H.B. No. 2256
    1-1                                AN ACT
    1-2  relating to viatical settlements.
    1-3        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
    1-4        SECTION 1.  Article 3.50-6A, Insurance Code, is amended to
    1-5  read as follows:
    1-6        Art. 3.50-6A.  VIATICAL SETTLEMENTS
    1-7        Sec. 1.  DEFINITIONS. In this article:
    1-8              (1)  "Person" means an individual, corporation, trust,
    1-9  partnership, association, or any other legal entity.
   1-10              (2)  "Viatical <, "viatical> settlement" means an
   1-11  agreement that is solicited, negotiated, offered, entered into,
   1-12  delivered, or issued for delivery in this state under which a
   1-13  person pays compensation or anything of value that is less than the
   1-14  expected death benefit of a policy insuring the life of an
   1-15  individual who has a catastrophic or life-threatening illness or
   1-16  condition in return for the policy owner's or certificate holder's
   1-17  assignment, transfer, sale, devise, or bequest of the death benefit
   1-18  under or ownership of the policy <a contract, entered into by an
   1-19  insured with a terminal illness who owns a life insurance policy
   1-20  insuring the life of the insured, under which the insured assigns
   1-21  or transfers the insurance policy to another person or entity for
   1-22  valuable consideration>.
   1-23        Sec. 2.  RULES.  (a)  The purpose of this article is to
   1-24  register persons engaged in the business of viatical settlements
    2-1  and to provide consumer protection for a person with a catastrophic
    2-2  or life-threatening illness or condition who may sell or otherwise
    2-3  transfer the person's life insurance policy.
    2-4        (b)  The commissioner shall adopt reasonable rules to
    2-5  implement this article.
    2-6        (c)  The rules adopted by the commissioner under this article
    2-7  must include rules governing:
    2-8              (1)  registration of a person engaged in the business
    2-9  of viatical settlements;
   2-10              (2)  approval of contract forms;
   2-11              (3)  disclosure requirements;
   2-12              (4)  prohibited practices relating to:
   2-13                    (A)  discrimination in the provision of viatical
   2-14  settlements; and
   2-15                    (B)  referral fees paid by persons engaged in the
   2-16  business of viatical settlements;
   2-17              (5)  the assignment or resale of life insurance
   2-18  policies; and
   2-19              (6)  the maintenance of appropriate confidentiality of
   2-20  personal and medical information.
   2-21        (d)  The commissioner may adopt rules requiring payment of an
   2-22  annual fee in connection with registration.  The fee may not exceed
   2-23  $250.
   2-24        Sec. 3.  ENFORCEMENT.  For a violation of a rule adopted
   2-25  under this article, the commissioner may take any action against a
   2-26  person engaged in the business of viatical settlements that may be
   2-27  taken under:
    3-1              (1)  Articles 1.10 and 1.10E of this code; or
    3-2              (2)  Article 1.10D of this code against a person
    3-3  engaged in a fraudulent insurance act.
    3-4        Sec. 4.  RELATION TO OTHER INSURANCE LAWS.  Except as
    3-5  otherwise provided by this article or by rules adopted under this
    3-6  article, this code and any other insurance law of this state do not
    3-7  apply to the business of viatical settlements <REGULATION BY BOARD.
    3-8  The board has exclusive jurisdiction in this state to regulate
    3-9  viatical settlements, regardless of form, other than transactions
   3-10  governed by The Securities Act (Article 581-1 et seq., Vernon's
   3-11  Texas Civil Statutes)>.
   3-12        SECTION 2.  (a)  Except as provided by Subsection (b) of this
   3-13  section, this Act takes effect September 1, 1995.
   3-14        (b)  Section 3, Article 3.50-6A, Insurance Code, as added by
   3-15  this Act, takes effect January 1, 1996.
   3-16        SECTION 3.  The importance of this legislation and the
   3-17  crowded condition of the calendars in both houses create an
   3-18  emergency and an imperative public necessity that the
   3-19  constitutional rule requiring bills to be read on three several
   3-20  days in each house be suspended, and this rule is hereby suspended.