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.