Program

28 TAC §§19.1001-19.1013

Texas Department of Insurance adopts amendments to 28 TAC §§19.1001 - 19.1004 and 19.1010 - 19.1013, and new §§19.1005 - 19.1009, concerning guidelines and standards for a continuing education program for agents and adjusters. Sections 19.1003, 19.1005, 19.1006, and 19.1012 are adopted with changes to the proposed text as published in the August 27, 1996, issue of the Texas Register (21 TexReg 8076). Sections 19.1001, 19.1002, 19.1004, 19.1007-19.1011 and 19.1013 are adopted without changes and will not be republished.

The amendments are necessary to ensure quality programs for licensees by improving compliance with continuing education requirements for agents. The agency has clarified §19.1003(d) which requires all agents to take at least four hours of insurance regulation and ethics during either of the next two licensing cycles based on comments. The agency has changed §19.1005(a)(7) to delete the necessity of naming shareholders as part of the provider application in response to comments. In response to comments the agency has added language to §19.1006(g) to clarify how providers may advertise a course which has been submitted but is not yet registered with the agency. The agency has changed §19.1012(c) to clarify the type of information that is to be provided in electronic format.

The title of the subchapter has been changed to more appropriately reflect the content of the subchapter. Section 19.1001 adds language concerning the severability of provisions in the subchapter. Section 19.1002 adds definitions for the terms "assignee", "disinterested third party", "effective date", "provider", "provider registration", and "TDI ID number" and amends the definition of the term "licensee". Section 19.1003 adds language to require all agents to take at least four hours of insurance regulation and ethics within the first licensing cycle for new licensees and within either of the next two licensing cycles for other licensees. Section 19.1004 adds language to the provisions concerning exemption from the continuing education requirement. The new language changes the calculation for credit hours for the final licensing period to one hour for each whole month between the last renewal date and the effective date of the exemption. Section 19.1004 also adds an exemption for nonresident adjusters who have valid licenses from another state which has substantially equivalent continuing education requirements for adjusters. New §§19.1005 - 19.1009 replace existing §§19.1005 - 19.1009 which have been proposed for repeal elsewhere in this issue of the Texas Register . New §19.1005 refers to provider and instructor criteria and establishes the procedures a provider must follow when applying for registration with the department and when certifying course instructors. New §19.1006 refers to course criteria and sets out the requirements for a course to be registered for continuing education. New §19.1007 defines the types of continuing education courses that may be offered. New §19.1008 sets out the methods used in determining the number of credit hours to be given for continuing education courses. New §19.1009 sets out the requirements to be used in determining successful completion of continuing education courses. Section 19.1010 has been amended to list provider registration forms, course registration forms and sample certificates of completion among the forms that may be obtained from the department. The language of §19.1011 has been clarified to state that agents licensed under Articles 21.07-1, 21.07-3 or 21.14 may take continuing education courses applicable to any of those license types. The title of §19.1012 has been changed from Audit of Continuing Education Records to Provider Compliance. Section 19.1012 also has been amended to require providers to notify the department when a course is discontinued or inactive and when there is a change in the provider's information of record. Section 19.1012 also was changed to provide that if a provider fails to remedy a discrepancy in its records within 30 days, the department will automatically close the course certification on the 31st day until the discrepancy is resolved. Additionally, §19.1012 has been amended to provide that providers' registration is conditioned upon compliance with the sections and that repeated noncompliance may be grounds for nonrenewal of a provider's registration, nonapproval of courses and restriction of a provider's ability to provide continuing education courses for up to one year. Language has been added to §19.1013 concerning a licensee's failure to comply with the continuing education requirements and the requirements set out in these sections. Amended §19.1013 sets out the types of violations which could, after notice and opportunity for hearing, subject a licensee to disciplinary action. Additionally, §19.1013 has been amended to provide that failure of a provider to comply with the provisions of this subchapter may, after notice and opportunity for hearing, cause the provider to be prohibited from participating in any department approved education programs for a period not to exceed one year.

