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A BILL TO BE ENTITLED
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AN ACT
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relating to certain trade practices related to life insurance, |
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annuity contracts, and accident and health coverage. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. The heading to Title 9, Insurance Code, is |
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amended to read as follows: |
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TITLE 9. PROVISIONS APPLICABLE TO LIFE INSURANCE, ANNUITY |
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CONTRACTS, AND ACCIDENT AND HEALTH COVERAGES |
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SECTION 2. Title 9, Insurance Code, is amended by adding |
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Chapter 1702 to read as follows: |
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CHAPTER 1702. REGULATION OF CERTAIN TRADE PRACTICES |
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SUBCHAPTER A. GENERAL PROVISIONS |
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Sec. 1702.001. PURPOSE. The purpose of this chapter is to: |
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(1) set forth uniform standards of prohibited acts and |
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practices for life insurance, annuity contracts, accident and |
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health insurance, and health care plans; and |
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(2) provide for more uniformity in well-recognized |
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exceptions to existing rebate and discrimination laws for certain |
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value-added services, acts, or practices recognized in existing law |
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or contained in uniform model laws developed and recommended by the |
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National Association of Insurance Commissioners. |
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Sec. 1702.002. DEFINITIONS. In this chapter: |
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(1) "Agent" means a person authorized to act as an |
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insurance agent as defined by Section 4001.003. |
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(2) "Consumer" means a policyholder or potential |
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policyholder, a certificate holder or potential certificate |
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holder, an insured or potential insured, a contract holder or |
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potential contract holder, an enrollee or potential enrollee, or an |
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applicant for insurance, an annuity, or health care plan coverage. |
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(3) "Enrollee" and "health care plan" have the |
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meanings assigned by Section 843.002. |
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(4) "Insurer" means an insurance company, including a |
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reciprocal or interinsurance exchange, mutual insurance company, |
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capital stock company, Lloyd's plan, fraternal benefit society, |
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group hospital service corporation, or other legal entity |
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authorized to engage in the business of life, accident, or health |
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insurance or annuities in this state. |
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(5) "Loss-control or value-added product or service" |
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means a product or service offered or provided by an insurer, health |
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maintenance organization, or agent, by or through an employee, |
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affiliate, or third-party representative, to an insured, |
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annuitant, or enrollee at no or reduced cost when such products or |
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services are not specified in the insurance policy, annuity |
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contract, or health care plan contract and that: |
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(A) relates to the insurance, annuity, or health |
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care plan coverage; and |
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(B) is primarily designed to do one or more of the |
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following: |
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(i) provide loss mitigation or loss |
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control; |
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(ii) reduce claim costs or claim settlement |
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costs; |
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(iii) provide education about liability |
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risks or risk of loss to persons or property; |
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(iv) monitor or assess risk, identify |
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sources of risk, or develop strategies for eliminating or reducing |
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risk; |
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(v) enhance health; |
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(vi) enhance financial wellness through |
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items such as education or financial planning services; |
