An unlicensed person in Texas takes an application for a life insurance policy from a neighbor and collects the initial premium. Under TIC 101.051, which statement is correct?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
Under TIC 101.051, the acts that constitute the business of insurance in this state include making or proposing to make an insurance contract; taking or receiving an insurance application; receiving or collecting any consideration for insurance, including a premium, commission, membership fee, assessment, or dues; and directly or indirectly acting as an agent for or otherwise representing or assisting an insurer in soliciting, negotiating, procuring, or effectuating insurance. Because the list reaches conduct that occurs before issuance, an unlicensed person who takes an application and collects premium is transacting insurance without authority.
Why the other options are wrong
- A) The definition reaches agents and other persons acting for or assisting an insurer, not only admitted insurers.
- C) Many pre-issuance acts, including taking an application, are within the statutory list.
- D) Collecting consideration is itself a listed act; delivery of the policy is not required.
Memory hook
Take the application or take the premium, and you are transacting insurance.