82(R) HB 2277 - Enrolled version

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	H.B. No. 2277




	AN ACT
	relating to life settlements and the sale, exchange, or replacement
	of life insurance and annuity contracts.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
	SECTION 1. Section 541.058(b), Insurance Code, is amended
	to read as follows:
	(b) It is not a rebate or discrimination prohibited by
	Section 541.056(a) or 541.057:
	(1) for a life insurance or life annuity contract, to
	pay a bonus to a policyholder or otherwise abate the policyholder's
	premiums in whole or in part out of surplus accumulated from
	nonparticipating insurance policies if the bonus or abatement:
	(A) is fair and equitable to policyholders; and
	(B) is in the best interests of the insurer and
	its policyholders;
	(2) for a life insurance policy issued on the
	industrial debit plan, to make to a policyholder who has
	continuously for a specified period made premium payments directly
	to the insurer's office an allowance in an amount that fairly
	represents the saving in collection expenses;
	(3) for a group insurance policy, to readjust 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 a life annuity contract, to waive 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 when determining any
	surrender charges under the new contract;
	(5) in connection with an accident and health
	insurance policy, to provide to policy or certificate holders, in
	addition to benefits under the terms of the insurance contract,
	health-related services or health-related information, or to
	disclose the availability of those additional services and
	information to prospective policy or certificate holders; or
	(6) in connection with a health maintenance
	organization evidence of coverage, to provide to enrollees, in
	addition to benefits under the evidence of coverage, health-related
	services or health-related information, or to disclose the
	availability of those additional services and information to
	prospective enrollees or contract holders.
	SECTION 2. 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 3. 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.
	Sections 230.501 and 230.144A, respectively, 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 its stockholders, except stockholders
	owning fewer than 10 percent of the shares of an applicant whose
	shares 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) The broker, or
	the provider if no broker is involved in the application, shall
	provide in writing, in a separate document that is signed by the
	owner, the following information to the owner not later than the
	date of application for a life settlement contract:
	(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, 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.
	Sec. 1111A.026. APPLICABILITY OF CERTAIN PROVISIONS TO LIFE
	EXPECTANCY ESTIMATORS. (a) The following provisions do not apply
	to a broker who acts solely as a life expectancy estimator:
	(1) Section 1111A.003(p);
	(2) Section 1111A.012; and
	(3) Sections 1111A.014(l) and (m).
	(b) The commissioner may exempt a broker who acts only as a
	life expectancy estimator from other provisions of this chapter if
	the commissioner finds that the application of those provisions to
	the broker is not necessary for the public welfare.
	SECTION 4. Section 1114.004(a), Insurance Code, is amended
	to read as follows:
	(a) Except as otherwise specifically provided by this
	chapter, this chapter does not apply to transactions involving:
	(1) credit life insurance;
	(2) group life insurance or group annuities for which
	there is no direct solicitation of individuals by an agent;
	(3) [~~group~~] life insurance and annuities used to fund
	prepaid funeral benefits contracts, as defined by Chapter 154,
	Finance Code;
	(4) an application to:
	(A) exercise a contractual change or a conversion
	privilege made to the insurer that issued the existing policy or
	contract;
	(B) replace an existing policy or contract by the
	insurer that issued the existing policy or contract under a program
	filed with and approved by the commissioner; or
	(C) exercise a term conversion privilege among
	corporate affiliates;
	(5) life insurance proposed to replace life insurance
	under a binding or conditional receipt issued by the same insurer;
	(6) a policy or contract used to fund:
	(A) an employee pension benefit plan or employee
	welfare benefit plan that is covered by the Employee Retirement
	Income Security Act of 1974 (29 U.S.C. Section 1001 et seq.);
	(B) a plan described by Section 401(a), 401(k),
	or 403(b), Internal Revenue Code of 1986, if established or
	maintained by an employer;
	(C) a government or church plan, as defined by
	Section 414, Internal Revenue Code of 1986, a government or church
	welfare benefit plan, or a deferred compensation plan of a state or
	local government or tax exempt organization described under Section
	457, Internal Revenue Code of 1986; or
	(D) a nonqualified deferred compensation
	arrangement established or maintained by an employer or plan
	sponsor;
	(7) new coverage provided under a life insurance
	policy or contract if the cost is borne wholly by the insured's
	employer or by an association of which the insured is a member;
	(8) an existing life insurance policy that is a
	nonconvertible term life insurance policy scheduled to expire in
	five years or less and that cannot be renewed;
	(9) immediate annuities purchased with proceeds from
	an existing contract; or
	(10) structured settlements.