§19.1003(d) A commenter is concerned that it may not be clear if licensees must take the insurance regulation and ethics course once or twice within the next two licensing cycles.

AGENCY RESPONSE: The agency agrees with the commenter that the subsection is unclear and has clarified that a licensee may take the course within either of the cycles. §19.1005(a)(7) A commenter maintains that naming shareholders as part of the provider application would be a burden for publicly held corporations with a large number of shareholders.

AGENCY RESPONSE: The agency agrees and has changed the paragraph to delete the requirement of identifying shareholders. §19.1005(c) A commenter inquires if a state legislator or Texas Workers Compensation employee would qualify as an instructor in their respective areas.

AGENCY RESPONSE: The agency believes and intends that the term "recognized professional" is an adequate descriptor that includes regulators and legislators. §19.1006(d) A commenter feels it would be very difficult to supply a detailed course outline before the course presentation date; and further, suggests that variation from the submitted outline be allowed to account for last minute court decisions and changes in statute following the legislative session. This commenter also contends that outside presenters may be unable to prepare a detailed outline as required by the rule as far in advance as necessary to be in compliance. The commenter also believes that the term "detailed" is vague.

AGENCY RESPONSE: The agency believes that provision of a detailed outline is a reasonable requirement that represents the only way to ascertain content of the course for reference and audit purposes and is necessary for the provider to properly certify the content of the course. Also, a course outline must be prepared by the provider to meet certain external constraints, such as creating a descriptive advertisement, and determination of time needed to cover the material adequately. An outline topic which lists "Recent Legal Decisions" would adequately cover last minute court decisions which are not known to the provider at the time of course submission. The agency agrees with the commenter that insurance is a rapidly changing field. Department records indicate that complete registration submissions are processed in less than 15 days. The course application instructions provide an example of the format and depth needed in the outline for the course, which is a two level outline, with a third level only as needed for clarification.

§19.1006(g) A commenter inquired when a course is considered registered and suggested that wording be included to prevent misleading advertising that infers that an unregistered course has been registered.

AGENCY RESPONSE: The course is registered on the date the submission is processed with a course number assigned. Notification of the registration is mailed within one working day of the completion of the process. The agency agrees that language should be included to prevent misleading advertising and language has been included in this subsection for providers to use in advertising courses which have been submitted but not yet registered.

A commenter feels that it may be advisable to allow a course to be registered after it is presented.

AGENCY RESPONSE: The agency does not agree. The allowance of registration after the fact defeats the ability of the department to perform audits as described in (19.1012. The agency believes that it is appropriate to continue to follow the current registration policy which has been in place since 1988.

§19.1006(h) A commenter argues that the two year life of the registration will increase the paperwork of providers.

AGENCY RESPONSE: The agency does not agree that there will be more paperwork, since this requirement has been in force since July, 1994. The subsection continues the requirement of a review of the course every two years and clarifies that registrations are valid for two years. This has been the agency's position since 1994 when the requirement went into effect. A renewal or re-registration of a course is done with a single form. All course documents mentioned in these rules are documents that are already required to be maintained by the provider at this time. The two year life gives the agency clear evidence that a course has been kept up to date and allows the department to eliminate any inactive course listings from the lists it furnishes to the insurance licensees of Texas.

§19.1008(6) A commenter suggests allowing instructors course credit hours in excess of the hours approved for the licensees attending the class, for preparation of the course.

AGENCY RESPONSE: The agency will take the suggestion under consideration and commits to doing a survey of instructors and other state's insurance departments. This survey may provide information for a possible policy change and a change in these provisions. The agency does not believe that the change is appropriate at this time since it would result in a substantial change in the manner in which the agency administers credit for continuing education.

§19.1012(c) A commenter inquires what "course data" must be maintained in an electronic format, and is concerned about the specific format and the time allowed to accomplish this change.

AGENCY RESPONSE: By the term "course data," the agency is referring to course completion data. The language has been changed to reflect this. Such an enhancement to our current agent monitoring procedure would require at least six months notice to the providers of continuing education courses and would be compatible with a DOS based personal computer.