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(vii) provide post-loss services; |
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(viii) provide incentives for behavioral |
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changes to improve the health or reduce the risk of death or |
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disability of an insured, annuitant, or enrollee; or |
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(ix) assist in the administration of |
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employee or retiree benefit insurance, annuity, or health care plan |
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coverage. |
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Sec. 1702.003. APPLICABILITY OF CHAPTER: LIFE INSURANCE AND |
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ANNUITIES. Except as otherwise provided by this chapter, this |
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chapter applies to an insurance company writing life insurance and |
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annuities in this state, including: |
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(1) a stock life insurance company; |
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(2) a mutual life insurance company, including a |
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mutual life assessment company; |
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(3) a stipulated premium life insurance company; and |
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(4) a fraternal benefit society authorized under |
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Chapter 885. |
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Sec. 1702.004. APPLICABILITY OF CHAPTER: ACCIDENT AND |
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HEALTH. Except as otherwise provided by this chapter, this chapter |
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applies to: |
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(1) an insurer authorized to engage in the business of |
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accident and health insurance in this state, including: |
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(A) a life, health, and accident stock insurance |
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company; |
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(B) a mutual insurance company, including: |
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(i) a mutual life insurance company; and |
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(ii) a mutual assessment life insurance |
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company; |
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(C) a local mutual aid association; |
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(D) a mutual or natural premium life or casualty |
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insurance company; |
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(E) a general casualty company; |
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(F) a nonprofit hospital, medical, or dental |
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service corporation, including a corporation operating under |
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Chapter 842; |
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(G) a Lloyd's plan operating under Chapter 941; |
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(H) a reciprocal or interinsurance exchange |
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operating under Chapter 942; and |
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(I) any other type of insurer required by law to |
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be authorized by the department to issue accident and health |
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insurance policies; and |
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(2) a health maintenance organization operating under |
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Chapter 843. |
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Sec. 1702.005. CONSTRUCTION. Nothing in this chapter may |
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be construed to: |
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(1) permit conduct that is an unfair method of |
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competition or a false, misleading, or deceptive act or practice |
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under Section 17.46, Business & Commerce Code, or Chapter 541 of |
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this code; or |
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(2) prohibit an insurer, health maintenance |
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|
organization, or agent from offering or giving to a consumer, for |
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free or at a discounted price in a manner that is not unfairly |
|
|
discriminatory to consumers of the same class and of essentially |
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the same hazard, a loss-control or value-added product or service |
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|
relating to the risks covered under the relevant policy or |
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contract, subject to Sections 1702.051 and 1702.053. |
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Sec. 1702.006. RULES. The commissioner may adopt |
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reasonable rules necessary to implement this chapter. |
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SUBCHAPTER B. ANCILLARY PRODUCTS OR SERVICES AND PROHIBITED |
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INDUCEMENTS |
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Sec. 1702.051. LOSS-CONTROL OR VALUE-ADDED PRODUCTS AND |
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SERVICES. (a) The cost to an insurer, health maintenance |
