Stricken language would be deleted from and underlined language would be added to present law.
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State of Arkansas 1
94th General Assembly A Bill 2
Regular Session, 2023 SENATE BILL 97 3
4
By: Senator D. Wallace 5
By: Representative Joey Carr 6
7
For An Act To Be Entitled 8
AN ACT TO AMEND THE ARKANSAS PREPAID FUN ERAL BENEFITS 9
LAW; TO REGULATE PRE PAID BENEFITS CONTRA CTS; TO 10
REDUCE BURDENS ON TH E ADMINISTRATION OF PREPAID 11
BENEFITS CONTRACTS; TO CLARIFY CONTROL O F PREPAID 12
BENEFITS CONTRACTS; TO ENHANCE THE ADMINISTRATION OF 13
THE ARKANSAS PREPAID FUNERAL BENEFITS LAW ; AND FOR 14
OTHER PURPOSES. 15
16
17
Subtitle 18
TO AMEND THE ARKANSAS PREPAID FUNERAL 19
BENEFITS LAW; TO REGULATE PREPAID 20
BENEFITS CONTRACTS; AND TO ENHANCE THE 21
ADMINISTRATION OF THE ARKANSAS PREPAID 22
FUNERAL BENEFITS LAW. 23
24
25
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF ARKANSAS: 26
27
SECTION 1. Arkansas Code § 19 -5-1106(b)(3), concerning the 28
administration of the State Insurance Department Prepaid Trust Fund, is 29
amended to read as follows: 30
(3) The State Insurance Department Prepaid Trust Fund shall also 31
consist of the assets of the Prepaid Funeral Contracts Recovery Program Fund, 32
there to be administered by the Insurance Commissioner and the Prepaid 33
Funeral Contracts Recovery Program Board as set out in § 23-40-125 34
commissioner. 35
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SECTION 2. Arkansas Code § 23 -40-111(b), concerning the cancellation 1
or denial of a permit to sell prepaid funeral benefits under the Arkansas 2
Prepaid Funeral Benefits Law, is amended to add additional subdivision s to 3
read as follows: 4
(6)(A)(i) If a licensee's permit has lapsed or is suspended or 5
revoked, then the licensee shall surrender to the commissioner: 6
(a) Any existing nonfulfilled prepaid 7
contracts; 8
(b) Contract files; 9
(c) Inventory reports; 10
(d) In-force reports; and 11
(e) Any other documentation pertaining to the 12
administration of the licensee's prepaid funeral benefits business. 13
(ii)(a) If the licensee's permit has lapsed, then 14
the licensee shall surrender the documentat ion under subdivision (b)(6)(A)(i) 15
of this section within thirty (30) days of the date of the expiration of the 16
permit. 17
(b) If the licensee renews the licensee's 18
permit, then at the time the renewal is approved, the commissioner shall 19
return the documentation to the licensee. 20
(iii)(a) If the licensee's permit is suspended, then 21
the licensee shall surrender the documentation under subdivision (b)(6)(A)(i) 22
of this section within thirty (30) days of the date the commissioner's order 23
is entered or within thirty (30) days after the deadline to appeal the 24
commissioner's order. 25
(b) At the end of the period of suspension, if 26
no other action is taken against the licensee, then the commissioner shall 27
return the documentation to the licensee. 28
(c) If the permit is subsequently revoked, 29
then the commissioner shall not return any documentation to the licensee. 30
(iv) If the licensee's permit is revoked, then the 31
licensee shall surrender the documentation under subdivision (b)(6)(A)(i) of 32
this section within thirty (30) days of the date the commissioner's order is 33
entered or within thirty (30) days after the deadline to appeal the 34
commissioner's order. 35
(B) The licensee's failure to surrender all the 36 SB97
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documentation under subdivision (b)(6)(A)(i) o f this section if there has 1
been a lapse of a permit, suspension, or revocation, shall subject the 2
licensee to an administrative penalty of: 3
(i) One thousand dollars ($1,000) per violation if 4
the licensee fails to comply with the applicable thirty -day timeline to 5
surrender the documentation under this subdivision (b)(6); and 6
(ii) Five thousand dollars ($5,000) per violation if 7
the licensee: 8
(a) Fails to comply with the applicable 9
thirty-day timeline to surrender the documentation under this subdivision 10
(b)(6); and 11
(b) The commissioner finds willful misconduct 12