§19.1012 (f) A commenter inquired if the provider would be able to charge a registration fee to a department auditor.

AGENCY RESPONSE: Typically, department CE auditors arrive at a course location unannounced, and identify themselves to the provider. In that case, course materials are not used and the auditor observes only. However, this subsection allows an auditor to enroll (pay fees) and take courses without identifying themselves as auditors. Typically the provider will not know of this until after the fact.

§19.1013(a) A commenter inquires what "administrative penalties" may be assessed against a licensee.

AGENCY RESPONSE: Administrative penalties are defined in the Insurance Code, Art. 1.10E and the type of penalties are set forth in section 3 of this article. The type of administrative penalty which may be assessed against a licensee is determined by numerous factors.

A commenter desires that a way be provided that the provider can notify the department on the course application that the course can be discontinued after a single presentation.

AGENCY RESPONSE: The agency agrees and has revised the course application form to include this option.

Texas Association of Insurance Agents and Hammerman & Gainer commented in favor of adoption of the rules. Farmers Insurance Group of Companies commented against adoption of the rules.

The sections are adopted pursuant to the Insurance Code, Articles 21.07-1, 21.07-3, 21.07-4, 21.14, and 1.03A. The Insurance Code, Articles 21.07-1, §3A, 21.07-3, §6A, 21.07-4, §7A and 21.14, §§5b and 5d authorize the department to adopt a procedure for establishing guidelines for continuing education programs for agents and adjusters. Insurance Code, Article 1.03A provides that the Commissioner of Insurance may adopt rules and regulations to execute the duties and functions of the Texas Department of Insurance only as authorized by a statute. The Government Code, §§2001.004 et seq. authorize and require each state agency to adopt rules of practice setting forth the nature and requirements of available procedures and to prescribe the procedures for adoption of rules by a state agency.

§19.1003.Applicability of Requirements.

(a)

Agents licensed under the Insurance Code, Articles 21.07-1, 21.07-3, and 21.14 shall complete 30 hours of continuing education within each reporting period, unless otherwise exempt.

(b)

An agent licensed under more than one article of the Insurance Code, Articles 21.07-1, 21.07-3 and 21.14 may elect to satisfy the continuing education requirements of any one of the articles and shall not be required to complete more than 30 hours within each reporting period.

(c)

All agents subject to these sections, other than local recording agents identified in subsection (g) of this section, shall take at least four hours of registered courses in insurance regulation and ethics within the first licensing cycle for new licenses and reinstated licenses.

(d)

All agents subject to these sections shall take at least four hours of registered courses in insurance regulation and ethics within either of the next two licensing cycles, beginning with the first licensing cycle after the effective date of these sections.

(e)

Adjusters licensed under the Insurance Code, Article 21.07-4 shall complete 30 hours of continuing education within each reporting period. Four of the 30 hours must be in registered consumer protection courses.

(f)

Agents and adjusters holding a license subject to continuing education which is prorated to coincide with the renewal of another license shall complete continuing education on a prorated schedule. The credit hours required shall be based upon the licensing period from the issue date of the license to the prorated renewal date of the license at the rate of one hour for each whole month between the last renewal date and the prorated renewal date.

(g)

An agent holding only a temporary local recording agent license under Article 21.14 shall be required to complete only four hours of registered insurance regulation and ethics instruction for the first reporting period after receiving the permanent local recording agent license. After the first renewal, the local recording agent is subject to the full continuing education requirement.

§19.1005.Provider and Instructor Criteria.

