1. (a) The Texas Department of Insurance considers it very important that licensees, all corporate officials, including corporate officers and members of boards of directors of insurance companies (referred to as corporate officials in these rules), and license applicants and all corporate officials of license applicants be honest, trustworthy, and reliable. Accordingly, crimes involving moral turpitude, including, but not limited to, fraud, dishonesty, and the mishandling of funds are generally of prime importance in determining fitness for licensure.

   1. (1) The special nature of the relationship between agents, insurance companies, other insurance-related entities, the corporate officials of such entities, and the public with respect to insurance and related businesses regulated by the Texas Department of Insurance, requires trust in and reliance upon such persons because of the complex and varied nature of insurance and insurance-related products which require citizens to place reliance on insurance and insurance-related licensees. In light of this special relationship, the matters specified in Texas Civil Statutes, Article 6252-13(c), §4(b) and (c), and described in subsection (b) of this section, will be considered by the Texas Department of Insurance in determining whether to grant, deny, suspend, or revoke any license under its jurisdiction.
   2. (2) Where the legislature has set out specific criteria for any license, such specific criteria shall be considered by the Texas Department of Insurance in considering whether to grant, deny, suspend, or revoke such licenses. In the event of any conflict with these rules, those specific statutory criteria shall govern licensure under such statutes.

   3. (3) The department, in considering the matters described in subsection (b) of this section, has determined that the serious nature of felony convictions involving crimes of moral turpitude or breach of fiduciary duty, bear such a strong relationship to the occupations which are licensed by the department, that special rules should apply to licensure of persons convicted of such crimes. The following rules, therefore, apply to persons convicted of felonies involving crimes of moral turpitude or breach of fiduciary duty.

      1. (A) The department shall not issue a license to any applicant for a license as an insurance agent subject to Article 21.07, §10A, if the applicant has been convicted of a felony involving moral turpitude or breach of a fiduciary duty, except as provided in subparagraph (F) of this paragraph.
      2. (B) The department shall not issue a certificate of authority to any applicant for a certificate of authority as an insurance company if a corporate official of the company has been convicted of a felony involving moral turpitude or breach of a fiduciary duty, except as provided in subparagraph (F) of this paragraph.
      3. (C) The department shall not issue a license to any applicant for any license regulated by the department, other than a license as an insurance agent subject to Article 21.07, §10A, or a certificate of authority as an insurance company, if the applicant has been convicted of a felony involving moral turpitude or breach of a fiduciary duty, unless the commissioner of insurance finds that the other matters set out in subsection (b) of this section outweigh the serious nature of a felony conviction involving moral turpitude or breach of fiduciary duty when viewed in light of the occupation being licensed, except as provided in subparagraph (F) of this paragraph.
      4. (D) The department may, after notice and hearing, revoke the certificate of authority of an insurance company if a corporate official of the company is convicted of a felony involving moral turpitude or breach of a fiduciary duty. In determining whether to revoke the certificate of authority of the insurance company, the department shall consider the factors set forth in subsection (b) of this section and whether the insurance company has terminated the corporate official with the felony conviction. The certificate of authority may not be reinstated except as provided in subparagraph (F) of this paragraph.
      5. (E) The department shall, after notice and hearing, revoke the license of any licensee if the licensee is convicted of a felony involving moral turpitude or breach of a fiduciary duty, unless the other factors set forth in subsection (b) of this section outweigh the serious nature of the crimes involved when viewed in light of the special relationship between the licensee and the public. The license may not be reinstated except as provided in subparagraph (F) of this paragraph.

      6. (F) A licensee or applicant whose application for issuance of a license has been denied or whose license has been revoked under subparagraph (D) or subparagraph (E) of this paragraph, may petition the commissioner of insurance for issuance or reinstatement of the license under the following conditions.

         1. (i) The licensee or applicant may not make a petition for issuance or reinstatement of a license before a date five years after the date of final conviction or, if the licensee, applicant, or corporate official of the licensee or applicant has been sentenced to prison or probation, five years after the date the sentence or probation terminates.
         2. (ii) A petition for issuance or reinstatement of a certificate of authority may be made at any time after the convicted corporate official is no longer a corporate official of the company.