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|
organization, or agent for a loss-control or value-added product or |
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service provided to an insured, annuitant, or enrollee must be |
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reasonable in comparison to that insured's, annuitant's, or |
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enrollee's premiums or coverage for the class of the insured's, |
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|
annuitant's, or enrollee's policy or contract. |
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(b) If an insurer, health maintenance organization, or |
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|
agent provides a loss-control or value-added product or service to |
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an insured, annuitant, or enrollee, the insurer, health maintenance |
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organization, or agent must ensure that the insured, annuitant, or |
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enrollee is provided with contact information to assist the |
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insured, annuitant, or enrollee with questions regarding the |
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product or service. |
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(c) An insurer, health maintenance organization, or agent |
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must: |
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(1) base the availability of the loss-control or |
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value-added product or service on documented objective criteria; |
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(2) offer the product or service in a manner that is |
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not unfairly discriminatory; and |
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(3) maintain the documented criteria and produce the |
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criteria on request by the department. |
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Sec. 1702.052. PROHIBITED INDUCEMENTS. Except as provided |
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by this chapter, an insurer, health maintenance organization, or |
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agent may not: |
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(1) offer or provide insurance, annuity, or health |
|
|
care plan coverage as an inducement to the purchase of another |
|
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policy or contract; or |
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(2) otherwise use "free," "no cost," or words of |
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similar meaning in an advertisement. |
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Sec. 1702.053. NON-CASH GIFTS, CHARITABLE DONATIONS, |
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RAFFLES, OR OTHER ITEMS AND SERVICES. (a) An insurer, health |
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maintenance organization, or agent may offer or provide non-cash |
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gifts, items, or services, including meals, to or charitable |
|
|
donations on behalf of a consumer, in connection with the |
|
|
marketing, sale, purchase, or retention of policies or contracts of |
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|
insurance, annuity, or health care plan coverage, provided: |
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(1) the cost does not exceed an amount determined to be |
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reasonable by the commissioner per policy or contract year per |
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term; |
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(2) the offer is made in a manner that is not unfairly |
|
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discriminatory; and |
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(3) the consumer is not required to purchase, continue |
|
|
to purchase, or renew a policy or contract in exchange for the gift, |
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item, or service. |
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(b) An insurer, health maintenance organization, or agent |
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|
may conduct raffles or drawings to the extent permitted by the laws |
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|
of this state, provided: |
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(1) there is no financial cost to participate; |
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|
(2) the raffle or drawing does not obligate |
|
|
participants to purchase, continue to purchase, or renew a policy |
|
|
or contract; |
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(3) the prizes are not valued in excess of a reasonable |
|
|
amount determined by the commissioner and the raffle or drawing is |
|
|
open to the public; and |
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(4) the raffle or drawing is offered in a manner that |
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is not unfairly discriminatory. |
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SUBCHAPTER C. PRACTICES RELATED TO LIFE AND ANNUITY COVERAGE |
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Sec. 1702.101. APPLICABILITY OF SUBCHAPTER. This |
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|
subchapter applies only to an insurer described by Section |
|
|
1702.003. |
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Sec. 1702.102. PROHIBITED REBATES AND INDUCEMENTS. (a) |
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Except as provided by this subchapter, an insurer or agent may not, |
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with respect to business written in this state: |