(a)

A provider seeking initial registration or subsequent application for registration from the department as a continuing education provider shall submit an application on forms provided by the department. The department may require the following items in order to approve or disapprove a provider's request for registration:

(1)

A description of the experience and education that the applicant believes qualifies the applicant to be a provider;

(2)

A description of the provider's organizational structure, registration policies, fee schedules, and promotional materials;

(3)

A description of the provider's student record system including a description of the methods for documenting attendance;

(4)

The method used by the provider for evaluating instructors;

(5)

An original signature of the person(s) authorized to sign certificates of completion;

(6)

A certificate format that the provider proposes to use which is in compliance with §19.1006(d)(4) of this subchapter (relating to Course Criteria);

(7)

If provider is a corporation, partnership, limited liability company or other legal entity not otherwise regulated by the department, the names of the officers and directors if a corporation, the partners if a partnership, or the officers, managers and members if a limited liability company;

(8)

If provider is a corporation or limited liability company, a current Franchise Tax Certificate of Good Standing;

(9)

A description of provider's history, including whether provider has provided continuing education courses under any other name and whether provider has ever had continuing education approval revoked in Texas or any other state; and

(10)

Other information as specified by the department.

(b)

In order to be approved, continuing education providers shall submit all requests for course certification in the manner prescribed by the department.

(c)

Providers shall certify that course instructors will be experienced and qualified in the subject to be taught, and certify that the course instructors meet at least one of the following instructor criteria:

(1)

Instructor is and has been in the practice of teaching insurance courses for at least the last three years and has the knowledge and experience in the subject the instructor will teach;

(2)

Instructor is and has been properly licensed as a licensee subject to continuing education under this act for at least five years;

(3)

Instructor is the holder of a professional designation recognized by the department which relates directly to the subject the instructor will teach; or

(4)

Instructor is or has been engaged in a recognized profession that is pertinent to the subject areas to be taught, including, but not limited to: licensed or certified medical professionals, Certified Public Accountants, and members of a state bar.

(d)

Providers and instructors must certify that they will comply with all provider and course requirements as outlined in these sections.

(e)

All providers' registrations are valid for two years. Providers that are already registered upon the effective date of these sections shall provide the required registration information at the request of the department, or no later than the second anniversary of the current provider registration.

§19.1006.Course Criteria.

(a)

To be registered, a course must be designed to increase the licensee's professional competence.

(b)

The course content shall be designed to enhance the knowledge and understanding of one or more of the following: insurance principles and coverages; applicable laws, rules and regulations; recent and prospective changes in coverages; law and the duties and responsibilities of the licensee; consumer protection; or insurance ethics. The course content may also include courses on management of the licensee's insurance business. These courses on management shall include those subjects specific to the business of insurance agency management, specific company policy provisions which cover technical aspects of the policies, or underwriting rules and standards. The course content for consumer protection shall include:

(1)

Article 21.21, Insurance Code;

(2)

The Unauthorized Insurers False Advertising Process Act, (Article 21.21-1, Insurance Code);

(3)

The Unfair Claim Settlement Practices Act (Article 21.21-2, Insurance Code),

(4)

The Deceptive Trade Practices-Consumer Protection Act (Subchapter E, Chapter 17, Business and Commerce Code); or

(5)

Analogous laws as specified by the department.

(c)

Meetings held in conjunction with the regular business of the licensee, or training relating to the marketing and business practices of a specific company, and those portions of the course content set forth in paragraphs (1) - (3) of this subsection shall not be considered applicable to continuing education requirements for insurance agents and adjusters:

(1)

Course content teaching general accounting, speed reading or other general business skills or computer use, or computer software application use.

(2)

Course content teaching motivation, goal-setting, time management, communication, sales or marketing skills.

(3)

Course content providing for pre-licensing training or qualifying examination preparation.

(d)

The items listed in paragraphs (1) - (6) of this subsection must be maintained by the provider and must be furnished with the course application, if requested by the department. Courses will not be reviewed unless a complete application and all of the requested items have been provided to the department. The application and items listed in paragraphs (1) - (6) of this subsection shall be maintained by the provider for four years; may be subject to random review by the department; and shall be provided to the department upon request.

(1)

A certification by the provider that the course meets the minimum requirements as defined in these sections.

(2)

The specific learning objectives. The learning objectives are the desired outcomes for the learning process and identify the knowledge, skills, or abilities the licensee is expected to obtain.

(3)

A detailed course content outline.

(4)

A table of contents for correspondence courses.

