The first step to determine whether an insurance company is vicariously liable is to determine whether the person who engaged in the conduct was acting as the insurance company agent.
Agency has been discussed by the Texas Supreme Court in many contexts. The Texas Legislature has helped by putting the definition of an agent into law as it relates to the insurance context.
The question; “Who are agents?” was answered in the past by one statute. It broadly defined agents to include any person who performed certain actions on behalf of insurance companies. This old law is now found in the Texas Insurance Code, Sections 4001.003 and 4001.051.
“Agent” is now defined in Section 4001.003, while Section 4001.051 outlines what constitutes “acting as an agent,” and Section 4001.053 further defines agents saying:
Unless the context clearly indicates other wise in this title:
(1) “Agent” means a person who is an authorized agent of an insurer or health maintenance organization, a subagent, and any other person who performs the acts of an agent, whether through an oral, written, electronic, or other form of communication, by soliciting, negotiating, procuring, or collecting a premium on an insurance or annuity contract, or who represents or purports to represent a health maintenance organization, including a health maintenance organization offering only a single health care service plan, in soliciting, negotiating, procuring, or effectuating membership in the health maintenance organization. The term does not include:
(A) a regular salaried officer or employee of an insurer, health maintenance organization, or agent who:
(i) devotes substantially all of the officer’s or employee’s time to activities other than the solicitation of applications for insurance, annuity contracts, or memberships;
(ii) does not receive a commission or other compensation directly dependent on the business obtained; and (iii) does not solicit or accept from the public applications for insurance, annuity contracts, or memberships;
(B) an employer or an employer’s officer or employee or a trustee of an employee benefit plan, to the extent that the employer, officer, employee, or trustee is engaged in the administration or operation of an employee benefits program involving the use of insurance or annuities issued by an insurer or memberships issued by a health maintenance organization, if the employer, officer, employee, or trustee is not directly or indirectly compensated by the insurer or health maintenance organization issuing the insurance or annuity contracts or memberships;
(C) except as otherwise provided by this code, a depository institution, or an officer or employee of a depository institution, to the extent that the depository institution or officer or employee collects and remits premiums or charges by charging those premiums or charges against accounts of depositors on the orders of those depositors; or (D) a person or the employee of a person who has contracted to provide administrative, management, or health care services to a health maintenance organization and who is compensated for those services by the payment of an amount computed as a percentage of the revenues, net income, or profit of the health maintenance organization, if that method of compensation is the sole basis for subjecting that person or the employee of the person to this title.
An experienced Insurance Law Attorney is going to use the above in discussing agent liability with a client. A client who gets some understanding of this can be very helpful when it comes to discussing their case.
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