A licensed Texas insurance agent arranges loans for a bank and makes buying a policy a condition of applying for a $52,000 loan. Does requiring an insurance purchase preserve the insurance-agent licensing carve-out?
Correct Answer
A) The carve-out is lost: insurance may not be made a condition of the loan
An insurance agent licensed under the listed subchapters of Insurance Code Chapter 4051 needs no Chapter 342 license to negotiate or arrange a loan on behalf of a bank, savings bank or savings and loan association, provided neither the agent nor the institution makes the provision of insurance a condition to apply for or obtain a loan or service. Other choices: being licensed as an agent is the starting point rather than the whole exemption; a 10-day cancellation right does not undo the tying; and earning commission on both is not the condition the statute sets. Source: Tex. Fin. Code sec. 342.051(d)
Why This Is the Correct Answer
An insurance agent licensed under the listed subchapters of Insurance Code Chapter 4051 needs no Chapter 342 license to negotiate or arrange a loan on behalf of a bank, savings bank or savings and loan association, provided neither the agent nor the institution makes the provision of insurance a condition to apply for or obtain a loan or service. Other choices: being licensed as an agent is the starting point rather than the whole exemption; a 10-day cancellation right does not undo the tying; and earning commission on both is not the condition the statute sets. Source: Tex. Fin. Code sec. 342.051(d)
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