Bill Text: TX SB1213 | 2011-2012 | 82nd Legislature | Engrossed

---

Bill Title: Relating to consumer protections in the purchase of life settlement contracts; imposing penalties.

Sponsorship: Bipartisan Bill

Status: (Engrossed - Dead) 2011-05-16 - Committee report sent to Calendars [SB1213 Detail]

Download: Texas-2011-SB1213-Engrossed.html

---

By: Carona S.B. No. 1213

A BILL TO BE ENTITLED
AN ACT
relating to consumer protections in the purchase of life settlement
contracts; imposing penalties.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
ARTICLE 1. LIFE SETTLEMENT CONTRACTS
SECTION 1.01. Subtitle A, Title 7, Insurance Code, is
amended by adding Chapter 1111A to read as follows:
CHAPTER 1111A. LIFE SETTLEMENT CONTRACTS
Sec. 1111A.001. SHORT TITLE. This Act may be cited as the
Life Settlements Act.
Sec. 1111A.002. DEFINITIONS. In this chapter:
(1) "Advertisement" means a written, electronic, or
printed communication or a communication by means of a recorded
telephone message or transmitted on radio, television, the
Internet, or similar communications media, including film strips,
motion pictures, and videos, published, disseminated, circulated,
or placed directly before the public for the purpose of creating an
interest in or inducing a person to purchase or sell, assign,
devise, bequest, or transfer the death benefit or ownership of a
life insurance policy or an interest in a life insurance policy
under a life settlement contract.
(2) "Broker" means a person who, on behalf of an owner
and for a fee, commission, or other valuable consideration, offers
or attempts to negotiate a life settlement contract between an
owner and a provider or estimates life expectancies for a life
settlement contract. A broker who offers or attempts to negotiate a
life settlement contract represents only the owner and owes a
fiduciary duty to the owner to act according to the owner's
instructions, and in the best interest of the owner,
notwithstanding the manner in which the broker is compensated. A
broker does not include an attorney, certified public accountant,
or financial planner retained in the type of practice customarily
performed in a professional capacity to represent the owner whose
compensation is not paid directly or indirectly by the provider or
any other person, except the owner.
(3) "Business of life settlements" means an activity
involved in, but not limited to, offering to enter into,
soliciting, negotiating, procuring, effectuating, monitoring, or
tracking, of life settlement contracts.
(4) "Chronically ill" means:
(A) being unable to perform at least two
activities of daily living such as eating, toileting, transferring,
bathing, dressing, or continence;
(B) requiring substantial supervision to protect
the individual from threats to health and safety due to severe
cognitive impairment; or
(C) having a level of disability similar to that
described in Paragraph (A) as determined under rules adopted by the
commissioner after consideration of any applicable regulation,
guideline, or determination of the United States Secretary of
Health and Human Services.
(5) "Financing entity" means an underwriter,
placement agent, lender, purchaser of securities, purchaser of a
policy or certificate from a provider, credit enhancer, or any
entity that has a direct ownership in a policy or certificate that
is the subject of a life settlement contract whose principal
activity related to the transaction is providing funds to effect
the life settlement contract or purchase of a policy, and who has an
agreement in writing with a provider to finance the acquisition of a
life settlement contract. The term does not include a
non-accredited investor or purchaser.
(6) "Financing transaction" means a transaction in
which a licensed provider obtains financing from a financing entity
including secured or unsecured financing, a securitization
transaction, or a securities offering that is either registered or
exempt from registration under federal and state securities law.
(7) "Fraudulent life settlement act" includes:
(A) an act or omission committed by a person who,
knowingly and with intent to defraud, for the purpose of depriving
another of property or for pecuniary gain, commits, or permits an
employee or an agent to engage in, acts including:
(i) presenting, causing to be presented, or
preparing with knowledge and belief that it will be presented to or
by a provider, premium finance lender, broker, insurer, insurance
agent, or any other person, false material information, or
concealing material information, as part of, in support of, or
concerning a fact material to one or more of the following:
(a) an application for the issuance of
a life settlement contract or an insurance policy;
(b) the underwriting of a life
settlement contract or an insurance policy;
(c) a claim for payment or benefit
pursuant to a life settlement contract or an insurance policy;
(d) premium paid on an insurance
policy;
(e) payment for and changes in
ownership or beneficiary made in accordance with the terms of a life
settlement contract or an insurance policy;
(f) the reinstatement or conversion
of an insurance policy;
(g) in the solicitation, offer to
enter into, or effectuation of a life settlement contract, or an
insurance policy;
(h) the issuance of written evidence
of life settlement contracts or insurance; or
(i) an application for or the
existence of or any payment related to a loan secured directly or
indirectly by an interest in a life insurance policy;
(ii) failing to disclose to the insurer, if
the insurer has requested the disclosure, that the prospective
insured has undergone a life expectancy evaluation by any person or
entity other than the insurer or its authorized representatives in
connection with the issuance of the policy; or
(iii) employing a device, scheme, or
artifice to defraud in the business of life settlements; and
(B) acts or omissions in the furtherance of a
fraud or to prevent the detection of a fraud, or acts or omissions
that permit an employee or an agent to:
(i) remove, conceal, alter, destroy, or
sequester from the commissioner the assets or records of a license
holder or another person engaged in the business of life
settlements;
(ii) misrepresent or conceal the financial
condition of a license holder, financing entity, insurer, or other
person;
(iii) transact the business of life
settlements in violation of laws requiring a license, certificate
of authority, or other legal authority for the transaction of the
business of life settlements;
(iv) file with the commissioner or the
chief insurance regulatory official of another jurisdiction a
document containing false information or concealing information
about a material fact;
(v) engage in embezzlement, theft,
misappropriation, or conversion of monies, funds, premiums,
credits, or other property of a provider, insurer, insured, owner,
insurance policy owner, or any other person engaged in the business
of life settlements or insurance;
(vi) knowingly and with intent to defraud,
enter into, broker, or otherwise deal in a life settlement
contract, the subject of which is a life insurance policy that was
obtained by presenting false information concerning any fact
material to the policy or by concealing that fact, for the purpose
of misleading another, or providing information concerning any fact
material to the policy, if the owner or the owner's agent intended
to defraud the policy's issuer;
(vii) attempt to commit, assist, aid or
abet in the commission of, or engage in conspiracy to commit the
acts or omissions specified in this paragraph; or
(viii) misrepresent the state of residence
of an owner to be a state or jurisdiction that does not have a law
substantially similar to this chapter for the purpose of evading or
avoiding the provisions of this chapter.