(5)

The method of evaluation by which the provider measures how effectively the course meets its objectives and provides for student input.

(6)

A sample of the certificate of completion which will be used when licensees successfully complete the registered course for approval by the department. The certificate of completion must be similar to the sample provided by the department and must contain, at a minimum, the following information: provider name and number, assignee name and number (if applicable), course name, course effective date, TDI course number(s), number of credit hours in each applicable category (adjuster, property and casualty, life, accident and health, consumer protection or insurance regulation and ethics), date of course completion, location of the class, TDI identification number and name of licensee completing courses, signature of person authorized to sign certificates and the date signed, and a certification by the licensee of completion of the course and the date signed.

(e)

Credit will not be awarded to licensees for courses taken or completed prior to the effective date assigned by the department or after the expiration date of the registration.

(f)

The provider shall at its option indicate whether the course is to be open to all licensees or will restrict enrollment to licensees of its choice. Restricted enrollment courses will not be included on lists of courses available to the public.

(g)

Providers may not advertise that their course has been registered by the department until such time that they have received written confirmation from the department of the registration of their course. Advertisements that include references to course registration by the department must also include the provider's name and TDI provider number. Advertisements may not be misleading as to the content or requirements for successful completion. Providers may advertise submitted courses as "Pending registration by the Texas Department of Insurance".

(h)

All course registrations are valid for two years. Each course shall be reviewed every two years by the provider and updated to remain in compliance with this section (relating to Course Criteria) prior to re-submission for registration. If more than 25% of the course is changed prior to the course expiration date, or the change will affect the course content breakdown as registered by the department, the department will consider the course revised and the provider must resubmit the course to the department.

(i)

A course may be registered by the department, conditional upon subsequent review, after all the following steps have been completed:

(1)

The provider is registered in accordance with §19.1005 of this subchapter (relating to Provider and Instructor Criteria).

(2)

The provider has submitted all items required by the department for course registration in accordance with this subchapter.

(3)

The content of the course meets the requirements identified in this subchapter.

(j)

Courses that the department does not register due to content shall not be considered for credit and cannot be used by licensees for continuing education credit.

(k)

If a course is not registered by the department, the provider may request re-evaluation, supplying specifics on how each portion of the course meets the minimum requirements for registration. If the course is presented during the department's re-evaluation, credit will not be authorized.

§19.1012.Provider Compliance.

(a)

All continuing education records, rosters, and course materials, including final examinations, of providers shall be maintained for at least four years and are subject to review by the department at any time.

(b)

Providers shall notify the department when a course is discontinued or no longer active, and when there is a change to the provider's information of record.

(c)

At the department's request, providers shall furnish course completion information in an acceptable electronic format.

(d)

If continuing education records are audited or reviewed and the validity or completeness of the records are questioned, the provider shall have 30 days from the date of notice to correct discrepancies or submit new documentation. Should the provider fail to satisfactorily remedy the discrepancy within 30 days, the department shall automatically cancel the course registration effective the 31st day from the date of the notice and will suspend the provider's future registration status until such time as the discrepancy is resolved.

(e)

Registration of providers is conditioned upon the provider's compliance with these provisions. Repeated non-compliance with this subchapter may be considered grounds for non-renewal of a provider's registration. For providers who fail to comply with this subchapter, the department may remove the certification of courses and restrict a provider's ability to provide continuing education courses for up to one year.

(f)

The department may conduct audits of any certified course without prior notice to the provider. Department staff, or the department's representative or designee, may enroll and take courses without identifying themselves as employees or representatives of the department.

This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority.

Issued in Austin, Texas, on December 20, 1996.

TRD-9618570

Caroline Scott

General Counsel and Chief Clerk

Texas Department of Insurance

Effective date: January 10, 1997

Proposal publication date: August 27, 1996

For further information, please call: (512) 463-6327


Subchapter K. Agents and Adjusters Guidelines for Minimum Standards for Continuing Education Courses

28 TAC §§19.1005-19.1009

The Texas Department of Insurance adopts the repeal of §§19.1005-19.1009, concerning minimum standards for continuing education courses for agents and adjusters. The repeal of these sections is adopted without changes to the proposed text published in the August 27, 1996, issue of the Texas Register (21 TexReg 8083).

