Agents, Would-Be Agents and Educators Fall Under TDI Scrutiny

Late January and early February enforcement actions taken by Texas Insurance Commissioner Jose Montemayor included license revocations, suspensions, denials, and related fines assessed upon numerous agents, would-be agents and at least one insurance continuing education provider in the state.

Billy George Calhoun and his agency, Texas Casualty Insurance Agency Inc. of Houston, were found to have illegally withheld premium funds collected from business clients that should have been paid to carriers, including the Fidelity and Deposit Company of Maryland, Republic Underwriters of Dallas, USF Insurance Company of Philadelphia, and Hartford Insurance Company of Houston. Montemayer revoked Calhoun’s general lines property and casualty and risk manager licenses, as well as Texas Casualty Insurance Agency’s corporate general lines property and casualty license. His life, accident, health and HMO licenses were also revoked.

Franklin Harvey Nicholson’s request for a general property and casualty license was refused after investigators alleged that Nicholson’s prior convictions on theft charges in 1997 and 2000 disqualified him from consideration for licensure.

The commissioner did grant a property and casualty license to Linda Louise Howard, only to find that Howard had been indicted in a 1995 forgery by passing and theft in Liberty County, for which she was placed on probation. Montemayor granted her a suspended license, but probated the suspension provided she meet several requirements, including no illegal conduct, disclosure of her probated license to agents and carriers with whom she does business, disclosure to TDI on future license applications of her prior criminal charges, and monthly submissions to TDI describing business activities, professional responsibilities and duties, and contact information for supervisors.

Rey Estrada Insurance Agency Inc. of El Paso was issued a general property and casualty license but it was put on probated suspension for 12 months. TDI alleged that owner, Reymundo Estrada had misappropriated funds from auto insurance policyholders, withheld money from both policyholders and carriers, allowed his unlicensed employees to conduct insurance-related business, and did not disclose inspection and agency fees charged to customers.

In 1999 and 2000, Estrada conducted insurance business through unlicensed employees, who charged and collected undisclosed fees from policyholders—a violation of the Texas insurance code. Estrada also withheld premium fees from carriers, including American Hallmark Insurance Company of Texas, Southern County Mutual Insurance Company, and State and County Mutual Fire Insurance Company.

Because of several mitigating factors—Estrada’s lack of a criminal record, his agreement to cease conducting business through unlicensed employees, and his agreement to pay restitution to policyholders whose premiums were withheld from carriers—his licenses, including his general property and casualty license, were all renewed, but with probated suspension. During the probationary period, Estrada will be required to file monthly reports detailing restitution payments, agency contact information, consumers and the licensed agents selling policies to them, and copies of any written complaints relating to Estrada’s business. In addition, Estrada must pay an administrative penalty fee of $2,500 and the Rey Estrada Insurance Agency will pay another $2,500.

Montemayor suspended the provider registration of ProEd Consultants Inc., a Dallas-based provider of continuing education courses for insurance agents and adjusters. TDI alleged that the company failed to properly conduct registered classroom continuing education courses, did not use TDI-approved course outlines, and issued Texas Continuing Education Certificates of Completion for courses registered by the insurance department to providers without obtaining authorization from those providers to use their courses as assignees.

Among other things, TDI alleged that ProEd charged enrollment fees to 14 insurance agents for its Insurance Regulations and Ethics course in Dallas, but no instructor was present at the scheduled time for conducting the course. The agents were instead told to listen in on a class for students pursuing general life, accident, health and HMO licenses. ProEd then issued Certificates of Completion to them, although they never completed the Regulations and Ethics course. Furthermore, Insurance Education Inc. was listed as the provider of these certificates, but ProEd was the actual provider of the certificates—the signature of president and owner Sheila Trussell appeared on at least one of them.

TDI also found that ProEd violated department rules while providing other courses.

ProEd was issued a probated 12-month suspension of its registration and fined $6,500. It agreed to refund agents and companies for unauthorized courses and certificates it provided.