(8) "Insured" means a person covered under the policy
being considered for sale in a life settlement contract.
(9) "Life expectancy" means the arithmetic mean of the
number of months the insured under the life insurance policy to be
settled can be expected to live as determined by a life expectancy
company or provider considering medical records and appropriate
experiential data.
(10) "Life insurance agent" means a person licensed in
this state as a resident or nonresident insurance agent who has
received qualification or authority to write life insurance
coverage under this code.
(11) "Life settlement contract" means a written
agreement entered into between a provider and an owner establishing
the terms under which compensation or anything of value will be paid
and is less than the expected death benefit of the insurance policy
or certificate, in return for the owner's assignment, transfer,
sale, devise, or bequest of the death benefit or a portion of an
insurance policy or certificate of insurance for compensation;
provided, however, that the minimum value for a life settlement
contract must be greater than a cash surrender value or accelerated
death benefit available at the time of an application for a life
settlement contract. The term also includes the transfer for
compensation or value of ownership or beneficial interest in a
trust or other entity that owns the policy if the trust or other
entity was formed or used for the principal purpose of acquiring one
or more life insurance contracts that insure the life of an
individual residing in this state. The term also includes:
(A) a written agreement for a loan or other
lending transaction, secured primarily by an individual or group
life insurance policy; and
(B) a premium finance loan made for a policy on or
before the date of issuance of the policy if:
(i) the loan proceeds are not used solely to
pay premiums for the policy and any costs or expenses incurred by
the lender or the borrower in connection with the financing;
(ii) the owner receives on the date of the
premium finance loan a guarantee of the future life settlement
value of the policy; or
(iii) the owner agrees on the date of the
premium finance loan to sell the policy or any portion of its death
benefit on a date following the issuance of the policy.
(11-A) "Life settlement contract" does not include:
(A) a policy loan by a life insurance company
under the terms of a life insurance policy or accelerated death
provision contained in the life insurance policy, whether issued
with the original policy or as a rider;
(B) a premium finance loan or any loan made by a
bank or other licensed financial institution, provided that neither
default on the loan nor the transfer of the policy in connection
with the default is under an agreement or understanding with any
other person for the purpose of evading regulation under this
chapter;
(C) a collateral assignment of a life insurance
policy by an owner;
(D) a loan made by a lender that does not violate
Chapter 651, provided that the loan is not described in Subdivision
(11) and is not otherwise within the definition of life settlement
contract;
(E) an agreement with respect to which all the
parties are closely related to the insured by blood or law or have a
lawful substantial economic interest in the continued life, health,
and bodily safety of the person insured, or are trusts established
primarily for the benefit of the parties;
(F) a designation, consent, or agreement by an
insured who is an employee of an employer in connection with the
purchase by the employer, or trust established by the employer, of
life insurance on the life of the employee;
(G) a bona fide business succession planning
arrangement:
(i) between one or more shareholders in a
corporation or between a corporation and one or more of its
shareholders or one or more trusts established by its shareholders;
(ii) between one or more partners in a
partnership or between a partnership and one or more of its partners
or one or more trusts established by its partners; or
(iii) between one or more members in a
limited liability company or between a limited liability company
and one or more of its members or one or more trusts established by
its members;
(H) an agreement entered into by a service
recipient, or a trust established by the service recipient, and a
service provider, or a trust established by the service provider,
who performs significant services for the service recipient's trade
or business; or
(I) any other contract, transaction, or
arrangement from the definition of life settlement contract that
the commissioner determines is not of the type intended to be
regulated by this chapter.
(12) "Net death benefit" means the amount of the life
insurance policy or certificate to be settled less any outstanding
debts or liens.
(13) "Owner" means the owner of a life insurance
policy or a certificate holder under a group policy, with or without
a terminal illness, who enters or seeks to enter into a life
settlement contract. In this chapter, the term "owner" is not
limited to an owner of a life insurance policy or a certificate
holder under a group policy that insures the life of an individual
with a terminal or chronic illness or condition except as
specifically provided. The term does not include:
(A) a provider or other license holder under this
chapter;
(B) a qualified institutional buyer as defined by
17 C.F.R. Section 230.144A, as amended;
(C) a financing entity;
(D) a special purpose entity; or
(E) a related provider trust.
(14) "Patient identifying information" means an
insured's address, telephone number, facsimile number, e-mail
address, photograph or likeness, employer, employment status,
social security number, or any other information that is likely to
lead to the identification of the insured.
(15) "Policy" means an individual or group policy,
group certificate, contract, or arrangement of life insurance owned
by a resident of this state, regardless of whether delivered or
issued for delivery in this state.
(16) "Premium finance loan" is a loan made primarily
for the purposes of making premium payments on a life insurance
policy that is secured by an interest in the life insurance policy.
(17) "Person" means an individual or legal entity,
including a partnership, limited liability company, association,
trust, or corporation.
(18) "Provider" means a person, other than an owner,
who enters into or effectuates a life settlement contract with an
owner. The term does not include:
(A) a bank, savings bank, savings and loan
association, or credit union;
(B) a licensed lending institution or creditor or
secured party pursuant to a premium finance loan agreement that
takes an assignment of a life insurance policy or certificate
issued pursuant to a group life insurance policy as collateral for a
loan;
(C) the insurer of a life insurance policy or
rider to the extent of providing accelerated death benefits or
riders under Subchapter B, Chapter 1111, or cash surrender value;
(D) an individual who enters into or effectuates
not more than one agreement in a calendar year for the transfer of a
life insurance policy or certificate issued pursuant to a group
life insurance policy, for compensation or anything of value less
than the expected death benefit payable under the policy;
(E) a purchaser;
(F) any authorized or eligible insurer that
provides stop loss coverage to a provider, purchaser, financing
entity, special purpose entity, or related provider trust;
(G) a financing entity;
(H) a special purpose entity;
(I) a related provider trust;
(J) a broker; or
(K) an accredited investor or qualified
institutional buyer as those terms are defined by 17 C.F.R. Section
230.144A, as amended, who purchases a life settlement policy from a
provider.
(19) "Purchased policy" means a policy or group
certificate that has been acquired by a provider pursuant to a life
settlement contract.
(20) "Purchaser" means a person who pays compensation
or anything of value as consideration for a beneficial interest in a
trust that is vested with, or for the assignment, transfer, or sale
of, an ownership or other interest in a life insurance policy or a
certificate issued pursuant to a group life insurance policy that
has been the subject of a life settlement contract.