The repeals are necessary so that new sections may be added describing provider and instructor criteria and establishing procedures for providers when applying for registration with the department and certifying course instructors. Other sections have been clarified and updated and are being simultaneously adopted and appear elsewhere in this issue of the Texas Register .

The repeal of these sections enables the Commissioner to adopt new §§19.1005-19.1009, concerning the continuing education program for agents and adjusters.

No comments were received regarding adoption of the repeals.

The repeals are adopted pursuant to the Insurance Code, Articles 21.07-1, 21.07-3, 21.07-4, 21.14, and 1.03A. The Insurance Code, Articles 21.07-1, §3A, 21.07-3, §6A, 21.07-4, §7A and 21.14, §§5b and 5d authorize the department to adopt a procedure for establishing guidelines for continuing education programs for agents and adjusters. Insurance Code, Article 1.03A provides that the Commissioner of Insurance may adopt rules and regulations to execute the duties and functions of the Texas Department of Insurance only as authorized by a statute. The Government Code, §§2001.004 et seq. authorize and require each state agency to adopt rules of practice setting forth the nature and requirements of available procedures and to prescribe the procedures for adoption of rules by a state agency.

This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority.

Issued in Austin, Texas, on December 20, 1996.

TRD-9618566

Caroline Scott

General Counsel and Chief Clerk

Texas Department of Insurance

Effective date: January 10, 1997

Proposal publication date: August 27, 1996

For further information, please call: (512) 463-6327


Chapter 21. Trade Practices

Subchapter H. Unfair Discrimination

28 TAC §21.704, §21.705

The Commissioner of Insurance adopts amendments to §21.704, concerning unfair discrimination, and §21.705, concerning nondiscriminatory testing for the Human Immunodeficiency Virus (HIV), with changes to the proposed text as published in the October 18, 1996, issue of the Texas Register (21 TexReg 10271) in response to public comment. No one requested a public hearing on these amendments, and such a hearing was not held.

The amendments to §21.704 and §21.705 are necessary to delete references that would limit allowable HIV testing for insurance purposes to blood tests, and also to make clerical changes updating the name and address of the department. The amendment to §21.704 also changes the effective date of the notice and consent authorization form adopted by the department and incorporated by reference into subsection (a)(8) of §21.704 (Notice/Consent Form) to January 1, 1997. The change in the effective date of the Notice/Consent Form is necessary because the department also is revising the Notice/Consent Form to reflect that HIV testing of insurance applicants may now be undertaken utilizing any of the three tests now approved by the United States Food and Drug Administration (FDA) for testing for the presence of HIV antibodies, and also to make clerical changes updating the name and address of the department. The amendment to §21.705 also states that in testing applicants for insurance for the presence of HIV antibodies, insurers shall only use tests approved by the FDA, in a manner approved by the FDA. The tests also must comply with all other applicable state and federal laws.

The amendments expanding the types of allowable tests for HIV antibodies are necessary and desirable to allow insurers to utilize new procedures for testing for the presence of HIV antibodies that have been approved by the FDA. One procedure extracts oral fluid from the cheek and gum tissues of the person being tested for antibodies. This fluid, know as oral mucosal transudate, is not saliva. The FDA has approved this test both for initial screenings for the virus (ELISA tests) and the confirmatory test (Western Blot). The other procedure is a urine test, which the FDA has approved only for ELISA tests. The Commissioner has determined that the use of these alternative procedures will allow insurers to maximize the convenience and safety of HIV-related screenings for insurance purposes.

The sections as adopted differ in some respects from the proposed sections, based on further study generated by the comments received. The term "oral tissue" in the Notice/Consent Form was revised to "oral fluid extracted from cheek and gum tissue," because the latter phrase describes the procedure more accurately. A provision was added to §21.705 to state explicitly that insurers testing applicants for coverage can only use testing procedures that have been approved by the FDA and that otherwise comply with state and federal law. References to urine testing were added to the Notice/Consent Form, because insurers lawfully may obtain ELISA test results from urine screens.

