When a licensed agent or agency, which does not have an appointment from a particular insurance company, refers an application for insurance to another agent or managing general agent, who does have an appointment with that company, and the referral has resulted in the issuance of a policy of insurance written by that company, the agent who has the appointment may share the commission with the agent who does not have an appointment.
The agent (without an appointment from the company that takes the risk or issues a policy)
- may prepare an application for insurance,
- may collect and remit premium due to the agent issuing any such policy, and
- may deliver the policy and any endorsements to the insured and shall as to such activities be regarded as the agent of the insured and shall not be considered to be the agent of the company for any purpose.
Upon making such referral, the agent without an appointment from the company that takes the risk shall make written disclosure to the insured that such agent is not authorized to bind coverage or to execute or issue a policy for the subject risk.
An agent without an appointment from a particular insurer may not sign or execute policies or issue binders, endorsements, or any other indication of coverage on behalf of that insurer.
MGA License May Be Required
According to Chapter 4053 of the Texas Insurance Code, an agent who accepts business from other agents is required to obtain a Managing General Agent's license if the agent accepts more than $500,000 in annual premium volume or if the brokered business represents 50% or more of the agent's total business.
References:
- RULE §19.905 Referral Business and Insurance Company Appointments - Texas Administrative Code