	SECTION 5. Subchapter B, Chapter 1114, Insurance Code, is
	amended by adding Section 1114.057 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 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 1115.001, Insurance Code, is amended to
	read as follows:
	Sec. 1115.001. PURPOSE. The purpose of this chapter is to
	establish standards and procedures regarding recommendations made
	to a consumer that result in a transaction involving annuity
	products, and to require insurers to establish a system to
	supervise those recommendations, to ensure that the insurance needs
	and financial objectives of the consumer as of the time of the
	transaction are appropriately addressed.
	SECTION 7. Section 1115.002, Insurance Code, is amended by
	amending Subdivisions (2), (3), and (4) and adding Subdivisions
	(2-a), (5), and (6) to read as follows:
	(2) "Annuity" means an [~~a fixed, variable, or modified~~
	~~guaranteed~~] annuity that is an insurance product under the laws of
	this state that is individually solicited, whether the product is
	classified as an individual annuity or group annuity.
	(2-a) "Continuing education provider" means a person
	authorized to offer continuing education courses under Chapter
	4004.
	(3) "Insurer" means a [~~an insurance~~] company
	authorized to engage in the business of life insurance and
	annuities in this state.
	(4) "Recommendation" means advice provided by an
	agent, or an insurer if no agent is involved, to an individual
	consumer that results in a purchase, [or] exchange, or replacement
	of an annuity made in accordance with that advice.
	(5) "Replacement" means a transaction in which a new
	policy or contract is to be purchased and the proposing agent, or
	the proposing insurer if an agent is not involved, knows or should
	know that, by reason of the transaction, an existing policy or
	contract has been or is to be:
	(A) lapsed, forfeited, surrendered or partially
	surrendered, assigned to the replacing insurer, or otherwise
	terminated;
	(B) converted to reduced paid-up insurance,
	continued as extended term insurance, or otherwise reduced in value
	by the use of nonforfeiture benefits or other policy values;
	(C) amended so as to effect either a reduction in
	benefits or in the term for which coverage would otherwise remain in
	force or for which benefits would be paid;
	(D) reissued with any reduction in cash value; or
	(E) used in a financed purchase.
	(6) "Suitability information" means information that
	is reasonably appropriate to determine the suitability of a
	recommendation, including the following:
	(A) age;
	(B) annual income;
	(C) financial situation and needs, including the
	financial resources used for the funding of the annuity;
	(D) financial experience;
	(E) financial objectives;
	(F) intended use of the annuity;
	(G) financial time horizon;
	(H) existing assets, including investment and
	life insurance holdings;
	(I) liquidity needs;
	(J) liquid net worth;
	(K) risk tolerance; and
	(L) tax status.
	SECTION 8. Section 1115.003, Insurance Code, is amended to
	read as follows:
	Sec. 1115.003. APPLICABILITY; EXEMPTIONS. (a) This
	chapter applies to any recommendation to purchase, replace, or
	exchange an annuity that:
	(1) is made to a consumer by an agent, or an insurer if
	an agent is not involved; and
	(2) results in the recommended purchase, replacement,
	or exchange.
