81R11218 PMO-F

By: Eiland H.B. No. 1857

A BILL TO BE ENTITLED

AN ACT

relating to the sale of charitable gift annuities.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Sections 102.002, 102.051, 102.102, and 102.152, Insurance Code, are amended to read as follows:

Sec. 102.002. QUALIFIED CHARITABLE GIFT ANNUITY. A charitable gift annuity is a qualified charitable gift annuity for purposes of this chapter if it was issued before September 1, 1995, or if it is:

(1) described by Section 501(m)(5), Internal Revenue Code of 1986; and

(2) issued by a charitable organization that on the date of the annuity agreement:

(A) has, exclusive of the assets funding the annuity agreement, a minimum of $100,000 in unrestricted cash, cash equivalents, or publicly traded securities; [and]

(B) has been in continuous operation for at least three years or is a successor or affiliate of a charitable organization that has been in continuous operation for at least three years; and

(C) is approved by the department under Section 102.102.

Sec. 102.051. [NOT INSURANCE;] EFFECT OF CERTAIN LAWS. (a) The issuance of a qualified charitable gift annuity:

(1) does not constitute engaging in the business of insurance in this state;

(2) does not violate Section 15.05 or 17.46, Business & Commerce Code; and

(3) is not an unconscionable action or course of action for purposes of Section 17.50(a)(3), Business & Commerce Code.

(b) Notwithstanding Subsection (a)(1), an organization that issues a charitable gift annuity without the approval of the department under Section 102.102 engages in the unauthorized business of insurance and is subject to Chapter 101.

Sec. 102.102. NOTICE AND APPROVAL OF QUALIFIED STATUS [TO DEPARTMENT]. (a) Not later than the 60th day before the date on which a charitable organization sells the organization's first qualified charitable gift annuity, the [A charitable] organization [that issues qualified charitable gift annuities] shall:

(1) notify the department's annuities division in writing of the organization's intention to issue a charitable gift annuity; and

(2) request in writing the department's approval of the organization as a qualified charitable organization under this chapter [not later than the date on which the organization enters into the organization's first qualified charitable gift annuity agreement].

(b) The notice required by this section must:

(1) be signed by an officer or director of the organization;

(2) identify the organization; [and]

(3) certify that:

(A) the organization is a charitable organization; and

(B) the annuities issued by the organization are [qualified] charitable gift annuities; and

(4) be submitted in a form and manner adopted by the commissioner by rule under Subsection (c).

(c) The commissioner may adopt rules that establish the form and manner of information that a charitable organization must [may not be required to] submit to request approval under this section [additional information except to determine appropriate penalties under Section 102.104].

(d) A postsecondary educational institution authorized to grant degrees under a certificate of authority issued by the Texas Higher Education Coordinating Board is exempt from Subsections (b)(4) and (c).

(e) On receipt of notice and request for approval under this section, the department may:

(1) approve a request for a charitable organization to issue charitable gift annuities; or

(2) disapprove a request and notify the issuer in writing of the grounds for the disapproval in sufficient detail to allow remediation.

(f) A request under Subsection (b) is considered approved if the commissioner does not act on the request on or before the 60th day after the date that the department received the request.

(g) The department may withdraw the approval of a request for qualified status of a charitable organization if the organization no longer satisfies the requirements for approval. The department shall notify the organization in writing of the grounds for the withdrawal of approval in sufficient detail to allow remediation.

(h) A proceeding under this chapter for the disapproval or withdrawal of approval is a contested case subject to Chapter 2001, Government Code.

Sec. 102.152. TREATMENT OF ANNUITY AS CHARITABLE GIFT ANNUITY; ESTOPPEL. In any litigation or other proceeding brought by or on behalf of a donor or the donor's heirs or distributees, an annuity that the donor has treated as a charitable gift annuity in a filing with the United States Internal Revenue Service shall be considered to be a qualified charitable gift annuity issued by a charitable organization, as described by Subchapters A and B and Section 101.053(b).

SECTION 2. Subchapter B, Chapter 4005, Insurance Code, is amended by adding Section 4005.056 to read as follows:

Sec. 4005.056. MODIFICATION OF METHOD OF COMPENSATION FOR SALE OF ANNUITIES. In addition to any other remedy available, the commissioner may order the modification of a method of compensation for the sale of an annuity that the commissioner finds, after notice and an opportunity for hearing, results in a pattern or practice that violates Chapter 1115.

SECTION 3. (a) Section 1 of this Act applies only to an annuity that is delivered, issued for delivery, or renewed on or after January 1, 2010. An annuity that is delivered, issued for delivery, or renewed before January 1, 2010, is governed by the law as it existed immediately before the effective date of this Act, and that law is continued in effect for that purpose.

(b) Section 2 of this Act applies only to a method of compensation resulting in a sale occurring on or after September 1, 2009. A method of compensation resulting in a sale occurring before September 1, 2009, is governed by the law as it existed immediately before the effective date of this Act, and that law is continued in effect for that purpose.

SECTION 4. This Act takes effect September 1, 2009.