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(1) knowingly permit the making of, offer to make, or |
|
|
make a life insurance policy or annuity contract or an agreement |
|
|
regarding the policy or contract, other than as plainly expressed |
|
|
in the issued policy or contract; |
|
|
(2) directly or indirectly pay, give, or allow or |
|
|
offer to pay, give, or allow as inducement to enter into a life |
|
|
insurance policy or annuity contract either: |
|
|
(A) a rebate of premiums payable on the policy or |
|
|
contract; or |
|
|
(B) a special favor or advantage in the dividends |
|
|
or other benefits of the policy or contract or a valuable |
|
|
consideration or inducement not specified in the policy or |
|
|
contract; or |
|
|
(3) give, sell, or purchase or offer to give, sell, or |
|
|
purchase in connection with a life insurance policy or annuity |
|
|
contract or as inducement to enter into the policy or contract: |
|
|
(A) stocks, bonds, or other securities of an |
|
|
insurer or other corporation, association, or partnership; |
|
|
(B) dividends or profits accrued from the stocks, |
|
|
bonds, or securities; or |
|
|
(C) anything of value not specified in the |
|
|
contract. |
|
|
(b) An insurer may not permit an agent, officer, or employee |
|
|
to issue or deliver as an inducement to enter into a life insurance |
|
|
policy or annuity contract: |
|
|
(1) company stock or other capital stock; |
|
|
(2) a benefit certificate or share in a corporation; |
|
|
(3) a security; or |
|
|
(4) a special or advisory board contract or any other |
|
|
contract promising returns or profits. |
|
|
(c) This section does not prohibit issuing or delivering a |
|
|
participating insurance policy or annuity contract otherwise |
|
|
authorized by law. |
|
|
Sec. 1702.103. PROHIBITED DISTINCTIONS AND DISCRIMINATION. |
|
|
Except as provided by Section 1702.104, an insurer may not, with |
|
|
respect to a life insurance policy or annuity contract, make or |
|
|
permit a distinction or unfair discrimination between individuals |
|
|
of the same class and equal life expectancy regarding: |
|
|
(1) the rate charged; |
|
|
(2) the dividend or other payable benefit; or |
|
|
(3) any of the other terms of the policy or contract. |
|
|
Sec. 1702.104. EXEMPTIONS. The following are not |
|
|
considered to constitute a rebate, inducement, distinction, or |
|
|
discrimination prohibited by this subchapter: |
|
|
(1) for a life insurance policy or annuity contract, a |
|
|
bonus payment to a policyholder or contract holder or other |
|
|
abatement in the policyholder's or contract holder's premiums |
|
|
provided wholly or partly out of surplus accumulated from |
|
|
nonparticipating policies or contracts if the payment or abatement: |
|
|
(A) is fair and equitable to policyholders and |
|
|
contract holders; and |
|
|
(B) is in the best interests of the insurer and |
|
|
the insurer's policyholders and contract holders; |
|
|
(2) for a life insurance policy issued on an |
|
|
industrial debit plan, an allowance to a policyholder who has |
|
|
continuously for a specified period made premium payments directly |
|
|
to the insurer's office that is in an amount that fairly represents |
|
|
the insurer's savings in collection expenses; |
|
|
(3) for a group insurance policy, a readjustment in |
|
|
the rate of premium based on the loss or expense experience under |
|
|
the policy at the end of a policy year if the adjustment is |
|
|
retroactive for only that policy year; |
|
|
(4) for an annuity contract, a waiver of surrender |
|
|
charges under the contract when the contract holder exchanges that |
|
|
contract for another annuity contract issued by the same insurer or |
|
|
an affiliate of the same insurer that is part of the same holding |
|
|
company group if: |
|
|
(A) the waiver and the exchange are fully, |
|
|
fairly, and accurately explained to the contract holder in a manner |
|
|
that is not deceptive or misleading; and |
|
|
(B) the contract holder is given credit for the |
|
|
time that the previous contract was held in determining any |
|
|
surrender charges under the new contract; |
|
|
(5) in connection with an offer or sale of a life |
|
|
insurance policy or annuity contract, a promotional advertising |
|
|
item, educational item, or traditional courtesy commonly extended |
|
|
to consumers and that is valued at $25 or less; or |
|
|
(6) any loss-control or value-added service or product |
|
|
or other item allowed by Subchapter B. |
|
|
SUBCHAPTER D. PRACTICES RELATED TO ACCIDENT AND HEALTH COVERAGE |
|
|
Sec. 1702.151. APPLICABILITY OF SUBCHAPTER. This |
|
|
subchapter applies only to an insurer or health maintenance |
|
|
organization described by Section 1702.004. |
|
|
Sec. 1702.152. PROHIBITED REBATES AND INDUCEMENTS. (a) |
|
|
Except as provided by this subchapter or another provision in this |
|
|
code, with respect to accident and health insurance or health care |
|
|
plan coverage written in this state, an insurer, health maintenance |
|
|
organization, or agent may not: |
|
|
(1) knowingly permit the making of or offering of, |
|
|
offer to make, or make an accident and health insurance policy or |
|
|
health care plan contract or an agreement regarding the policy or |
|
|
contract other than as plainly expressed in the issued policy or |
|
|
contract; |
|
|
(2) directly or indirectly pay, give, or allow or |
|
|
offer to pay, give, or allow as an inducement to enter into an |
|
|
accident and health insurance policy or health care plan contract: |
|
|
(A) a rebate of premiums payable on the policy or |
|
|
contract; or |
|
|
(B) a special favor or advantage in the dividends |
|
|
or other benefits of the policy or contract or a valuable |
|
|
consideration or inducement not specified in the policy or |
|
|
contract; or |
|
|
(3) give, sell, or purchase or offer to give, sell, or |
|
|
purchase in connection with an accident and health insurance policy |
|
|
or health care plan contract or as an inducement to enter into the |
|
|
policy or contract: |
|
|