	(b) Unless otherwise specifically included, this chapter
	does not apply to transactions [~~recommendations~~] involving:
	(1) direct response solicitations if there is no
	recommendation based on information collected from the consumer
	under this chapter; or
	(2) contracts used to fund:
	(A) an employee pension benefit plan or employee
	welfare benefit plan covered by the Employee Retirement Income
	Security Act of 1974 (29 U.S.C. Section 1001 et seq.);
	(B) a plan described by Section 401(a), 401(k),
	403(b), 408(k), or 408(p), Internal Revenue Code of 1986, if
	established or maintained by an employer;
	(C) a government or church plan, as defined by
	Section 414, Internal Revenue Code of 1986, a government or church
	welfare benefit plan, or a deferred compensation plan of a state or
	local government or tax exempt organization described under Section
	457, Internal Revenue Code of 1986;
	(D) a nonqualified deferred compensation
	arrangement established or maintained by an employer or plan
	sponsor;
	(E) settlements of or assumptions of liabilities
	associated with personal injury litigation or any dispute or claim
	resolution process; or
	(F) prepaid funeral benefits contracts, as
	defined by Chapter 154, Finance Code.
	SECTION 9. Section 1115.051, Insurance Code, is amended to
	read as follows:
	Sec. 1115.051. SUITABILITY OF ANNUITY PRODUCT REQUIRED.
	(a) In recommending to a consumer the purchase of an annuity or the
	exchange of an annuity that results in another insurance
	transaction or series of insurance transactions, the agent, or the
	insurer if an agent is not involved, must have a reasonable basis to
	believe that:
	(1) the recommendation is suitable for the consumer on
	the basis of the facts disclosed by the consumer as to the
	consumer's investments and other insurance products and as to the
	consumer's financial situation and needs, including the consumer's
	suitability information;
	(2) the consumer has been reasonably informed of
	various features of the annuity, such as the potential surrender
	period and the surrender charge, any potential tax penalty if the
	consumer sells, exchanges, surrenders, or annuitizes the annuity,
	mortality and expense fees, investment advisory fees, potential
	charges for and features of riders, limitations on interest
	returns, insurance and investment components, and market risk;
	(3) the consumer would benefit from certain features
	of the annuity, such as tax-deferred growth, annuitization, or a
	death or living benefit;
	(4) the particular annuity as a whole, the underlying
	subaccounts to which funds are allocated at the time of the purchase
	or exchange of the annuity, and any riders or similar product
	enhancements are suitable, and, in the case of an exchange or
	replacement, the transaction as a whole is suitable, for the
	particular consumer based on the consumer's suitability
	information; and
	(5) in the case of an exchange or replacement of an
	annuity, the exchange or replacement is suitable, including taking
	into consideration whether the consumer:
	(A) will incur a surrender charge, be subject to
	the commencement of a new surrender period, lose existing benefits
	such as death, living, or other contractual benefits, or be subject
	to increased fees, investment advisory fees, or charges for riders
	or similar product enhancements;
	(B) would benefit from product enhancements and
	improvements; and
	(C) has had another annuity exchange or
	replacement, and in particular, an exchange or replacement in the
	preceding 36 months.
	(b) Before the execution of a purchase, exchange, or
	replacement of an annuity resulting from a recommendation, an
	agent, or an insurer if an agent is not involved, shall make
	reasonable efforts to obtain the consumer's suitability
	information.
	(c) Except as permitted by Subsection (d), an insurer may
	not issue an annuity recommended to a consumer unless the insurer
	has a reasonable basis to believe the annuity is suitable based on
	the consumer's suitability information.
	(d) Subject to Subsection (e), an agent or insurer does not
	have any obligation to a consumer related to an annuity transaction
	if:
	(1) the consumer refuses to provide suitability
	information requested by the agent or insurer;
	(2) the agent or insurer does not make a
	recommendation;
	(3) the agent or insurer makes a recommendation later
	found to have been prepared based on inaccurate material
	information provided by the consumer; or
	(4) the consumer decides to enter into a transaction
	that is not based on a recommendation of the agent or insurer.
	(e) An insurer's issuance of an annuity under circumstances
	described by Subsection (d) must be reasonable under all
	circumstances actually known to the insurer at the time the annuity
	is issued.