(21) "Related provider trust" means a titling trust or
other trust established by a licensed provider or a financing
entity for the sole purpose of holding the ownership or beneficial
interest in purchased policies in connection with a financing
transaction. In order to qualify as a related provider trust, the
trust must have a written agreement with the licensed provider
under which the licensed provider is responsible for ensuring
compliance with all statutory and regulatory requirements and under
which the trust agrees to make all records and files relating to
life settlement transactions available to the department as if
those records and files were maintained directly by the licensed
provider.
(22) "Settled policy" means a life insurance policy or
certificate that has been acquired by a provider pursuant to a life
settlement contract.
(23) "Special purpose entity" means a corporation,
partnership, trust, limited liability company, or other legal
entity formed solely to provide either directly or indirectly
access to institutional capital markets:
(A) for a financing entity or provider; or
(B) in connection with a transaction in which:
(i) the securities in the special purpose
entity are acquired by the owner or by a qualified institutional
buyer as defined by 17 C.F.R. Section 230.144A, as amended; or
(ii) the securities pay a fixed rate of
return commensurate with established asset-backed institutional
capital markets.
(24) "Terminally ill" means having an illness or
sickness that can reasonably be expected to result in death not
later than 24 months after the date of diagnosis.
Sec. 1111A.003. LICENSING REQUIREMENTS; EXEMPTION. (a) A
person, wherever located, may not act as a provider or broker with
an owner who is a resident of this state, unless the person holds a
license from the department.
(b) An application for a provider or broker license must be
made to the department by the applicant on a form prescribed by the
commissioner. The application must be accompanied by a fee in an
amount established by the commissioner by rule. The license and
renewal fees for a provider license must be reasonable and the
license and renewal fees for a broker license may not exceed those
established for an insurance agent, as otherwise provided by this
chapter.
(c) A person who has been licensed as a life insurance agent
in this state or the person's home state for at least one year and is
licensed as a nonresident agent in this state meets the licensing
requirements of this section and may operate as a broker.
(d) Not later than the 30th day after the first date of
operating as a broker, a life insurance agent shall notify the
commissioner on a form prescribed by the commissioner that the
agent is acting as a broker and shall pay any applicable fee to be
determined by the commissioner by rule. Notification must include
an acknowledgement by the life insurance agent that the agent will
operate as a broker in accordance with this chapter.
(e) An insurer that issued a policy that is the subject of a
life settlement contract is not responsible for any act or omission
of a broker or provider or purchaser arising out of or in connection
with the life settlement transaction, unless the insurer receives
compensation for the placement of a life settlement contract from
the provider, purchaser, or broker in connection with the life
settlement contract.
(f) A person licensed as an attorney, certified public
accountant, or financial planner accredited by a nationally
recognized accreditation agency, who is retained to represent the
owner and whose compensation is not paid directly or indirectly by
the provider or purchaser, may negotiate life settlement contracts
for the owner without having to obtain a license as a broker.
(g) A license expires on the second anniversary of the date
of issuance. A license holder may renew the license on payment of a
renewal fee. As specified by Subsection (b), the renewal fee for a
provider license may not exceed a reasonable fee.
(h) An applicant shall provide the information that the
commissioner requires on forms adopted by the commissioner. The
commissioner may, at any time, require an applicant to fully
disclose the identity of the applicant's stockholders that own at
least 10 percent of the shares of an applicant the shares of which
are publicly traded, partners, officers and employees, and the
commissioner may, in the exercise of the commissioner's sole
discretion, refuse to issue a license in the name of any person if
the commissioner is not satisfied that an officer, an employee, a
stockholder, or a partner of the applicant who may materially
influence the applicant's conduct meets the standards of Sections
1111A.001 to 1111A.018.
(i) A license issued to a partnership, corporation, or other
entity authorizes each member, officer, and designated employee
named in the application and any supplement to the application to
act as a license holder under the license.
(j) After the filing of an application and the payment of
the license fee, the commissioner shall investigate each applicant
and may issue a license if the commissioner finds that the
applicant:
(1) if a provider, has provided a detailed plan of
operation;
(2) is competent and trustworthy and intends to
transact business in good faith;
(3) has a good business reputation and has had
experience, training, or education to qualify in the business for
which the license is applied;
(4) if the applicant is a legal entity, is formed or
organized under the laws of this state or is a foreign legal entity
authorized to transact business in this state, or provides a
certificate of good standing from the state of its domicile; and
(5) has provided to the commissioner an antifraud plan
that meets the requirements of Section 1111A.022 and includes:
(A) a description of the procedures for detecting
and investigating possible fraudulent acts and procedures for
resolving material inconsistencies between medical records and
insurance applications;
(B) a description of the procedures for reporting
fraudulent insurance acts to the commissioner;
(C) a description of the plan for antifraud
education and training of its underwriters and other personnel; and
(D) a written description or chart outlining the
arrangement of the antifraud personnel who are responsible for the
investigation and reporting of possible fraudulent insurance acts
and the investigation of unresolved material inconsistencies
between medical records and insurance applications.
(k) The commissioner may not issue a license to a
nonresident applicant unless a written designation of an agent for
service of process is filed and maintained with the department or
unless the applicant has filed with the department the applicant's
written irrevocable consent that any action against the applicant
may be commenced by service of process on the commissioner.
(l) A license holder shall file with the department not
later than March 1 of each year an annual statement containing the
information as the commissioner by rule prescribes.
(m) A provider may not allow any person to perform the
functions of a broker unless the person holds a current, valid
license as a broker, and as provided in this section.
(n) A broker may not allow any person to perform the
functions of a provider unless the person holds a current, valid
license as a provider, and as provided in this section.
(o) A provider or broker shall provide to the commissioner
new or revised information about officers, stockholders described
by Subsection (h), partners, directors, members, or designated
employees within 30 days of the change.
(p) An individual licensed as a broker shall complete on a
biennial basis 15 hours of training related to life settlements and
life settlement transactions, as required by the commissioner. A
life insurance agent who is operating as a broker under this section
is not subject to the requirements of this subsection.
(q) The business of life settlements constitutes the
business of insurance.