The effective date for the Notice/Consent Form initially proposed, of December 1, 1996, has been changed to Wednesday, January 8, 1997, the twentieth day after these amendments are projected to be filed with the Secretary of State.

The amended §21.704 (relating to unfair discrimination) and §21.705 (relating to nondiscriminatory testing for the human immunodeficiency virus) delete references that would limit HIV testing for insurance purposes to blood testing, and also make clerical changes updating the name and address of the department. Section 21.704 also incorporates by reference a Notice/Consent Form promulgated by the department for insurers to provide applicants or insureds to ensure that the applicants or insureds consent knowingly to the test. The amended Notice/Consent Form explains to applicants or insureds that they are consenting to a procedure for detecting HIV antibodies in the body either through testing blood, oral fluid extracted from cheek and gum tissue or urine. Section 21.705 now states explicitly that insurers testing applicants for coverage can only use testing procedures that have been approved by the FDA and that otherwise comply with state and federal law.

General support. One commenter expressed support for the proposed amendments in general. The commenter stated that the FDA's approval of the Western Blot confirmatory HIV screening test using oral fluid extracted from cheek and gum tissue would benefit consumers. The commenter intends to implement use of the test in Texas after these amendments become effective.

Agency Response: The Department agrees with the commenter. The adopted rules will allow testing for the presence of HIV antibodies through any procedures approved by the FDA and otherwise allowed by state or federal law. The oral fluid and urine tests, when used in accordance with FDA guidelines, should provide safe and useful alternatives for both insurers and consumers.

Testing Procedures. Commenters requested changes relating to the way testing procedures are allowed or referenced in the proposed amendments. Two of these commenters suggested that any references to specific types of testing in the Notice/Consent Form be deleted and replaced with specimen-neutral language, such as "HIV-related testing." The commenters stated that such language would allow insurers to use any tests approved by the FDA and otherwise allowed by law. Two commenters each noted that a urine test had been approved by the FDA in August 1996 for initial ELISA screenings. One of the commenters noted that insurers should be able to use urine tests in the initial screening process, because such tests offer patient-friendly, noninvasive specimen collection, safety for lab workers from needle sticks and handling blood, and cost savings.

A commenter stated that the reference to oral testing in the proposed Notice/Consent Form was not technically accurate. The commenter noted that the oral screening for HIV approved by the FDA does not involve collecting samples of oral tissue, but instead involves collection of oral fluid extracted from cheek and gum tissue. This commenter also stated that the word "blood" had not been removed at one place in the proposed Notice/Consent Form where the Form referenced HIV-related testing as a whole.

Agency Response: The Department agrees that insurers should be able to utilize all HIV-related tests and testing procedures, including urine screenings, that have been approved by the FDA and that otherwise comply with applicable Texas and federal laws. Because the amendments have eliminated the limitation of allowable tests to only blood tests, the Department believes that it is necessary and appropriate to explicitly state that any tests performed must be limited to FDA-approved tests which otherwise comply with state and federal law. Accordingly, the Department has added a new paragraph (3) in §21.705 to accomplish this purpose. The Department also added references to urine tests in the Notice/Consent Form.

The Department does not agree that all references to the types of tests that may be performed on an applicant should be deleted from the Notice/Consent Form. Currently, FDA-approved testing procedures include obtaining samples of blood (both ELISA screening and Western Blot confirmation), oral fluid extracted from cheek and gum tissue (both ELISA screening and Western Blot confirmation), or urine (ELISA screening only). The Department believes that delineating the bodily fluids that may be tested by an insurer gives consumers information that is necessary for making an informed consent to testing. If the FDA later approves HIV antibody tests on other types of specimens, the Department will amend the Notice/Consent Form accordingly.