	(f) An agent, or an insurer if an agent is not involved,
	shall at the time of sale of an annuity:
	(1) make a record of any recommendation made by the
	agent or insurer that is subject to Subsection (a);
	(2) obtain a customer-signed statement documenting
	the customer's refusal, if any, to provide suitability information;
	and
	(3) obtain a customer-signed statement acknowledging
	that an annuity transaction is not recommended if the customer
	decides to enter into an annuity transaction that is not based on
	the agent's or insurer's recommendation. [~~Before the execution of a~~
	~~purchase or exchange of an annuity resulting from a recommendation,~~
	~~an agent, or the insurer if an agent is not involved, must make~~
	~~reasonable efforts to obtain:~~
	[~~(1) information from the consumer concerning:~~
	[~~(A) the consumer's financial status;~~
	[~~(B) the consumer's tax status; and~~
	[~~(C) the consumer's investment objectives; and~~
	[~~(2)~~ ~~other relevant information used or considered to~~
	~~be reasonable by the agent or that insurer in making~~
	~~recommendations to consumers.~~
	[~~(b)~~ ~~In a recommendation to a consumer regarding the~~
	~~purchase of an annuity or the exchange of an annuity that results in~~
	~~another insurance transaction or series of insurance transactions,~~
	~~an agent or the insurer, if an agent is not involved, has reasonable~~
	~~grounds for believing that the recommendation is suitable for that~~
	~~consumer based on the facts disclosed by the consumer regarding the~~
	~~consumer's:~~
	[~~(1) investments and other insurance products; and~~
	[~~(2) financial situation and needs.~~
	[~~(c)~~ ~~An agent, or an insurer if an agent is not involved, has~~
	~~no obligation to a consumer related to a recommendation if the~~
	~~consumer:~~
	[~~(1)~~ ~~refuses to provide relevant information~~
	~~requested by the agent or insurer;~~
	[~~(2)~~ ~~fails to provide complete or accurate information~~
	~~on the request of the agent or insurer; or~~
	[~~(3)~~ ~~decides to enter into a transaction that is not~~
	~~based on a recommendation of the agent or insurer.~~
	[~~(d)~~ ~~An agent's or insurer's recommendation subject to~~
	~~Subsection (a) must be reasonable under all the circumstances~~
	~~actually known to the agent or insurer at the time of the~~
	~~recommendation.~~]
	SECTION 10. Section 1115.052, Insurance Code, is amended to
	read as follows:
	Sec. 1115.052. SUPERVISION [~~COMPLIANCE~~] SYSTEM. (a) Each
	insurer shall establish supervision [~~operate a system,~~] that is
	reasonably designed to achieve the insurer's and the insurer's
	agents' compliance with this chapter[~~, to supervise~~
	~~recommendations~~].
	(b) An insurer may comply with Subsection (a) [~~by complying~~
	~~with Subsections (c)-(e) or~~] by establishing and maintaining the
	insurer's own supervision [~~compliance~~] system under which, at a
	minimum, the insurer [~~that complies with Subsection (c).~~ ~~Each~~
	~~agent and independent agency shall adopt an insurer's compliance~~
	~~system or shall establish and maintain such a system.~~
	[~~(c)~~ ~~A compliance system established under Subsection~~
	~~(b)~~ ~~must include~~]:
	(1) maintains reasonable procedures to inform the
	insurer's agents of the requirements of this chapter and
	incorporates the requirements of this chapter into relevant agent
	training manuals [~~maintenance of written procedures~~]; [~~and~~]
	(2) establishes standards for agent product training
	and maintains reasonable procedures to require the insurer's agents
	to comply with the requirements of Section 1115.056;
	(3) provides product-specific training and training
	materials that explain all material features of the insurer's
	annuity products to the insurer's agents;
	(4) maintains procedures to review each
	recommendation electronically, physically, or otherwise before the
	issuance of an annuity that:
	(A) are designed to ensure that there is a
	reasonable basis to determine that a recommendation is suitable;
	and
	(B) may:
	(i) include the application of a screening
	system to identify selected transactions for additional review; and
	(ii) be designed to require additional
	review only of those transactions identified for additional review
	by the selection criteria;
	(5) maintains reasonable procedures, such as
	confirmation of consumer suitability information, systematic
	customer surveys, interviews, confirmation letters, and programs
	of internal monitoring, to detect recommendations that are not
	suitable, which may involve applying sampling procedures or
	confirming suitability information after the issuance or delivery
	of the annuity; and
	(6) annually provides a report to the insurer's senior
	management, including to the senior manager responsible for audit
	functions, that details a review, with appropriate testing,
	reasonably designed to determine the effectiveness of the
	supervision system, the exceptions found, and any corrective action
	taken or recommended [~~periodic reviews of the insurer's or agent's~~
	~~records in a manner reasonably designed to assist in detecting and~~
	~~preventing violations of this chapter~~].
