State RegulationsTX specificDifficulty 3/5
A Texas insurer assigns an unlicensed employee to handle policyholder service calls. Under TIC 4002.003, what is the effect if that employee also begins recommending additional coverage and taking applications?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
Under TIC 4002.003, the exemptions are narrow and are defined by the activity actually performed rather than by a job title or by who signs the paycheck. An employee who goes beyond nonsoliciting duties and recommends coverage or takes an application is soliciting or negotiating insurance and must hold an agent license. Practically, the insurer cannot cure the violation by having a licensed agent countersign the paperwork: both the unlicensed employee and the insurer that permits the activity are exposed to department action.
Why the other options are wrong
- A) Being on the insurer's payroll does not preserve the exemption; the test is what duties the person actually performs.
- C) An agent appointment is not what is involved here, and the exemption does not continue until the employee asks for different duties; it ends when the solicitation begins.
- D) Routing the applications to a licensed agent for signature does not make the earlier unlicensed solicitation lawful.
Memory hook
The exemption follows the act, not the badge.