Sec. 1111A.004. LICENSE SUSPENSION, REVOCATION, OR REFUSAL
TO RENEW. (a) The commissioner may suspend, revoke, or refuse to
renew the license of a license holder if the commissioner finds
that:
(1) there was a material misrepresentation in the
application for the license;
(2) the license holder or an officer, partner, member,
or director of the license holder has been guilty of fraudulent or
dishonest practices, is subject to a final administrative action,
or is otherwise shown to be untrustworthy or incompetent to act as a
license holder;
(3) the license holder is a provider and demonstrates
a pattern of unreasonably withholding payments to policy owners;
(4) the license holder no longer meets the
requirements for initial licensure;
(5) the license holder or any officer, partner,
member, or director of the license holder has been convicted of a
felony, or of any misdemeanor with respect to which criminal fraud
is an element, or has pleaded guilty or nolo contendere with respect
to a felony or a misdemeanor with respect to which criminal fraud or
moral turpitude is an element, regardless of whether a judgment of
conviction has been entered by the court;
(6) the license holder is a provider and has entered
into a life settlement contract using a form that has not been
approved under this chapter;
(7) the license holder is a provider and has failed to
honor contractual obligations in a life settlement contract;
(8) the license holder is a provider and has assigned,
transferred, or pledged a settled policy to a person other than a
provider licensed in this state, a purchaser, an accredited
investor or qualified institutional buyer as defined respectively
in 17 C.F.R. Section 230.144A, as amended, a financing entity, a
special purpose entity, or a related provider trust; or
(9) the license holder or any officer, partner,
member, or key management personnel of the license holder has
violated this chapter.
(b) The commissioner may deny a license application or
suspend, revoke, or refuse to renew the license of a license holder
in accordance with Chapter 2001, Government Code.
Sec. 1111A.005. REQUIREMENTS FOR CONTRACT FORMS,
DISCLOSURE FORMS, AND ADVERTISEMENTS. (a) A person may not use
any form of life settlement contract in this state unless the form
has been filed with and approved, if required, by the commissioner
in a manner that conforms with the filing procedures and any time
restrictions or deeming provisions for life insurance forms,
policies, and contracts.
(b) An insurer may not, as a condition of responding to a
request for verification of coverage or in connection with the
transfer of a policy pursuant to a life settlement contract,
require that the owner, insured, provider, or broker sign any form,
disclosure, consent, waiver, or acknowledgment that has not been
expressly approved by the commissioner for use in connection with
life settlement contracts.
(c) A person may not use a life settlement contract form or
provide to an owner a disclosure statement form unless the form is
first filed with and approved by the commissioner. The
commissioner shall disapprove a life settlement contract form or
disclosure statement form if, in the commissioner's opinion, the
contract or contract provisions fail to meet the requirements of
Sections 1111A.011, 1111A.012, 1111A.014, and 1111A.023(b), or are
unreasonable, contrary to the interests of the public, or otherwise
misleading or unfair to the owner.
(d) At the commissioner's discretion, the commissioner may
require the submission of advertisements.
Sec. 1111A.006. REPORTING REQUIREMENTS AND PRIVACY.
(a) For a policy settled not later than the fifth anniversary of
the date of policy issuance, each provider shall file with the
commissioner not later than March 1 of each year an annual statement
containing the information that the commissioner prescribes by
rule. In addition to any other requirements, the annual statement
must specify the total number, aggregate face amount, and life
settlement proceeds of policies settled during the immediately
preceding calendar year, together with a breakdown of the
information by policy issue year. The annual statement must also
include the names of each insurance company whose policies have
been settled and the brokers that have settled the policies.
(b) The information required under Subsection (a) is
limited to only those transactions in which the insured is a
resident of this state and may not include individual transaction
data regarding the business of life settlements or information if
there is a reasonable basis to find that the information could be
used to identify the owner or the insured.
(c) A provider that wilfully fails to file an annual
statement as required in this section, or wilfully fails to reply
not later than the 30th day after the date the provider receives a
written inquiry from the department about the filing of the annual
statement, shall, in addition to other penalties provided by this
chapter, after notice and opportunity for hearing be subject to a
penalty of up to $250 for each day of delay, not to exceed $25,000 in
the aggregate, for the failure to file or respond.
(d) Except as otherwise allowed or required by law, a
provider, broker, insurance company, insurance agent, information
bureau, rating agency or company, or any other person with actual
knowledge of an insured's identity, may not disclose the identity
of an insured or information that there is a reasonable basis to
believe could be used to identify the insured or the insured's
financial or medical information to any other person unless the
disclosure is:
(1) necessary to effect a life settlement contract
between the owner and a provider and the owner and insured have
provided prior written consent to the disclosure;
(2) necessary to effectuate the sale of a life
settlement contract, or interests in the contract, as an
investment, provided the sale is conducted in accordance with
applicable state and federal securities law and provided further
that the owner and the insured have both provided prior written
consent to the disclosure;
(3) provided in response to an investigation or
examination by the commissioner or another governmental officer or
agency or under Section 1111A.018;
(4) a term or condition of the transfer of a policy by
one provider to another licensed provider, in which case the
receiving provider shall comply with the confidentiality
requirements of this subsection;
(5) necessary to allow the provider or broker or the
provider's or broker's authorized representative to make contact
for the purpose of determining health status provided that in this
subdivision, authorized representative does not include a person
who has or may have a financial interest in the settlement contract
other than a provider, licensed broker, financing entity, related
provider trust, or special purpose entity and that the provider or
broker requires the authorized representative to agree in writing
to adhere to the privacy provisions of this chapter; or
(6) required to purchase stop loss coverage.
(e) Nonpublic personal information solicited or obtained in
connection with a proposed or actual life settlement contract is
subject to the provisions applicable to financial institutions
under the federal Gramm-Leach-Bliley Act (Pub. L. No. 106-102), and
any other state and federal laws relating to confidentiality of
nonpublic personal information.
Sec. 1111A.007. EXAMINATION. Subchapter B, Chapter 401,
applies to a person engaged in the business of life settlements.
Sec. 1111A.008. IMMUNITY FROM LIABILITY. (a) No cause of
action shall arise nor shall any liability be imposed against the
commissioner, the commissioner's authorized representatives, or
any examiner appointed by the commissioner for a statement made or
conduct performed in good faith while carrying out this chapter.
(b) No cause of action shall arise, nor shall any liability
be imposed against any person for the act of communicating or
delivering information to the commissioner or the commissioner's
authorized representative or examiner pursuant to an examination
made under this chapter, if the act of communication or delivery was
performed in good faith and without fraudulent intent or the intent
to deceive. This subsection does not abrogate or modify in any way
any common law or statutory privilege or immunity enjoyed by any
person identified in Subsection (a).
Sec. 1111A.009. INVESTIGATIVE AUTHORITY OF THE
COMMISSIONER. The commissioner may investigate a suspected
fraudulent life settlement act and a person engaged in the business
of life settlements.
Sec. 1111A.010. COST OF EXAMINATIONS. The reasonable and
necessary cost of an examination under this chapter is to be
assessed against the person being examined in accordance with
Section 751.208.