	(c) This subsection does not prohibit an insurer from
	contracting for the performance of a function, including
	maintenance of procedures, required by Subsection (b). An
	insurer's supervision system under Subsection (b) must include the
	supervision of contractual performance under this subsection that
	includes, at a minimum [~~(d)~~ ~~An agent or insurer may contract with a~~
	~~third party, including an agent or independent agency, to establish~~
	~~and maintain a compliance system with respect to agents under~~
	~~contract with or employed by the third party.~~ ~~The agent or insurer~~
	~~shall make reasonable inquiries sufficient to ensure that the third~~
	~~party is performing the functions required under Subsection (a),~~
	~~and shall take any action reasonable under the circumstances to~~
	~~enforce the contractual obligation to perform those functions.~~ An
	~~agent or insurer may comply with the obligation to make reasonable~~
	~~inquiries by~~]:
	(1) annually obtaining certification that complies
	with Section 1115.053 from a senior manager who represents that the
	contracted function is properly performed [~~of the third party that~~
	~~the third party is performing the required functions~~]; and
	(2) monitoring and, as appropriate, conducting audits
	to ensure that the contracted function is properly performed
	[~~periodically selecting third parties, based on reasonable~~
	~~selection criteria, for a review to determine whether the third~~
	~~parties are performing the required functions~~].
	(d) [~~(e)~~ ~~An agent or insurer shall adopt procedures for~~
	~~conducting a review under Subsection (d)(2) that are reasonable~~
	~~under the circumstances.~~ ~~An insurer that contracts with a third~~
	~~party under Subsection (d) and that complies with the requirements~~
	~~to supervise under Subsection (d) is deemed to have complied with~~
	~~the insurer's responsibilities under Subsection (b).~~
	[~~(f)~~] An insurer[~~, agent, or independent agency~~] is not
	required by this section to[:
	[~~(1)~~ ~~review, or provide for review of, all~~
	~~agent-solicited transactions; or~~
	[~~(2)~~] include in the supervision [~~compliance~~] system
	an agent's recommendations to consumers of products other than the
	annuities offered by the insurer[~~, agent, or independent agency~~].
	(e) An agent may not dissuade, or attempt to dissuade, a
	consumer from:
	(1) truthfully responding to an insurer's request for
	confirmation or suitability information;
	(2) filing a complaint; or
	(3) cooperating with the investigation of a complaint.
	SECTION 11. Section 1115.053, Insurance Code, is amended to
	read as follows:
	Sec. 1115.053. CERTIFICATION REQUIREMENTS. [~~(a) On~~
	~~request by an insurer, an agent or independent agency that~~
	~~contracts with an insurer under Section 1115.052(d) shall promptly~~
	~~obtain a certification as described under Section 1115.052(d)(1) or~~
	~~give a clear statement that it is unable to meet the certification~~
	~~criteria.~~
	[~~(b)~~] A person may not provide a certification under Section
	1115.052(c)(1) [~~1115.052(d)(1)~~] unless the person:
	(1) is a senior manager with responsibility for the
	delegated functions; and
	(2) has a reasonable basis for making the
	certification.
	SECTION 12. Section 1115.054, Insurance Code, is amended to
	read as follows:
	Sec. 1115.054. COMPLIANCE WITH CERTAIN NATIONAL STANDARDS.
	(a) Subject to Subsection (c), sales made in compliance
	[~~Compliance~~] with the conduct rules of the Financial Industry
	Regulatory Authority (FINRA) relating to suitability and
	supervision of annuity transactions, or the rules of another
	national organization recognized by the commissioner, satisfy
	[~~satisfies~~] the requirements of [~~under~~] this chapter. This section
	applies to FINRA member broker-dealer sales of variable annuities
	and fixed annuities if the suitability and supervision conduct
	rules are similar to those applied to variable annuity sales [~~for~~
	~~the recommendation of annuities registered under the Securities Act~~
	~~of 1933 (15 U.S.C. Section 77a et seq.) or rules or regulations~~
	~~adopted under that Act~~].
