Texas General Lines — Life, Accident, Health and HMOTexas Statutes and Rules Specific to Accident, Health and HMOMedium
An insurance agent in Texas fails to provide the required disclosure notice regarding the agent's relationship with the insurer to a prospective client before selling a health insurance policy. What potential disciplinary action could the Texas Department of Insurance (TDI) take against this agent?
- AOrder the agent to refund the client's premiums and pay damages.
- BRequire the agent to complete additional continuing education hours.
- CImpose an administrative penalty and suspend the agent's license.
- DIssue a cease and desist order only.
Show answer & explanationAnswer & explanation
Correct answer: C. Impose an administrative penalty and suspend the agent's license.
Failure to provide required disclosures is a violation of Texas insurance law. The TDI has broad powers to enforce these laws, which can include administrative penalties (fines) and license suspension, especially for serious or repeated violations.
Why the other options are wrong
- A. Refunding premiums and paying damages are typically civil remedies, though TDI can order restitution; license suspension and fines are direct disciplinary actions against the agent's license.
- B. Additional CE hours might be imposed, but typically in conjunction with, or as a lesser penalty than, fines and suspension.
- D. A cease and desist order is possible, but usually accompanies other penalties for such violations, and is not the only potential action.
TDI Disciplinary Actions (Agent Misconduct)
The Texas Department of Insurance can impose various disciplinary actions on agents for violations, including administrative penalties (fines), license suspension, and license revocation.
- Applies to violations of insurance laws/rules.
- Penalties vary by severity.
- Can include fines, suspension, revocation.
Memory trick: The 'TDI' can 'penalize' and 'suspend' agents who don't 'disclose'.