| |
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|
A BILL TO BE ENTITLED
|
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|
AN ACT
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| |
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relating to the sale, exchange, or replacement of life insurance |
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and annuity contracts. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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|
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. 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 3. 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 4. 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 5. 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 6. 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 7. 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 8. 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 9. 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.
|
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|
[(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 10. 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 11. 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 12. 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 13. 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 14. (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 15. This Act takes effect September 1, 2011. |
|
|
|
|
|
* * * * * |