Sec. 1111A.011. ADVERTISING. (a) A broker or provider
licensed pursuant to this chapter may conduct or participate in an
advertisement in this state. The advertisement must comply with
all advertising and marketing laws under Chapter 541 and rules
adopted by the commissioner that are applicable to life insurers or
to license holders under this chapter.
(b) Advertisements shall be accurate, truthful, and not
misleading in fact or by implication.
(c) A person may not:
(1) market, advertise, solicit, or otherwise promote
the purchase of a policy for the sole purpose of or with an emphasis
on settling the policy; or
(2) use the words "free," "no cost," or words of
similar import in the marketing, advertising, or soliciting of, or
otherwise promoting, the purchase of a policy.
Sec. 1111A.012. DISCLOSURES TO OWNERS. (a) Not later than
the fifth day after the date a provider receives the application for
a life settlement contract, the provider shall provide, in a
separate written document, the following information to the owner:
(1) the fact that possible alternatives to life
settlement contracts exist, including accelerated benefits offered
by the issuer of the life insurance policy;
(2) the fact that some or all of the proceeds of a life
settlement contract may be taxable and that assistance should be
sought from a professional tax advisor;
(3) the fact that the proceeds from a life settlement
contract could be subject to the claims of creditors;
(4) the fact that receipt of proceeds from a life
settlement contract may adversely affect the recipients'
eligibility for public assistance or other government benefits or
entitlements and that advice should be obtained from the
appropriate agency;
(5) the fact that the owner has a right to terminate a
life settlement contract within 15 days of the date the contract is
executed by all parties and the owner has received the disclosures
described in this section, that rescission, if exercised by the
owner, is effective only if both notice of the rescission is given
and the owner repays all proceeds and any premiums, loans, and loan
interest paid on account of the provider during the rescission
period, and that if the insured dies during the rescission period,
the contract is considered rescinded subject to repayment by the
owner or the owner's estate of all proceeds and any premiums, loans,
and loan interest to the provider;
(6) the fact that proceeds will be sent to the owner
within three business days after the provider has received the
insurer or group administrator's acknowledgement that ownership of
the policy or interest in the certificate has been transferred and
the beneficiary has been designated in accordance with the terms of
the life settlement contract;
(7) the fact that entering into a life settlement
contract may cause the owner to forfeit other rights or benefits,
including conversion rights and waiver of premium benefits that may
exist under the policy or certificate of a group policy, and that
assistance should be sought from a professional financial advisor;
(8) the amount and method of calculating the
compensation, including anything of value, paid or given, or to be
paid or given, to the broker, or any other person acting for the
owner in connection with the transaction;
(9) the date by which the funds will be available to
the owner and the identity of the transmitter of the funds;
(10) the fact that the commissioner requires delivery
of a buyer's guide or a similar consumer advisory package in the
form prescribed by the commissioner to owners during the
solicitation process;
(11) the following language: "All medical, financial,
or personal information solicited or obtained by a provider or
broker about an insured, including the insured's identity or the
identity of family members or a spouse or a significant other, may
be disclosed as necessary to effect the life settlement contract
between the owner and provider. If you are asked to provide this
information, you will be asked to consent to the disclosure. The
information may be provided to someone who buys the policy or
provides funds for the purchase. You may be asked to renew your
permission to share information every two years.";
(12) the fact that the commissioner requires providers
and brokers to print separate signed fraud warnings on the
applications and on the life settlement contracts as follows: "Any
person who knowingly presents false information in an application
for insurance or a life settlement contract is guilty of a crime and
may be subject to fines and confinement in prison.";
(13) the fact that the insured may be contacted by
either the provider or broker or an authorized representative of
the provider or broker for the purpose of determining the insured's
health status or to verify the insured's address and that this
contact is limited to once every three months if the insured has a
life expectancy of more than one year, and not more than once per
month if the insured has a life expectancy of one year or less;
(14) the affiliation, if any, between the provider and
the issuer of the insurance policy to be settled;
(15) that a broker represents exclusively the owner,
and not the insurer or the provider or any other person, and owes a
fiduciary duty to the owner, including a duty to act according to
the owner's instructions and in the best interest of the owner;
(16) the name, address, and telephone number of the
provider;
(17) the name, business address, and telephone number
of the independent third party escrow agent, and the fact that the
owner may inspect or receive copies of the relevant escrow or trust
agreements or documents; and
(18) the fact that a change of ownership could in the
future limit the insured's ability to purchase future insurance on
the insured's life because there is a limit to how much coverage
insurers will issue on one life.
(b) The written disclosures described by Subsection (a)
must be conspicuously displayed in a life settlement contract
furnished to the owner by a provider, including any affiliations or
contractual arrangements between the provider and the broker.
(c) A broker shall provide the owner and the provider with
at least the following disclosures not later than the date on which
the life settlement contract is signed by all parties and which must
be conspicuously displayed in the life settlement contract or in a
separate document signed by the owner:
(1) the name, business address, and telephone number
of the broker;
(2) a full, complete, and accurate description of all
the offers, counter-offers, acceptances, and rejections relating
to the proposed life settlement contract;
(3) a written disclosure of any affiliations or
contractual arrangements between the broker and any person making
an offer in connection with the proposed life settlement contract;
(4) the name of each broker who receives compensation
and the amount of compensation, including anything of value, paid
or given to the broker in connection with the life settlement
contract; and
(5) a complete reconciliation of the gross offer or
bid by the provider to the net amount of proceeds or value to be
received by the owner.
(d) For the purpose of this section, "gross offer or bid"
means the total amount or value offered by the provider for the
purchase of one or more life insurance policies, inclusive of
commissions and fees.
(e) The failure to provide the disclosures or rights
described in this section is an unfair method of competition or an
unfair or deceptive act or practice.
Sec. 1111A.013. DISCLOSURE TO INSURER. (a) Without
limiting the ability of an insurer to assess the insurability of a
policy applicant and to determine whether to issue the policy, and
in addition to other questions an insurance carrier may lawfully
pose to a life insurance applicant, an insurer may inquire in the
application for insurance whether the proposed owner intends to pay
premiums with the assistance of financing from a lender that will
use the policy as collateral to support the financing.
(b) If, as described in Sections 1111A.002(11) and (11-A),
the loan provides funds that can be used for a purpose other than
paying for the premiums, costs, and expenses associated with
obtaining and maintaining the life insurance policy and loan, and
notwithstanding any other law, the application must be rejected as
a violation of Section 1111A.017.