	(b) This section does not affect or limit the commissioner's
	ability to enforce or investigate under this chapter.
	(c) Subsection (a) applies only if the insurer:
	(1) monitors the FINRA member broker-dealer using
	information collected in the normal course of the insurer's
	business; and
	(2) provides to the FINRA member broker-dealer
	information and reports that are reasonably appropriate to assist
	the broker-dealer to maintain the broker-dealer's supervision
	system.
	SECTION 13. Section 1115.056, Insurance Code, is amended to
	read as follows:
	Sec. 1115.056. AGENT TRAINING [~~EDUCATION~~] REQUIREMENTS.
	(a) An agent may not solicit the sale of an annuity product unless
	the agent has adequate knowledge of the product to recommend the
	annuity and is in compliance with the insurer's standards for
	product training. An agent may rely on insurer-provided,
	product-specific training standards and materials to comply with
	this subsection.
	(b) An agent who engages in the sale of annuity products
	must complete a one-time training course approved by the department
	and provided by a continuing education provider.
	(c) The training required by Subsection (b) must be of a
	length sufficient to qualify for at least four continuing education
	credits, as determined by the commissioner in accordance with
	Chapter 4004 and any rules adopted under that chapter, but may be
	longer. The training required by Subsection (b) may be used to
	satisfy the continuing education requirements under Subchapters B
	and E, Chapter 4004, and is not in addition to the continuing
	education requirements in Section 4004.202.
	(d) The training required by Subsection (b) must include
	information on the following topics:
	(1) the types of annuities and various classifications
	of annuities;
	(2) identification of the parties to an annuity;
	(3) how fixed, variable, and indexed annuity contract
	provisions affect consumers;
	(4) the application of income taxation of qualified
	and nonqualified annuities;
	(5) the primary uses of annuities; and
	(6) appropriate sales practices, replacement, and
	disclosure requirements.
	(e) A provider of a course intended to comply with
	Subsection (b) must cover all topics listed in Subsection (d) and
	may not present any marketing information, provide training on
	sales techniques, or provide specific information about a
	particular insurer's products. Additional topics may be offered in
	conjunction with and in addition to the required topics.
	(f) A provider of a course intended to comply with
	Subsection (b) must register as a continuing education provider in
	this state and comply with the rules and guidelines applicable to
	agent continuing education courses provided by Chapter 4004.
	(g) An annuity training course may be conducted and
	completed by classroom or self-study methods in accordance with
	Chapter 4004.
	(h) A provider of annuity training under Subsection (b) must
	comply with the reporting requirements and issue certificates of
	completion in accordance with Chapter 4004.
	(i) The satisfaction of the training requirements of
	another state that are substantially similar to the provisions of
	this section is considered to satisfy the training requirements of
	this section.
	(j) An insurer must verify that an agent has completed the
	annuity training course required by this section before allowing
	the agent to sell an annuity product for that insurer. An insurer
	may satisfy the insurer's responsibility under this section by:
	(1) obtaining a certificate of completion of the
	training course or obtaining an appropriate report provided by the
	department;
	(2) using a department-sponsored database or vendor;
	or
	(3) using a reasonably reliable commercial database
	vendor that has a reporting arrangement with approved insurance
	education providers. [~~A resident agent that intends to sell,~~
	~~solicit, or negotiate a contract for an annuity in this state or to~~
	~~represent an insurer in relation to such an annuity must submit~~
	~~evidence satisfactory to the department of completion of at least~~
	~~four hours of training relating to annuities before soliciting~~
	~~individual consumers for the purpose of selling annuities.~~
	[~~(b)~~ ~~The training required under Subsection (a) may be used~~
	~~to satisfy the continuing education requirements imposed under this~~
	~~code and rules adopted under this code for issuance of a license~~
	~~under this code.~~]
	SECTION 14. Section 1115.101, Insurance Code, is amended to
	read as follows:
	Sec. 1115.101. MITIGATION. An insurer is responsible for
	compliance with this chapter. If a violation occurs because of the
	action or inaction of the insurer or the insurer's agent, the [~~The~~]
	commissioner may:
	(1) order:
	(A) the [~~(1) an~~] insurer to take reasonable
	appropriate corrective action for any consumer harmed by the
	insurer or by the insurer's agent because of a violation of this
	chapter; or
	(B) a general agency, independent agency, or the
	[~~(2) an~~] agent to take reasonably appropriate corrective action
	for any consumer harmed by the agent's violation of this chapter;
	and
	(2) impose appropriate sanctions as provided by
	Section 1115.102 [~~(3)~~ ~~a managing general agent or independent~~
	~~agency that employs or contracts with an agent to sell, or solicit~~
	~~the sale of, annuities to consumers to take reasonably appropriate~~
	~~corrective action for any consumer harmed by the agent's violation~~
	~~of this chapter~~].
