Texas § IN.651.110 - LIMITATIONS ON CERTAIN INDUCEMENTS OR SHARING OF PROFITS AND FEES

§ IN.651.110. LIMITATIONS ON CERTAIN INDUCEMENTS OR SHARING OF PROFITS AND FEES

LIMITATIONS ON CERTAIN INDUCEMENTS OR SHARING OF PROFITS AND FEES. (a) This section applies to: (1) an insurance premium finance company; (2) an insurance agent; (3) a premium finance agreement servicer; or (4) an affiliate, employee, agent, or other representative of an insurance premium finance company or a premium finance agreement servicer. (a-1) A person, partnership, or other entity described by Subsection (a) and involved in transactions related to the financing of insurance premiums may not: (1) directly or indirectly pay, allow, give, or offer to pay, allow, or give in any manner to an insurance agent or an employee of an insurance agent any consideration, compensation, or inducement for soliciting, accepting an application for, delivering, or administering premium finance agreements; (2) pay, allow, or offer to pay or allow an insurance agent or an employee of an insurance agent to share the profits of any person, partnership, or other entity if any portion of the share of profits is determined, either in whole or in part, by the amount of premium dollars financed or premium finance agreements placed; or (3) pay, allow, or offer to pay or allow an insurance agent or an employee of an insurance agent to share any portion of fees, including late fees, that are related to the premium finance agreement. (b) Subsection (a-1) does not prohibit the giving or offering of an article of merchandise to an insurance agent or an employee of an insurance agent that has a value of $10 or less on which there is an advertisement of the insurance premium finance company. (c) Subsection (a-1) does not prohibit a person, partnership, or other entity described by Subsection (a) from making a payment under a contractual agreement with a validly organized and operating association of insurance agents or a subsidiary of the association if no part of a payment received under the agreement: (1) is distributed to an insurance agent or an employee of an insurance agent; or (2) inures directly to the benefit of a member of the association or an employee of the member. (d) A contractual agreement under Subsection (c): (1) must be in writing; and (2) is not valid until commissioner approval is received. (e) Subsection (a-1) does not prohibit an insurance agent from being the sole owner or sole shareholder of an insurance premium finance company and receiving profits and fees of the insurance premium finance company if the insurance agent discloses in writing the agent's ownership interest in the insurance premium finance company to all insureds placed by the agent with the insurance premium finance company owned by the agent. (f) Subsections (a-1) and (e) do not apply to a person, partnership, or other entity described by Subsection (a) and involved in transactions related to the financing of insurance premiums for commercial lines of insurance if, with respect to those transactions: (1) the insurance agent discloses in writing the source of any compensation to be received by the agent as a result of the insured entering into a premium finance agreement; (2) the agent provides in writing to the insured the amount of compensation, as a percentage of the premiums financed, if the amount of compensation received by the agent exceeds two percent of the premium amount financed; and (3) the amount of compensation is based only on actual premiums financed and is not paid as: (A) an advance on future premium finance agreements; or (B) a form of bonus for the agent agreeing to place finance agreements with the premium finance company. Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1, 2005. Amended by: Acts 2005, 79th Leg., Ch. 757 (H.B. 2965 ), Sec. 4, eff. June 17, 2005.