(c) If the financing does not violate Section 1111A.017, the
insurance carrier:
(1) may make disclosures, not later than the date of
the delivery of the policy, to the applicant and the insured, either
on the application or on an amendment to the application that
include the following or substantially similar statements:
"If you have entered into a loan arrangement in which the policy is
used as collateral, and the policy does change ownership at some
point in the future in satisfaction of the loan, the following may
be true:
(A) a change of ownership could lead to a
stranger owning an interest in the insured's life;
(B) a change of ownership could in the future
limit your ability to purchase future insurance on the insured's
life because there is a limit to how much coverage insurers will
issue on one life;
(C) should there be a change of ownership and you
wish to obtain more insurance coverage on the insured's life in the
future, the insured's higher issue age, a change in health status,
or other factors may reduce the ability to obtain coverage or may
result in significantly higher premiums; and
(D) you should consult a professional advisor,
since a change in ownership in satisfaction of the loan may result
in tax consequences to the owner, depending on the structure of the
loan.";
(2) may require certifications, such as the following,
from the applicant or the insured:
(A) "I have not entered into any agreement or
arrangement providing for the future sale of this life insurance
policy";
(B) "My loan arrangement for this policy provides
funds sufficient to pay for some or all of the premiums, costs, and
expenses associated with obtaining and maintaining my life
insurance policy, but I have not entered into any agreement by which
I am to receive consideration in exchange for procuring this
policy"; and
(C) "The borrower has an insurable interest in
the insured."
Sec. 1111A.014. GENERAL RULES. (a) Before entering into a
life settlement contract with an owner of a policy with respect to
which the insured is terminally or chronically ill, the provider
must obtain:
(1) if the owner is the insured, a written statement
from a licensed attending physician that the owner is of sound mind
and under no constraint or undue influence to enter into a
settlement contract; and
(2) a document in which the insured consents to the
release of medical records to a provider, settlement broker, or
insurance agent and, if the policy was issued less than two years
after the date of application for a settlement contract, to the
insurance company that issued the policy.
(b) An insurer shall respond to a request for verification
of coverage submitted by a provider, settlement broker, or life
insurance agent not later than the 30th calendar day after the date
the request is received. The request for verification of coverage
must be made on a form approved by the commissioner. The insurer
shall complete and issue the verification of coverage or indicate
in which respects the insurer is unable to respond. In the
response, the insurer shall indicate whether at the time of the
response, based on the medical evidence and documents provided, the
insurer intends to pursue an investigation about the validity of
the insurance contract.
(c) On or before the date of execution of the life
settlement contract, the provider shall obtain a witnessed document
in which the owner consents to the settlement contract, represents
that the owner has a full and complete understanding of the
settlement contract and of the benefits of the policy, acknowledges
that the owner is entering into the settlement contract freely and
voluntarily, and, for persons with a terminal or chronic illness or
condition, acknowledges that the insured has a terminal or chronic
illness and that the terminal or chronic illness or condition was
diagnosed after the policy was issued.
(d) The insurer may not unreasonably delay effecting change
of ownership or beneficiary with any life settlement contract
lawfully entered into in this state or with a resident of this
state.
(e) If a settlement broker or life insurance agent performs
any of these activities required of the provider, the provider is
deemed to have fulfilled the requirements of this section.
(f) If a broker performs the verification of coverage
activities required of the provider, the provider is deemed to have
fulfilled the requirements of Section 1111A.012.
(g) Not later than the 20th day after the date that an owner
executes the life settlement contract, the provider shall give
written notice to the insurer that issued that insurance policy
that the policy has become subject to a life settlement contract.
The notice shall be accompanied by the documents required by
Section 1111A.013(c).
(h) Medical information solicited or obtained by a license
holder is subject to the applicable provision of state law relating
to confidentiality of medical information, if not otherwise
provided in this chapter.
(i) A life settlement contract entered into in this state
must provide that the owner may rescind the contract on or before 15
days after the date the contract is executed by all parties to the
contract. Rescission, if exercised by the owner, is effective only
if notice of the rescission is given and the owner repays all
proceeds and any premiums, loans, and loan interest paid on account
of the provider within the rescission period. If the insured dies
during the rescission period, the contract is rescinded subject to
repayment by the owner or the owner's estate of all proceeds and any
premiums, loans, and loan interest to the provider.
(j) Not later than the third business day after the date the
provider receives from the owner the documents to effect the
transfer of the insurance policy, the provider shall pay the
proceeds of the settlement into an escrow or trust account managed
by a trustee or escrow agent in a state or federally chartered
financial institution pending acknowledgement of the transfer by
the issuer of the policy. The trustee or escrow agent shall
transfer to the owner the proceeds due to the owner not later than
the third business day after the date the trustee or escrow officer
receives from the insurer acknowledgment of the transfer of the
insurance policy.
(k) Failure to tender the life settlement contract proceeds
to the owner on or before the date disclosed to the owner renders
the contract voidable by the owner for lack of consideration until
the time the proceeds are tendered to and accepted by the owner. A
failure to give written notice of the right of rescission under this
subsection tolls the right of rescission for 30 days after the date
the written notice of the right of rescission has been given.
(l) A fee paid by a provider, an owner, or other person to a
broker in exchange for services provided to the owner pertaining to
a life settlement contract must be computed as a percentage of the
offer obtained, not the face value of the policy. Nothing in this
section prohibits a broker from voluntarily reducing the broker's
fee to less than a percentage of the offer obtained.
(m) A broker shall disclose to the owner anything of value
paid or given to a broker that relates to a life settlement
contract.
(n) A person, at any time prior to or at the time of the
application for, or issuance of, a policy, or during a two-year
period beginning on the date of issuance of the policy, may not
enter into a life settlement contract regardless of the date the
compensation is to be provided and regardless of the date the
assignment, transfer, sale, devise, bequest, or surrender of the
policy is to occur. This prohibition does not apply if:
(1) the owner certifies to the provider that the
policy was issued on the owner's exercise of conversion rights
arising out of a group or individual policy, provided the total of
the time covered under the conversion policy plus the time covered
under the prior policy is at least 24 months; or
(2) the owner submits independent evidence to the
provider that one or more of the following conditions have been met
during the two-year period described by this subsection:
(A) the owner or insured is terminally or
chronically ill;
(B) the owner or insured disposes of the owner's
or insured's ownership interests in a closely held corporation,
pursuant to the terms of a buyout or other similar agreement in
effect at the time the insurance policy was initially issued;
(C) the owner's spouse dies;
(D) the owner divorces the owner's spouse;
(E) the owner retires from full-time employment;
(F) the owner becomes physically or mentally
disabled and a physician determines that the disability prevents
the owner from maintaining full-time employment; or
(G) a final order, judgment, or decree is entered
by a court of competent jurisdiction, on the application of a
creditor of the owner, adjudicating the owner bankrupt or
insolvent, or approving a petition seeking reorganization of the
owner or appointing a receiver, trustee, or liquidator to all or a
substantial part of the owner's assets.