(A) stocks, bonds, or other securities of an |
|
|
insurer or other corporation, association, or partnership; |
|
|
(B) dividends or profits accrued from the stocks, |
|
|
bonds, or securities; or |
|
|
(C) anything of value not specified in the policy |
|
|
or contract. |
|
|
(b) An insurer or health maintenance organization may not |
|
|
permit an agent, officer, or employee to issue or deliver as an |
|
|
inducement to entering into an insurance policy or health care plan |
|
|
contract: |
|
|
(1) company stock or other capital stock; |
|
|
(2) a benefit certificate or share in a corporation; |
|
|
(3) securities; or |
|
|
(4) a special or advisory board contract or any other |
|
|
contract promising returns or profits. |
|
|
(c) This section does not prohibit an insurer or health |
|
|
maintenance organization from issuing or delivering a |
|
|
participating insurance policy or health care plan contract |
|
|
otherwise authorized by law. |
|
|
Sec. 1702.153. PROHIBITED DISCRIMINATION AND DISTINCTIONS. |
|
|
Except as provided by Section 1702.154 and other applicable |
|
|
provisions in this code specific to particular types of accident |
|
|
and health coverage or health care plan coverage, an insurer or |
|
|
health maintenance organization may not, with respect to an |
|
|
accident and health insurance policy or health care plan contract, |
|
|
make or permit a distinction or an unfair discrimination between |
|
|
individuals of the same class and equal life expectancy regarding: |
|
|
(1) the rate charged; |
|
|
(2) the dividend or other payable benefit; or |
|
|
(3) any of the other terms of the policy or contract. |
|
|
Sec. 1702.154. EXEMPTIONS. The following are not |
|
|
considered a rebate, inducement, or discrimination prohibited by |
|
|
this subchapter: |
|
|
(1) for an accident and health policy or a health care |
|
|
plan contract, a bonus payment to a policyholder or contract holder |
|
|
or other abatement in the policyholder's or contract holder's |
|
|
premiums provided wholly or partly out of surplus accumulated from |
|
|
nonparticipating policies or contracts if the bonus or abatement: |
|
|
(A) is fair and equitable to policyholders or |
|
|
contract holders; and |
|
|
(B) is in the best interests of the insurer or |
|
|
health maintenance organization and its policyholders or contract |
|
|
holders; |
|
|
(2) for a group insurance policy or health care plan |
|
|
contract, a readjustment in the rate of premium based on the loss or |
|
|
expense experience under the policy or contract at the end of a |
|
|
policy or contract year if the adjustment is retroactive for only |
|
|
that policy or contract year; |
|
|
(3) in connection with an offer or sale of an accident |
|
|
and health insurance policy or health care plan contract, a |
|
|
promotional advertising item, educational item, or traditional |
|
|
courtesy commonly extended to consumers and that is valued at $25 or |
|
|
less; or |
|
|
(4) a loss-control or value-added product or service |
|
|
or other item allowed by Subchapter B. |
|
|
Sec. 1702.155. PROGRAMS PROMOTING DISEASE PREVENTION, |
|
|
WELLNESS, AND HEALTH. (a) An insurer issuing an accident and |
|
|
health insurance policy or a health maintenance organization |
|
|
issuing a health care plan contract may establish premium |
|
|
discounts, rebates, or a reduction in otherwise applicable |
|
|
copayments, coinsurance, or deductibles, or any combination of |
|
|
those incentives, for an insured or enrollee who participates in |
|
|
programs promoting disease prevention, wellness, or health. |
|
|
(b) A discount, rebate, or reduction established under this |
|
|
section is not considered a prohibited rebate or inducement or |
|
|
unfair discrimination. |
|
|
SECTION 3. Section 81.001(c), Insurance Code, is amended to |
|
|
read as follows: |
|
|
(c) This section does not apply to conduct that is: |
|
|
(1) a violation that is ongoing at the time the |
|
|
department seeks to impose the sanction, penalty, or fine; |
|
|
(2) a violation of Subchapter A, Chapter 544, or |
|
|
Section 1702.103 [541.057], as those provisions relate to |
|
|
discrimination on the basis of race or color, regardless of the time |
|
|
the conduct occurs; or |
|
|
(3) a violation of Title 5, Labor Code. |
|
|
SECTION 4. Section 846.007(d), Insurance Code, is amended |
|
|
to read as follows: |
|
|
(d) A multiple employer welfare arrangement may establish |
|
|
premium discounts, rebates, or a reduction in otherwise applicable |
|
|
copayments or deductibles in return for adherence to programs of |
|
|
health promotion and disease prevention. A discount, rebate, or |
|
|
reduction established under this subsection does not violate |
|
|
Section 1702.152 [541.056(a)]. |
|
|
SECTION 5. Section 1114.057, Insurance Code, is amended to |
|
|
read as follows: |
|
|
Sec. 1114.057. DISCLOSURE OF AVAILABILITY OF WAIVER OF |
|
|
SURRENDER CHARGES. An insurer that offers to waive surrender |
|
|
charges as described by Section 1702.104(4) [541.058(b)(4)] shall |
|
|
provide reasonable notice of that offer to the insurer's |
|
|
prospective or current contract holders. The notice may be |
|
|
provided by any available means, including a disclosure document or |
|
|
by display on a link that is prominently placed on the insurer's |
|
|
Internet website. |
|
|
SECTION 6. Section 1501.107(b), Insurance Code, is amended |
|
|
to read as follows: |
|
|
(b) A discount, rebate, or reduction established under this |
|
|
section does not violate Section 1702.152 [541.056(a)]. |
|
|
SECTION 7. Sections 541.056, 541.057, 541.058, 543.003, and |
|
|
1201.013, Insurance Code, are repealed. |
|
|
SECTION 8. The changes in law made by this Act apply only to |
|
|
an insurance policy, annuity contract, or health care plan contract |
|
|
that is delivered, issued for delivery, or renewed on or after |
|
|
January 1, 2026. A policy or contract delivered, issued for |
|
|
delivery, or renewed before January 1, 2026, 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 9. This Act takes effect September 1, 2025. |