	SECTION 15. Section 1115.102(b), Insurance Code, is amended
	to read as follows:
	(b) The commissioner shall [~~may~~] reduce or eliminate a
	sanction for a violation of this chapter otherwise applicable if:
	(1) corrective action for the consumer was taken
	promptly by the agent or insurer after a violation was discovered;
	or
	(2) the violation was not part of a pattern or
	practice.
	SECTION 16. Section 1551.255(a), 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 17. Subchapter A, Chapter 1111, Insurance Code, is
	repealed.
	SECTION 18. (a) Section 541.058(b), Insurance Code, as
	amended by this Act, applies only to an exchange of life annuity
	contracts on or after the effective date of this Act. An exchange
	of life annuity contracts before the effective date of this Act is
	governed by the law in effect immediately before the effective date
	of this Act, and that law is continued in effect for that purpose.
	(b) Section 1114.004(a), Insurance Code, as amended by this
	Act, applies only to a transaction involving a life insurance or
	annuity policy or contract occurring on or after the effective date
	of this Act. A transaction involving a policy or contract occurring
	before the effective date of this Act is governed by the law in
	effect immediately before the effective date of this Act, and that
	law is continued in effect for that purpose.
	(c) Except as provided by this section, Chapter 1115,
	Insurance Code, as amended by this Act, applies only to a
	recommendation to purchase, exchange, or replace an annuity
	contract made on or after June 1, 2012, and any transaction arising
	from that recommendation. A recommendation made before June 1,
	2012, and a transaction arising from that recommendation are
	governed by the law in effect immediately before the effective date
	of this Act, and that law is continued in effect for that purpose.
	(d) An insurance agent who becomes licensed under Chapter
	4054, Insurance Code, on or after the effective date of this Act is
	subject to Section 1115.056, Insurance Code, as amended by this
	Act. An agent licensed under Chapter 4054, Insurance Code, before
	the effective date of this Act is not subject to Section 1115.056,
	Insurance Code, as amended by this Act, before March 1, 2012. On
	and after the effective date of this Act and before March 1, 2012,
	an insurance agent licensed under Chapter 4054, Insurance Code,
	before the effective date of this Act is subject to Section
	1115.056, Insurance Code, as that section existed immediately
	before the effective date of this Act, and that law is continued in
	effect for that purpose.
	SECTION 19. (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.
	SECTION 20. This Act takes effect September 1, 2011.


	______________________________	______________________________
	President of the Senate	Speaker of the House


	I certify that H.B. No. 2277 was passed by the House on April
	26, 2011, by the following vote: Yeas 148, Nays 0, 2 present, not
	voting; and that the House concurred in Senate amendments to H.B.
	No. 2277 on May 26, 2011, by the following vote: Yeas 134, Nays 7,
	2 present, not voting.

	______________________________
	Chief Clerk of the House

	I certify that H.B. No. 2277 was passed by the Senate, with
	amendments, on May 23, 2011, by the following vote: Yeas 30, Nays
	0.

	______________________________
	Secretary of the Senate
	APPROVED: __________________
	Date

	__________________
	Governor