(o) For the purposes of Subsection (n)(1), time covered
under a group policy must be calculated without regard to a change
in insurance carriers, provided the coverage has been continuous
and under the same group sponsorship.
(p) Copies of the independent evidence described by
Subsection (n)(2) must be submitted to the insurer at the time the
provider submits a request to the insurer for verification of
coverage. The copies must be accompanied by a letter of attestation
from the provider that the copies are true and correct copies of the
documents received by the provider. This section does not prohibit
an insurer from exercising its right to contest the validity of a
policy.
(q) If the provider submits to the insurer a copy of
independent evidence provided for Subsection (n)(2)(A) at the time
the provider submits a request to the insurer to effect the transfer
of the policy to the provider, the copy is deemed to establish that
the settlement contract satisfies the requirements of this section.
Sec. 1111A.015. AUTHORITY TO ADOPT RULES. (a) The
commissioner may adopt rules implementing this chapter and
regulating the activities and relationships of providers, brokers,
insurers, and their authorized representatives.
(b) The commissioner may not adopt a rule establishing a
price or fee for the sale or purchase of a life settlement contract.
This subsection does not prohibit the commissioner from adopting a
rule relating to an unjust price or fee for the sale or purchase of a
life settlement contract.
(c) The commissioner may not adopt a rule that regulates the
actions of an investor providing money to a life or viatical
settlement company.
Sec. 1111A.016. CONFLICT OF LAWS. (a) If there is more
than one owner on a single policy, and the owners are residents of
different states, the life settlement contract is governed by the
law of the state in which the owner having the largest percentage
ownership resides or, if the owners hold equal ownership, the state
of residence of one owner agreed on in writing by all of the owners.
The law of the state of the insured shall govern in the event that
equal owners fail to agree in writing on a state of residence for
jurisdictional purposes.
(b) A provider licensed in this state who enters into a life
settlement contract with an owner who is a resident of another state
that has enacted statutes or adopted rules governing life
settlement contracts is governed in the effectuation of that life
settlement contract by the statutes and rules of the owner's state
of residence. If the state in which the owner is a resident has not
enacted statutes or adopted rules governing life settlement
contracts, the provider shall give the owner notice that neither
state regulates the transaction on which the owner is entering. For
transactions in those states, however, the provider shall maintain
all records required by this chapter if the transactions were
executed in this state. The forms used in those states need not be
approved by the department.
(c) If there is a conflict in the laws that apply to an owner
and a purchaser in any individual transaction, the laws of the state
that apply to the owner shall take precedence and the provider shall
comply with those laws.
Sec. 1111A.017. PROHIBITED PRACTICES. (a) A person may
not:
(1) enter into a life settlement contract if the
person knows or reasonably should have known that the life
insurance policy was obtained by means of a false, deceptive, or
misleading application for the policy;
(2) engage in a transaction, practice, or course of
business if the person knows or reasonably should have known that
the intent of engaging in the transaction, practice, or course of
business is to avoid the notice requirements of this chapter;
(3) engage in a fraudulent act or practice in
connection with a transaction relating to any settlement involving
an owner who is a resident of this state;
(4) issue, solicit, market, or otherwise promote the
purchase of an insurance policy for the purpose of, or with an
emphasis on, settling the policy;
(5) if providing premium financing, receive any
proceeds, fee, or other consideration from the policy or owner in
addition to the amounts required to pay principal, interest, and
any reasonable costs or expenses incurred by the lender or borrower
in connection with the premium finance agreement, except in event
of a default, unless either the default on the loan or transfer of
the policy occurs pursuant to an agreement or understanding with
any other person for the purpose of evading regulation under this
chapter;
(6) with respect to any settlement contract or
insurance policy and to a broker, knowingly solicit an offer from,
effectuate a life settlement contract with, or make a sale to any
provider, financing entity, or related provider trust that is
controlling, controlled by, or under common control with the broker
unless the relationship is fully disclosed to the owner;
(7) with respect to any life settlement contract or
insurance policy and a provider, knowingly enter into a life
settlement contract with an owner if, in connection with the life
settlement contract, anything of value will be paid to a broker that
is controlling, controlled by, or under common control with the
provider or the financing entity or related provider trust that is
involved in such settlement contract, unless the relationship is
fully disclosed to the owner;
(8) with respect to a provider, enter into a life
settlement contract unless the life settlement promotional,
advertising, and marketing materials, as may be prescribed by rule,
have been filed with the commissioner, provided that in no event may
any marketing materials expressly reference that the insurance is
free for any period of time; or
(9) with respect to any life insurance agent,
insurance company, broker, or provider, make any statement or
representation to the applicant or policyholder in connection with
the sale or financing of a life insurance policy to the effect that
the insurance is free or without cost to the policyholder for any
period of time unless provided in the policy.
(b) A violation of this section is a fraudulent life
settlement act.
Sec. 1111A.018. FRAUD PREVENTION AND CONTROL. (a) A
person may not commit a fraudulent life settlement act.
(b) A person may not interfere with the enforcement of this
chapter or an investigation of a suspected or actual violation of
this chapter.
(c) A person in the business of life settlements may not
knowingly or intentionally permit a person convicted of a felony
involving dishonesty or breach of trust to participate in the
business of life settlements.
(d) A life settlement contract and an application for a life
settlement contract, regardless of the form of transmission, must
contain the following, or a substantially similar, statement: "Any
person who knowingly presents false information in an application
for insurance or a life settlement contract is guilty of a crime and
may be subject to fines and confinement in prison."
(e) The failure to include a statement as required in
Subsection (d) is not a defense in any prosecution for a fraudulent
life settlement act.
Sec. 1111A.019. MANDATORY REPORTING OF FRAUDULENT LIFE
SETTLEMENT ACTS. A person engaged in the business of life
settlements has a duty under Section 701.051 to report a fraudulent
life settlement act.
Sec. 1111A.020. CONFIDENTIALITY. (a) The documents and
evidence obtained by the commissioner in an investigation of a
suspected or an actual fraudulent life settlement act are
privileged and confidential, are not a public record, and are not
subject to discovery or subpoena in a civil or criminal action.
