By Maxey H.B. No. 792
76R12758 AJA-F
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the regulation of viatical settlement agreements and
1-3 life settlement agreements.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. The heading of Article 3.50-6A, Insurance Code,
1-6 is amended to read as follows:
1-7 Art. 3.50-6A. VIATICAL SETTLEMENTS AND LIFE SETTLEMENTS
1-8 SECTION 2. Section 1, Article 3.50-6A, Insurance Code, is
1-9 amended by adding Subdivision (3) to read as follows:
1-10 (3) "Life settlement" means an agreement that is
1-11 solicited, negotiated, offered, entered into, delivered, or issued
1-12 for delivery in this state under which a person pays compensation
1-13 or anything of value that is less than the expected death benefit
1-14 of a policy insuring the life of an individual who does not have a
1-15 catastrophic or life-threatening illness or condition in return for
1-16 the policy owner's or certificate holder's assignment, transfer,
1-17 sale, devise, or bequest of the death benefit under or ownership of
1-18 the policy.
1-19 SECTION 3. Section 2, Article 3.50-6A, Insurance Code, is
1-20 amended by amending Subsections (a), (b), and (c) and adding
1-21 Subsections (e) and (f) to read as follows:
1-22 (a) The purpose of this article is to register persons
1-23 engaged in the business of viatical settlements or the business of
1-24 life settlements and to provide consumer protection for a person
2-1 [with a catastrophic or life-threatening illness or condition] who
2-2 may sell or otherwise transfer the person's life insurance policy.
2-3 (b) The commissioner shall adopt reasonable rules to
2-4 implement this article as it relates to viatical settlements and as
2-5 it relates to life settlements.
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) registration of a person engaged in the business
2-11 of life settlements;
2-12 (3) approval of contract forms;
2-13 (4) [(3)] disclosure requirements;
2-14 (5) [(4)] prohibited practices relating to:
2-15 (A) unfair discrimination in the provision of
2-16 viatical settlements or life settlements; and
2-17 (B) referral fees paid by persons engaged in the
2-18 business of viatical settlements or life settlements;
2-19 (6) [(5)] the assignment or resale of life insurance
2-20 policies; [and]
2-21 (7) [(6)] the maintenance of appropriate
2-22 confidentiality of personal and medical information; and
2-23 (8) the responsibility of a registrant to ensure
2-24 compliance with this article and rules relating to viatical
2-25 settlements or life settlements after the registration is revoked,
2-26 is suspended, or otherwise lapses.
2-27 (e) The commissioner may not adopt rules establishing prices
3-1 or fees for the sale or purchase of life settlements. This
3-2 subsection does not prohibit the commissioner from adopting rules
3-3 addressing unjust prices or fees for the sale or purchase of life
3-4 settlements.
3-5 (f) The commissioner may not adopt rules that require
3-6 regulation of the passive financial actions of an institutional
3-7 investor or accredited investor, as those terms are defined under
3-8 regulations adopted under the Securities Act of 1933 (15 U.S.C.
3-9 Section 77a et seq.).
3-10 SECTION 4. Sections 3 and 4, Article 3.50-6A, Insurance
3-11 Code, are amended to read as follows:
3-12 Sec. 3. APPLICATION OF OTHER INSURANCE LAWS. Articles 1.10,
3-13 1.10A, 1.10C, 1.10D, 1.10E, 1.19, 1.19-1, 1.24, and 21.21 of this
3-14 code apply to a person engaged in the business of viatical
3-15 settlements or life settlements. [ENFORCEMENT. For a violation of
3-16 a rule adopted under this article, the commissioner may take any
3-17 action against a person engaged in the business of viatical
3-18 settlements that may be taken under:]
3-19 [(1) Articles 1.10 and 1.10E of this code; or]
3-20 [(2) Article 1.10D of this code against a person
3-21 engaged in a fraudulent insurance act.]
3-22 Sec. 4. DENIAL, SUSPENSION, OR REVOCATION OF REGISTRATION;
3-23 ENFORCEMENT. (a) The commissioner may suspend or revoke the
3-24 registration of a registrant or deny an application for
3-25 registration under this article if the commissioner finds that the
3-26 registrant or applicant, individually or through any officer,
3-27 director, or shareholder of the registrant or applicant:
4-1 (1) wilfully violates this article, an applicable
4-2 provision of this code or another insurance law of this state, or a
4-3 rule adopted under this article or under such a provision;
4-4 (2) intentionally makes a material misstatement in the
4-5 application for registration under this article;
4-6 (3) obtains, or attempts to obtain, registration under
4-7 this article by fraud or misrepresentation;
4-8 (4) misappropriates, converts to the registrant's or
4-9 applicant's own use, or illegally withholds money belonging to a
4-10 party to a viatical settlement or life settlement;
4-11 (5) is guilty of fraudulent or dishonest practices;
4-12 (6) materially misrepresents the terms and conditions
4-13 of business conducted under this article or any other provision of
4-14 this code or other insurance laws of this state;
4-15 (7) makes or issues, or causes to be made or issued, a
4-16 statement misrepresenting or making incomplete comparisons
4-17 regarding the terms or conditions of any business conducted under
4-18 this article; or
4-19 (8) is convicted of a misdemeanor involving moral
4-20 turpitude or criminal fraud or a felony.
4-21 (b) An applicant or registrant whose registration has been
4-22 denied, suspended, or revoked under this section may not file
4-23 another application for registration before the first anniversary
4-24 of the effective date of the denial, suspension, or revocation or,
4-25 if judicial review of the denial, suspension, or revocation is
4-26 sought, the first anniversary of the date of the final court order
4-27 or decree affirming the action. An application filed after that
5-1 period may be denied by the commissioner unless the applicant shows
5-2 good cause why the denial, suspension, or revocation of the
5-3 previous license should not bar the issuance of a new license.
5-4 (c) In addition to an action taken under Subsections (a)
5-5 and (b) of this section, the commissioner may take against a person
5-6 engaged in the business of viatical settlements or life settlements
5-7 who violates this article, an applicable provision of this code or
5-8 another insurance law of this state, or a rule adopted under this
5-9 article or under such a provision any action that the commissioner
5-10 may take against a person engaged in the business of insurance who
5-11 violates a statute or rule. [RELATION TO OTHER INSURANCE LAWS.
5-12 Except as otherwise provided by this article or by rules adopted
5-13 under this article, this code and any other insurance law of this
5-14 state do not apply to the business of viatical settlements.]
5-15 SECTION 5. The change in law made by this Act applies only
5-16 to conduct that occurs on or after the effective date of this Act.
5-17 Conduct that occurs before the effective date of this Act is
5-18 governed by the law in effect when the conduct occurred, and that
5-19 law is continued in effect for that purpose.
5-20 SECTION 6. This Act takes effect September 1, 1999.
5-21 SECTION 7. The importance of this legislation and the
5-22 crowded condition of the calendars in both houses create an
5-23 emergency and an imperative public necessity that the
5-24 constitutional rule requiring bills to be read on three several
5-25 days in each house be suspended, and this rule is hereby suspended.