         3. (iii) The petition for issuance or reinstatement of a license must set forth the following information:

            1. (I) the date of final conviction and/or the date the sentence or probation terminated; and
            2. (II) the reasons why the petitioner believes the license should be issued or reinstated.
         4. (iv) The petition should be filed with the associate commissioner for license and investigations.
         5. (v) The office of the associate commissioner for license and investigations may order an investigation of the facts surrounding the initial failure to issue the license or revocation of the license or any other matters deemed relevant to the petition.
         6. (vi) After notice and hearing, the commissioner of insurance (referred to in these rules as the commissioner) shall grant the petition if the petitioner demonstrates that it would be in the public interest and that justice would be served if the license was issued or reinstated.

         7. (vii) In determining whether it would be in the public interest and that justice would be best served if the license were to be issued or reinstated, the commissioner shall consider:

            1. (I) those factors set forth in subsection (b) of this section;
            2. (II) any other matters the commissioner deems relevant to the issuance or reinstatement of the license.
   4. (4) The same factors and crimes are also important respecting the various licensees regulated under the state fire marshal's office. Fire detection and fire protection systems and devices are often of a technical nature. Fire detection and fire protection systems and equipment are often installed, serviced, and maintained during nonworking hours. Moreover, the manufacturing, storing, and selling of fireworks requires numerous special precautions to maintain a safe environment for the licensees and the public. Honesty, trustworthiness, and reliability are therefore of prime importance in determining fitness for licensure.

2. (b) The matters specified in Texas Civil Statutes, Article 6252-13c, §4(b) and (c), will be considered by the Texas Department of Insurance in determining whether to grant or deny, or suspend or revoke any person's license under its jurisdiction, as well as any and all other matters which constitute proper evidence under other law, including matters contained in any other valid rule or statute. The matters specified in Texas Civil Statutes, Article 6252-13c, §4(b) and (c), recodified as §1 of Article 6252-13d, §1, are listed following.

   1. (1) In determining whether a criminal conviction directly relates to the duties and responsibilities of the licensed occupation, the following matters shall be considered:

      1. (A) the nature and seriousness of the crime;
      2. (B) the relationship of the crime to the purposes for requiring a license to engage in the occupation;
      3. (C) the extent to which a license might offer an opportunity to engage in further criminal activity of the same type as that in which the person previously had been involved; and
      4. (D) the relationship of the crime to the ability, capacity, or fitness required to perform the duties and discharge the responsibilities of the licensed occupation.

   2. (2) In addition to the factors listed in paragraph (1) of this subsection, the following evidence shall be considered in determining the present fitness of a person who has been convicted of a crime:

      1. (A) the extent and nature of the person's past criminal activity;
      2. (B) the age of the person at the time of the commission of the crime;
      3. (C) the amount of time that has elapsed since the person's last criminal activity;
      4. (D) the conduct and work activity of the person prior to and following the criminal activity;
      5. (E) evidence of the person's rehabilitation or rehabilitative effort while incarcerated or following release; and
      6. (F) other evidence of the person's present fitness, including letters of recommendation from: prosecution, law enforcement, and correctional officers who prosecuted, arrested, or had custodial responsibility for the person; the sheriff and chief of police in the community where the person resides; and any other persons in contact with the convicted person.
   3. (3) Article 6252-13d, §1, also provides that it shall be the responsibility of the licensee or applicant to the extent possible to secure and provide to the commissioner the information referred to in paragraph (2)(F) of this subsection. The licensee or applicant shall also furnish proof that the licensee or applicant has maintained a record of steady employment and has supported the licensee's or applicant's dependents where applicable, and has otherwise maintained a record of good conduct, and has paid all outstanding court costs, supervision fees, fines, and restitution as may have been ordered in all criminal cases in which licensee or applicant has been convicted.
3. (c) Although any felony or misdemeanor may be considered by the State Board of Insurance in making a determination respecting the granting, denial, or retention of a license under these sections or other law, a minor misdemeanor, or a conviction which is too remote or for some other reason does not constitute probative evidence, will not be considered.

Source Note:The provisions of this §1.502 adopted to be effective April 1, 1983, 8 TexReg 922; amended to be effective May 20, 1992, 17 TexReg 3378.