(b) Subsection (a) does not prohibit release by the
commissioner of documents and evidence obtained in an investigation
of a suspected or an actual fraudulent life settlement act:
(1) in an administrative or judicial proceeding to
enforce a provision of this code or another insurance law of this
state;
(2) to a federal, state, or local law enforcement or
regulatory agency, to an organization established for the purpose
of detecting and preventing a fraudulent life settlement act, or to
the National Association of Insurance Commissioners; or
(3) at the discretion of the commissioner, to a person
in the business of life settlements that is aggrieved by a
fraudulent life settlement act.
(c) Release of documents and evidence under Subsection (b)
does not abrogate or modify the privilege granted in Subsection
(a).
Sec. 1111A.021. OTHER LAW ENFORCEMENT OR REGULATORY
AUTHORITY. This chapter does not:
(1) preempt the authority or relieve the duty of
another law enforcement or regulatory agency to investigate,
examine, and prosecute a suspected violation of law;
(2) preempt, supersede, or limit any provision of any
state securities law or any rule, order, or notice issued under the
law;
(3) prevent or prohibit a person from disclosing
voluntarily information concerning life settlement fraud to a law
enforcement or regulatory agency other than the department; or
(4) limit the powers granted by the laws of this state
to the commissioner or an insurance fraud unit to investigate and
examine a possible violation of law and to take appropriate action
against wrongdoers.
Sec. 1111A.022. LIFE SETTLEMENT ANTIFRAUD INITIATIVES.
(a) A provider or broker shall implement antifraud initiatives
reasonably calculated to detect, prosecute, and prevent fraudulent
life settlement acts. At the discretion of the commissioner, the
commissioner may order, or a license holder may request and the
commissioner may grant, a modification of the following required
initiatives as necessary to ensure an effective antifraud program.
A modification granted under this section may be more or less
restrictive than the required initiatives so long as the
modification may reasonably be expected to accomplish the purpose
of this section. Antifraud initiatives must include:
(1) fraud investigators, who may be provider or broker
employees or independent contractors; and
(2) an antifraud plan, which must be submitted to the
commissioner and must include:
(A) a description of the procedures for detecting
and investigating possible fraudulent life settlement acts and
procedures for resolving material inconsistencies between medical
records and insurance applications;
(B) a description of the procedures for reporting
possible fraudulent life settlement acts to the commissioner;
(C) a description of the plan for antifraud
education and training of underwriters and other personnel; and
(D) a description or chart outlining the
organizational arrangement of the antifraud personnel who are
responsible for the investigation and reporting of possible
fraudulent life settlement acts and investigating unresolved
material inconsistencies between medical records and insurance
applications.
(b) An antifraud plan submitted to the commissioner is
privileged and confidential, is not subject to disclosure under
Chapter 552, Government Code, and is not subject to discovery or
subpoena in a civil action.
Sec. 1111A.023. INJUNCTION; CIVIL REMEDIES; CEASE AND
DESIST ORDERS. (a) In addition to the penalties and other
enforcement provisions of this chapter, if any person violates this
chapter or any rule implementing this chapter, the commissioner may
seek an injunction in a court in the county where the person resides
or has a principal place of business and may apply for temporary and
permanent orders that the commissioner determines necessary to
restrain the person from further committing the violation.
(b) The commissioner may issue a cease and desist order
against a person who violates any provision of this chapter, any
rule or order adopted by the commissioner, or any written agreement
entered into with the commissioner, in accordance with Chapter 82.
(c) If the commissioner finds that an action in violation of
this chapter presents an immediate danger to the public and
requires an immediate final order, the commissioner may issue an
emergency cease and desist order under Chapter 83.
(d) The provisions of this chapter may not be waived by
agreement. No choice of law provision may prevent the application
of this chapter to any settlement.
Sec. 1111A.024. PENALTIES. (a) It is a violation of this
chapter for any person, provider, broker, or any other party
related to the business of life settlements to commit a fraudulent
life settlement act.
(b) A person who knowingly, recklessly, or intentionally
commits a fraudulent life settlement act commits a criminal offense
and is subject to penalties under Chapter 35, Penal Code.
(c) Subtitle B, Title 2, applies to a violation of this
chapter.
Sec. 1111A.025. APPLICABILITY OF OTHER INSURANCE LAWS. The
following laws apply to a person engaged in the business of life
settlements:
(1) Chapters 82, 83, 84, 101, 481, 541, and 701;
(2) Sections 31.002, 32.021, 32.023, 32.041, 38.001,
81.004, 86.001, 86.051, 86.052, 201.004, 401.051, 401.054,
401.151(a), 521.003, 521.004, 543.001(c), 801.056, and 862.052;
(3) Subchapter A, Chapter 32;
(4) Subchapter C, Chapter 36;
(5) Subchapter B, Chapter 404; and
(6) Subchapter B, Chapter 491.
SECTION 1.02. (a) A provider lawfully transacting
business in this state before the effective date of this Act may
continue to do so pending approval or disapproval of the person's
application for a license as long as the application is filed with
the commissioner of insurance not later than 30 days after the date
of the publication by the commissioner of an application form and
instructions for licensure of providers. If the publication of the
application form and instructions is before the effective date of
this Act, then the filing of the application may not be later than
30 days after the effective date of this Act and the applicant may
use any form of life settlement contract that has been filed with
the commissioner pending approval, provided that the form is
otherwise in compliance with the provisions of this Act. A person
transacting business in this state under this provision shall
comply with all other requirements of this Act.
(b) A person who has lawfully negotiated a life settlement
contract between an owner residing in this state and one or more
providers for at least one year immediately before the effective
date of this Act may continue to do so pending approval or
disapproval of the person's application for a license provided that
the application is filed with the commissioner of insurance not
later than the 30th day after the date of publication by the
commissioner of an application form and instructions for licensure
of brokers. If the publication of the application form and
instructions is before the effective date of this Act, then the
filing of the application may not be later than the 30th day after
the effective date of this Act. Any person transacting business in
this state under this provision shall comply with all other
requirements of this Act.
ARTICLE 2. CONFORMING AMENDMENTS
SECTION 2.01. The heading to Chapter 1111, Insurance Code,
is amended to read as follows:
CHAPTER 1111. [LIFE AND VIATICAL SETTLEMENTS AND] ACCELERATED
TERM LIFE INSURANCE BENEFITS
SECTION 2.02. Subsection (a), Section 1551.255, Insurance
Code, is amended to read as follows:
(a) In this section, "viatical settlement" has the meaning
assigned to "life settlement contract" by Section 1111A.002
[1111.001].
SECTION 2.03. Subchapter A, Chapter 1111, Insurance Code,
is repealed.
ARTICLE 3. EFFECTIVE DATE
SECTION 3.01. This Act takes effect September 1, 2011.