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A BILL TO BE ENTITLED
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AN ACT
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relating to the replacement transactions of certain life insurance |
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and annuity contracts from an insurer to a replacing insurer. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 1114.054, Insurance Code, is amended by |
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adding Subsections (e) through (g) to read as follows: |
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(a) If a transaction involves a replacement, the existing |
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insurer shall comply with this section. |
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(b) The existing insurer shall retain and be able to produce |
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all replacement notifications received, indexed by the replacing |
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insurer, until the later of: |
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(1) the fifth anniversary of the date of receipt of the |
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notification; or |
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(2) the date of conclusion of the next regular |
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examination conducted by the insurance regulatory authority of the |
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existing insurer's state of domicile. |
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(c) The existing insurer shall send a letter to the policy |
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or contract owner regarding the owner's right to receive |
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information regarding the existing policy or contract values. The |
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letter must include, if available, an in force illustration or, if |
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an in force illustration cannot be produced not later than the fifth |
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business day after the date of receipt of a notice that an existing |
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policy or contract is being replaced, a policy summary. The |
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information must be provided not later than the fifth business day |
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after the date of receipt of the request from the policy or contract |
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owner. |
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(d) On receipt of a request to borrow, surrender, or |
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withdraw any policy values, the existing insurer shall send a |
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notice advising the policy owner that the release of policy values |
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may affect the guaranteed elements, nonguaranteed elements, face |
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amount, or surrender value of the policy from which the values are |
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released. The notice must be sent separately from the payment if |
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the payment is sent to any person other than the policy owner. In |
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the case of consecutive automatic premium loans, the insurer is |
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only required to send the notice at the time of the first loan. |
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(e) Notwithstanding Section 1114.004(a)(9), on receipt of a |
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notice from a policy or contract owner or the replacing insurer of a |
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replacement policy or contract, the existing insurer shall: |
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(1) provide acknowledgement of receipt of the notice |
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within 5 business days, and |
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(2) send the payment to either the contract or policy |
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owner or the replacing insurer as specified in the notice within 30 |
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days of receipt of the notice. |
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(f) Notwithstanding Section 1114.004(a)(9), on receipt of a |
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notice from a policy or contract owner of intent to surrender the |
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policy or contract, the existing insurer shall: |
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(1) provide acknowledgement of receipt of the notice |
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within 5 business days, and |
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(2) send the surrender payment to the contract or |
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policy owner within 30 days of receipt of the notice. |
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(g) If a transfer or surrender payment is not completed |
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within 30 days following notice from the contract or policy holder, |
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the existing insurer shall pay interest on the unpaid amount at an |
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annual rate of 18 percent, accruing from the 31st day until the |
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payment is made in full. |
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SECTION 2. Sections 1114.054(e) through 114.054(g), |
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Insurance Code, as added by this Act, apply only to an annuity |
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contract or insurance policy transferred or surrendered on or after |
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January 1, 2026. |
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SECTION 3. This Act takes effect September 1, 2025. |