Graford Texas insurance lawyers learn real fast how to determine whether someone is an agent of an insurance company, or not.
The first step to determine whether an insurer is vicariously liable is to determine whether the person who engaged in the conduct was acting as the insurer’s agent.
The question — “Who are agents?” was answered, until recently, by one statute. Formerly, article 21.02 broadly defined “agents” to include any person who performed certain actions on behalf of an insurance company. As part of the ongoing codification of Texas statutes, the old article 21.02 is now found in 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 who are agents. Section 4001.003 gives this definition of “agent”:
Sec. 4001.003. DEFINITIONS. Unless the context clearly indicates otherwise, 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.
(2) “Control” means the power to direct or cause the direction of the management and policies of a license holder, whether directly or indirectly. For the purposes of this title, a person is considered to control:
(A) a corporate license holder if the person, individually or acting with others, directly or indirectly, holds with the power to vote, owns, or controls, or holds proxies representing, at least 10 percent of the voting stock or voting rights of the corporate license holder; or
(B) a partnership if the person through a right to vote or through any other right or power exercises rights in the management, direction, or conduct of the business of the partnership.
(3) “Corporation” means a legal entity that is organized under the business corporation laws or limited liability company laws of this state or another state and that has as one of its purposes the authority to act as an agent.
(4) “Depository institution” means:
(A) a bank or savings association as defined by 12 U.S.C. Section 1813, as amended;
(B) a foreign bank that maintains a branch, agency, or commercial lending company in the United States;
(C) a federal or state credit union as defined by 12 U.S.C. Section 1752, as amended;
(D) a bank branch; or
(E) a bank subsidiary, as defined by state or federal law.
(5) “Individual” means a natural person. The term includes a resident or a nonresident of this state.
(6) “Insurer” means an insurance company or insurance carrier regulated by the department. The term includes:
(A) a stock life, health, or accident insurance company;
(B) a mutual life, health, or accident insurance company;
(C) a stock fire or casualty insurance company;
(D) a mutual fire or casualty insurance company;
(E) a Mexican casualty insurance company;
(F) a Lloyd’s plan;
(G) a reciprocal or interinsurance exchange;
(H) a fraternal benefit society;
(I) a stipulated premium company;
(J) a nonprofit or for-profit legal services corporation;
(K) a statewide mutual assessment company;
(L) a local mutual aid association;
(M) a local mutual burial association;
(N) an association exempt under Section 887.102;
(O) a nonprofit hospital, medical, or dental service corporation, including a company subject to Chapter 842;
(P) a health maintenance organization;
(Q) a county mutual insurance company; and
(R) a farm mutual insurance company.
(7) “Partnership” means an association of two or more persons organized under the partnership laws or limited liability partnership laws of this state or another state. The term includes a general partnership, limited partnership, limited liability partnership, and limited liability limited partnership.
(8) “Person” means an individual, partnership, corporation, or depository institution.
(9) “Subagent” means a person engaging in activities described under Subdivision (1) who acts for or on behalf of an agent, whether through an oral, written, electronic, or other form of communication, by soliciting, negotiating, or procuring an insurance or annuity contract or health maintenance organization membership, or collecting premiums or charges on an insurance or annuity contract or health maintenance organization membership, without regard to whether the subagent is designated by the agent as a subagent or by any other term. A subagent is an agent for all purposes of this title, and a reference to an agent in this title, Chapter 21, or a provision listed in Section 4001.009 includes a subagent without regard to whether a subagent is specifically mentioned.