Texas insurance definitions

I.B Insurance definitions

Texas insurance definitions are tested under statutes common to life and health on the Texas Life producer exam (InsTX-Life01) outline in force on or after 1 September 2026. These unofficial notes cover the certificate of authority, what counts as transacting insurance, domestic versus foreign versus alien companies, stock versus mutual, and fraternal benefit societies. They are not a prelicensing course and are not affiliated with Pearson VUE, TDI, or NAIC. Passing is not guaranteed. Twenty scored questions sit in the common-statute section. Learn the labels. The rest of the Texas half is easier if these five are automatic.

I.B.1–2 Certificate of authority; transacting insurance

A certificate of authority is the insurer’s ticket to write insurance in Texas. It is not an agent license. TDI approves, denies, or disapproves the application. If the applicant has complied with the law, the department issues the certificate under its seal. The certificate must name the specific kinds of insurance authorized. It stays in force until it is suspended or revoked (TIC 801.051–.053). On a denial, the applicant may request a hearing. The commissioner must request a hearing date not later than the 30th day after that request.

You cannot lawfully do the business of insurance in Texas without statutory authorization (TIC 101.102). TIC 101.051 lists the acts that count. The exam-useful ones: making or proposing an insurance contract; taking or receiving an application; collecting a premium, commission, membership fee, assessment, or dues; issuing or delivering a contract to a Texas resident or a person authorized to do business here; and acting as an agent by soliciting, negotiating, procuring, renewing, forwarding an application, delivering a policy, inspecting a risk, setting a rate, or adjusting a claim. Doing the same things in a way designed to evade the code still counts. Mail into Texas still counts.

Do not confuse this with the producer license page. The company needs the certificate. The person who solicits needs the license and an appointment. A clerical employee who never solicits is a different fact pattern.

I.B.3 Foreign, domestic, alien

Domicile is about the law under which the company is organized, not where it advertises.

A domestic life, accident, or health company is organized under the laws of Texas (TIC 841.001). A foreign insurance company is organized under the laws of another state of the United States (TIC 982.001). An alien insurance company is organized under the laws of a foreign country (TIC 982.001; TIC 841.001 uses the same split for life, accident, or health). A New York company writing in Dallas is foreign. A Canadian company writing in Dallas is alien. A Texas-chartered company writing in Dallas is domestic.

Chapter 547 sometimes groups “alien or foreign” together for unauthorized-insurer advertising (TIC 547.001). That grouping does not erase the three-way split the outline wants. If the stem names a country, mark alien. If it names another U.S. state, mark foreign.

I.B.4–5 Stock, mutual, and fraternals

TIC 801.001 treats both a stock company and a mutual company of any kind as an “insurer” that needs a certificate. The ownership difference is what the exam is after. A stock insurer has capital stock and shareholders. Policyholders of a stock company are customers, not owners, unless they also bought stock. A mutual has no capital stock in the stock-company sense. Policyholders are the members. TIC 404.051 draws the same line on solvency: a stock company’s capital stock may not be impaired; a mutual is measured on minimum required aggregate surplus.

A fraternal benefit society is a separate animal (TIC 885.001, 885.051). It operates on a lodge system with a representative form of government, or it limits membership to a secret fraternity that does. It is organized solely for the mutual benefit of members and their beneficiaries, not for profit. It has no capital stock. It pays benefits under Chapter 885. A lodge is a camp, court, council, or branch. The lodge system means a supreme governing body plus lodges that admit members under the society’s laws and hold periodic meetings (TIC 885.053). Members get a benefit certificate as written evidence of the benefit contract. Do not call a fraternal a stock life company. Do not call every mutual a fraternal. No lodge, no fraternal.

Match the stem. Seal, lines of authority, in force until revoked: certificate of authority. Took the app and the premium in Texas: transacting insurance. Chartered in Ohio: foreign. Chartered in Germany: alien. Shareholders and capital stock: stock. Owned by the policyholders, no stock: mutual. Lodge, not for profit, benefit certificate: fraternal.