The Department agrees that the reference to oral testing in the Notice/Consent Form incorporated by reference into the proposed amendments to §21.704 was not technically accurate. In the Notice/Consent Form incorporated by reference into the adopted amendments to §21.704, the Department has replaced references to oral tissue with "oral fluid extracted from cheek and gum tissue." The latter reference is more accurate, according to the developer of the test. The Department also agrees that the word "blood" should not be used in connection with any reference to HIV-related testing as a whole, and it has deleted the reference.

For: Allstate Life Insurance Company. For with changes: Biomedical Resource Group, Epitope, Inc., Woodmen of the World/Omaha Woodmen Life Insurance Society.

The amendments are adopted pursuant to the Insurance Code, Articles 21.21-4 and 1.03A. Article 21.21-4 provides that an insurer can test applicants for HIV if the insurer administers the test on a nondiscriminatory basis. Article 21.21-4, subsection (g) states that an insurer may not make an adverse underwriting decision based on a positive HIV-related test, unless the insurer follows the test protocol established in rules promulgated by the Department. Article 21.21-4, subsection (i) authorizes the Department to adopt reasonable rules and forms to implement the article.

Article 1.03A provides that the Commissioner of Insurance may adopt rules and regulations to execute the duties and functions of the Texas Department of Insurance only as authorized by statute.

§21.704. Unfair Discrimination.

(a)

(No change.)

(b)

Medical/lifestyle applications, questions, and underwriting standards.

(1)-(7)

(No change.)

(8)

Whenever a proposed insured is requested to take an HIV-related test in connection with an application for insurance, the use of such a test must be revealed to the proposed insured or to any other person legally authorized to consent to such a test, and his or her written authorization obtained. The form of such authorization must be printed on a separate piece of paper and must contain the specific language in the form, entitled Notice and Consent for HIV-Related Testing, which the Texas Department of Insurance has adopted and incorporated herein by reference, effective January 7, 1997. This form is published by the Texas Department of Insurance and copies of this form are available from and on file at the offices of the Life/Health Group, Mail Code 106-1E, of the Texas Department of Insurance at 333 Guadalupe, P.O. Box 149104, Austin, Texas 78714-9104. Other information may be included so long as it is not misleading or violative of any applicable law or rule. Testing may be required only on a nondiscriminatory basis. No adverse underwriting decision shall be made on the basis of such a positive HIV-related test unless the established test protocol as provided by §21.705 of this title (relating to Nondiscriminatory Testing for Human Immunodeficiency Virus) has been followed.

(9)

Insurers are permitted to ask a proposed insured whether the proposed insured has tested positive on an acquired immune deficiency syndrome-related test.

(10)

(No change.)

(c)

Effective date. This section becomes effective February 1, 1988, except for paragraphs (8) and (9) of subsection (b) of this section, which become effective January 7, 1997.

(d)

(No change.)

§21.705. Nondiscriminatory Testing for Human Immunodeficiency Virus.

A proposed insured for life or health and accident insurance, or for coverage by a company licensed under the Insurance Code, Chapter 20, or with a licensed health maintenance organization may be required to be tested for the presence of the human immunodeficiency virus (HIV). Requiring such testing is not unfair discrimination provided:

(1)

(No change.)

(2)

no proposed insured is denied coverage or rated a substandard risk on the basis of such testing unless:

(A)

an initial enzyme linked immunosorbent assay (ELISA) test is administered to the proposed insured, and it indicates the presence of HIV antibodies;

(B)

a second ELISA test is conducted and it indicates the presence of HIV antibodies and

(C)

a Western Blot test is conducted and it confirms the results of the two ELISA tests.

(3)

the tests and testing procedures used have been approved by the United States Food and Drug Administration (FDA) and otherwise comply with applicable Texas and federal laws.

This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority.

Issued in Austin, Texas, on December 18, 1996.

TRD-9618371

Caroline Scott

General Counsel and Chief Clerk

Texas Department of Insurance

Effective date: January 8, 1997

Proposal publication date: October 18, 1996

For further information, please call: (512) 463-6327