Texas writes its insurance rules into the Texas Insurance Code (TIC) and the Texas Administrative Code (TAC), and the exam pulls the state-law questions straight from them. This guide turns those statutes into plain-English study notes so the "Texas Statutes and Rules" portion of your exam feels familiar. Read it once now and again the night before.

The regulator: the Texas Department of Insurance

Insurance in Texas is overseen by the Texas Department of Insurance (TDI), run by the Commissioner of Insurance, who is appointed by the Governor. TDI licenses companies and agents, reviews rates and forms, monitors solvency, and enforces consumer-protection law. A separate office, the Office of Public Insurance Counsel (OPIC), represents consumers in rate and rule proceedings—a distinctly Texan feature worth remembering.

Vocabulary the exam assumes you know:

• Certificate of Authority – the license a company needs; an agent holds a license.
• Admitted vs. surplus lines (eligible) – admitted carriers are TDI-licensed and guaranty-fund backed; surplus lines are not.
• Texas Lloyds plan and reciprocal/inter-insurance exchanges – special organizational types Texas recognizes alongside stock and mutual insurers.

Producer (agent) licensing

Texas calls producers agents. The main exam is the General Lines license (Life/Accident & Health, or Property & Casualty), administered by Pearson VUE. The score is reported on a scaled 0–100 basis and 70 is passing; national and Texas questions are mixed and scored as one exam (no separate-section cut score like Pennsylvania's).

To get licensed you generally:

• Complete any required prelicensing/education and pass the Pearson VUE exam.
• Submit fingerprints for a background check. (Unlike Pennsylvania, Texas does fingerprint license applicants—a common trap.)
• Apply and pay the fee through NIPR/Sircon.

License term & renewal. Texas agent licenses run on a two-year cycle and renew biennially.

Continuing education. Agents complete 24 hours of CE every two years, including 2 hours of ethics. (Note the ethics minimum is 2 hours in Texas, versus 3 in several other states—don't auto-fill "3.")

Nonresident & reciprocity. Texas follows NAIC uniform standards, so a producer in good standing in their home state can get a Texas nonresident license reciprocally without sitting the Texas exam.

Appointments and termination reporting

• An appointment links an agent to a specific insurer (TIC § 4001.201); an agent may hold many appointments.
• When an insurer terminates an agent, it must notify TDI, and report the cause if the termination involved misconduct. The reporting window to remember is within 30 days.
• The agent is entitled to a copy of any for-cause filing and may respond.

Unfair practices, prompt payment of claims, and prohibited acts

Texas splits these across two chapters you should memorize by number:

TIC Chapter 541 – Unfair Methods of Competition and Unfair or Deceptive Acts. Prohibited acts include:

• Misrepresentation of policy terms, benefits, or dividends.
• Twisting – misrepresenting facts to get someone to switch policies.
• Defamation of another insurer.
• Boycott, coercion, and intimidation.
• Rebating – giving unstated value to induce a sale (TIC § 541.056 / § 1806.104). Treat as prohibited on the exam.
• Unfair discrimination between insureds of the same class and hazard.
• False advertising / deceptive sales practices.

TIC Chapter 542 – Unfair Claim Settlement Practices & Prompt Payment of Claims. This is heavily tested. For a first-party claim the insurer must, in general:

• Acknowledge the claim and begin investigating within about 15 days.
• Accept or reject the claim within 15 business days after receiving all the information it needs.
• Pay an accepted claim within 5 business days after notifying the insured of acceptance.
• A late-paying insurer owes a statutory penalty (18% interest) plus attorney's fees—a favorite exam detail.

Insurance fraud is addressed in TIC Chapter 701 (and the Texas Penal Code), with the federal prohibition under 18 U.S.C. §§ 1033–1034 appearing on the national side.

Replacement rules

When a transaction replaces existing life insurance or an annuity (TIC Ch. 1114), Texas requires the agent to disclose the replacement, deliver the required notices, and give the existing insurer the opportunity to conserve the contract. The aim is to keep clients from losing benefits or restarting contestability and surrender-charge periods. Expect a question testing that replacement must be disclosed and documented.

Guaranty associations

If an admitted insurer fails, Texas guaranty associations pay covered claims (funded by assessments on other licensed insurers), up to caps:

• Texas Property & Casualty Insurance Guaranty Association (TPCIGA) – TIC Ch. 462.
• Texas Life, Accident, Health & Hospital Service Insurance Guaranty Association – TIC Ch. 463.

Surplus lines/non-admitted carriers are not covered, and you may not advertise guaranty-fund coverage to make a sale.

Texas auto, residual markets, and the workers' comp twist

• Auto: Financial responsibility is set by the Texas Transportation Code Ch. 601, with minimum liability limits of 30/60/25 ($30k bodily injury per person, $60k per accident, $25k property damage). Insurers must offer Personal Injury Protection (PIP) of at least $2,500 and Uninsured/Underinsured Motorist (UM/UIM) coverage; both are added unless the insured rejects them in writing.
• Residual markets: TWIA (Texas Windstorm Insurance Association) covers coastal wind/hail; the Texas FAIR Plan is the property insurer of last resort; and TAIPA is the auto assigned-risk plan.
• Workers' compensation — the signature Texas rule: Texas WC is elective for most private employers. An employer that opts out is a "non-subscriber," which gives up the exclusive-remedy protection (employees can then sue). No other big state works this way; expect a question on it.

Key state numbers to memorize

Common exam traps

• Writing "3 hours of ethics." Texas requires 2 ethics hours, not 3.
• Assuming workers' comp is mandatory. It is elective in Texas; employers can be non-subscribers.
• Saying PIP/UM are automatically included with no choice. They must be offered, but the insured can reject in writing.
• Forgetting fingerprints. Texas does fingerprint applicants.
• Mixing up Chapter 541 and 542. 541 = unfair competition/deceptive acts; 542 = unfair claims and prompt pay.
• Thinking the score is a raw percent. TX reports a scaled 0–100 score; 70 passes.
• Believing surplus lines are guaranty-protected. Only admitted insurers are.

Quick recap

TDI and its appointed Commissioner regulate Texas insurance; agents test through Pearson VUE (scaled 70 to pass), hold a two-year license, complete 24 CE hours (2 ethics), and must be fingerprinted. The prohibited-practice rules live in TIC Ch. 541 (deceptive acts—misrepresentation, twisting, rebating, defamation, coercion, unfair discrimination) and Ch. 542 (unfair claims and prompt pay, with an 18% penalty for late payment). Auto minimums are 30/60/25 with PIP and UM/UIM offered, residual markets are TWIA / FAIR Plan / TAIPA, and the can't-miss Texas distinctive is elective workers' compensation with the non-subscriber option. Lock those in and the Texas state section is yours.