The Texas Insurance Department (TDI) recently issued Commissioners’ Bulletin No. B-0007-19 (the “Bulletin”) to Third Party Administrators (“TPAs”) and agents licensed in Texas. Specifically, the Bulletin is a reminder to TPAs and agents that their licenses are potentially at risk if they assist a company engaged in the unauthorized business of insurance in Texas under Texas Insurance Code Chapter 101.
The TDI noted that new types of health insurance-like products are being sold to Texas consumers by unlicensed and unauthorized companies. For example, the Bulletin noted that companies may claim to be exempt from licensing requirements as a healthcare sharing ministry or other innovative business without complying with the requirements of the claimed exemption.
The Bulletin states that any “person who in any manner assists directly or indirectly in the procurement of an unauthorized insurance contract can be held strictly liable to the insured for the full amount of a claim or loss … if the unauthorized insurer fails to pay the claim or loss.”
Additionally, the TDI cautions that it may bring an action against an agent or TPA who assists the unauthorized company; even if the agent or TPA did not know the company was unauthorized. Such actions by the TDI against a TPA or agent for assisting an unauthorized company includes civil penalties up to $10,000 for each act of violation and for each day of violation. Further, the TDI may also suspend or revoke the agent or TPA’s license for engaging in the unauthorized business of insurance.
More Information on Our TPA Team
Polsinelli’s TPA team provides TPA licensing services, TPA regulatory and compliance services, drafting and negotiating of administrative services agreements and a number of other TPA services. Our TPA team includes attorneys who were former inhouse counsel for TPAs, as well as attorneys who were formerly insurance regulators.
By leveraging its extensive experience representing TPAs, our TPA team helps clients avoid the learning curve and related cost implications that can be experienced by working with companies or
attorneys less familiar with the regulatory and compliance needs of TPAs.
For questions regarding this information, please contact one of the authors, a member of Polsinelli’s Third Party Administrators practice or your Polsinelli attorney.