State RegulationsTX specificDifficulty 2/5
A Texas life and health agent is convicted of a felony arising from the misappropriation of a client's funds. Under TIC 4005.101, what authority does the Texas Department of Insurance have over the agent's license?
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Answer & full 3-part explanation (select an option above, or peek)
Why D is correct
Under TIC 4005.101 the Commissioner may suspend, revoke or deny a license for cause, and a felony conviction arising from misappropriating a client's funds is such cause. License discipline is administrative, so TDI does not need a court order and does not have to wait for the criminal appeal to end; the conduct need not be an insurance transaction, because the issue is the agent's fitness to hold money and trust. Practically, the agent must stop transacting insurance once the order issues, and any business written afterwards is unauthorized activity that draws further discipline.
Why the other options are wrong
- A) License discipline is administrative and rests with TDI, not with the convicting court.
- B) Fitness grounds reach conduct outside an insurance transaction; an agent who misappropriates client money cannot be trusted with premiums.
- C) TDI's authority to discipline a license is independent of criminal appellate review; the department need not wait for the appeal to end.
Memory hook
Felony conviction = TDI may pull the license, no court order needed.