or a willful violation of this subdivision (b)(6). 13
14
SECTION 3. Arkansas Code § 23 -40-119(a), concerning the annual report 15
and annual report fee under the Arkansas Prepaid Funeral Benefits Law, is 16
amended to read as follows: 17
(a) Each organization shall file an annual report and an annual report 18
fee with the Insurance Commissioner on or before March 15 of each year in 19
such form as the commissioner may require, showing the: 20
(1) Names or account The names or contract numbers, or both, of 21
all persons with whom contracts for prepaid funeral benefits have been made 22
prior to before January 1 of that year that had not been fully discharged on 23
January 1; 24
(2) Date The date of contract; 25
(3) Name If the prepaid contract is funded by cash or trust, 26
the: 27
(A) Name of the trustee holding the trust fund; and 28
(4)(B) Amount in the trust fund under each contract on the 29
preceding December 31 .; and 30
(4) If the prepaid contract is fund ed by an insurance policy or 31
an annuity, the: 32
(A) Information required under subdivisions (a)(1) and (2) 33
of this section; 34
(B) Name of the insurance company or third party 35
administrator holding the insurance policy or annuity; 36 SB97
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(C) Insurance policy number; 1
(D) Date the insurance policy or annuity is issued; and 2
(E) Amount of the insurance policy or annuity. 3
4
SECTION 4. Arkansas Code § 23 -40-119(d)(1), concerning the per -5
contract fee under the Arkansas Prepaid Funeral Benefits Law, is ame nded to 6
read as follows: 7
(d)(1)(A)(i)(a) Effective for all prepaid funeral benefits contracts 8
executed on and after April 1, 1997, each licensee selling a prepaid funeral 9
benefits contract shall remit to the State Insurance Department a one -time, 10
per-contract fee of not less than five dollars ($5.00) for each prepaid 11
funeral benefits contract, including any amendments thereto, entered into by 12
the licensee, whether cash or trust funded or funded by an insurance policy 13
or annuity contract, unless the per -contract fees are otherwise eliminated or 14
suspended by the commissioner pursuant to a rule. 15
(b) However, the per -contract fees once 16
eliminated or suspended by rule of the commissioner may be reinstated by 17
subsequent rule of the commissioner adopted upon a public hearing at a later 18
date upon the commissioner's determination that these fees are essential and 19
necessary to the operation of the Division of Prepaid Funeral Benefits of the 20
State Insurance Department. 21
(ii) On and after July 1, 2001, the commissioner 22
shall then transfer from each per -contract fee remitted to the department, 23
into the Prepaid Funeral Contracts Recovery Program Fund pursuant to this act 24
a portion of the fee in an amount to be determined by rules of the 25
commissioner and there after to be administered by the commissioner with 26
advice from the Prepaid Funeral Contracts Recovery Program Board, pursuant to 27
the provisions of under this subchapter. 28
(B) The per-contract fees shall be remitted quarterly 29
annually to the department fo r each quarter month of the calendar year with a 30
quarterly fee the annual report form as prescribed by the commissioner. 31
(C) The fees shall be remitted to the department no later 32
than forty-five (45) days after each quarter. 33
34
SECTION 5. Arkansas Code § 23-40-119(f)(1), concerning unused funds 35
from fees under the Arkansas Prepaid Funeral Benefits Law, is amended to read 36 SB97
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as follows: 1
(f)(1) Notwithstanding the provisions of § 23 -40-107, if there are any 2
unused funds from fees collected from organizatio ns under subsections (c) and 3
(d) of this section not disbursed for personal services, operating expenses, 4
maintenance and operations, and support and improvements for the Division of 5
Prepaid Funeral Benefits, such the excess funds, if any, may be transferr ed 6
to the Prepaid Funeral Contracts Recovery Program Fund to provide reparations 7
to purchasers of prepaid funeral contracts who have purchased cash -funded, 8
insurance-funded, or annuity-funded prepaid funeral contracts from 9
organizations that have been: 10
(A) Declared insolvent by a state or federal court of 11
competent jurisdiction; or 12
(B) Determined by either the commissioner or a state or 13
federal court of competent jurisdiction to have fund account deficiencies. 14
15
SECTION 6. Arkansas Code § 23 -40-122(a), concerning the cancellation 16
or transfer of a prepaid contract under the Arkansas Prepaid Funeral Benefits 17
Law, is amended to read as follows: 18
(a) A purchaser may cancel or transfer a prepaid contract under this 19
section, whether revocable or irrevocable, or whether cash-funded or funded 20
by insurance or an annuity, at any time before performance of the contract by 21
the seller, under the following conditions: 22
(1) In the case of a cash-funded or trust-funded prepaid 23
contract: 24
(A) Before the death of the contract beneficiary, if the 25
prepaid contract is revocable, the purchaser is entitled to receive a refund 26
of not less than one hundred percent (100%) of all sums paid to the seller by 27
the purchaser, not to exceed the contract price; 28
(B) After the death of the contract beneficiary, if the 29
prepaid contract is revocable, the purchaser or, his or her representative if 30
the purchaser is someone other than the prepaid contract beneficiary, the 31
contract beneficiary's family member or responsible party as determined under 32
§ 20-17-102(d), is entitled to receive one hundred percent (100%) of the 33
amount paid to the seller by the purchaser, not to exceed the contract price; 34
or 35
(C) If Before the death of the contract beneficiary, if 36 SB97
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the prepaid contract is irrevocable, the purchaser shall not have the right 1
to a refund of any funds paid by him or her or proceeds paid to the seller 2
but shall have the right to change the provider of the contract services and 3
merchandise to a substitute provider, in which event the seller shall 4
transfer to the substitute provider not less than one hundred percent (100%) 5
of the amount paid to the seller by the purchaser, not to exceed the contract 6
price; or 7
(D)(i) After the death of the contract beneficiary, if the 8
prepaid contract is irrevocable, the purchaser or, if the purchaser is 9
someone other than the prepaid contract beneficiary, the contract 10
beneficiary's family member or responsible party as determined under § 20-17-11
102(d), does not have the right to a refund of any funds paid by the 12
purchaser or proceeds paid to the seller but does have the right to change 13
the provider of the contract services and merchandise to a substitute 14
provider. 15
(ii) If a substitute provider is used under 16
subdivision (a)(1)(D)(i) of this section, then the seller shall transfer to 17
the substitute provider one hundred percent (100%) of the amount paid to the 18
seller by the purchaser, not to exceed the contract price; 19
(2) In the case of a prepaid contract funded by life insurance: 20
(A) Before the death of the contract beneficiary, if the 21
prepaid contract is revocable, the purchaser shall have the right to receive 22
not less than one hundred percent (100%) of the cash surrender value of the 23
policy used to fund the prepaid contract, not to exceed the premium paid by 24
the purchaser; 25
(B) After the death of the contract beneficiary, if the 26
prepaid contract is revocable, the purchaser, if the purchaser is someone 27
other than the prepaid contract beneficiary, or his or her designee is 28
entitled to receive not less than one hundred percent (100%) of the policy 29
proceeds paid to the seller, not to exceed the original face amount of the 30
policy; or 31
(C)(i) Before the death of the contract beneficiary, if 32
the contract is irrevocable, the prepaid contract purchaser shall not have 33
the right to a refund of any funds paid to the seller or the insurance 34
company but shall have the right to change the provider of the prepaid 35
contract services and merchandise to a substitute provider, in which event 36 SB97
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the seller shall assign or transfer to the substitute provider, as directed 1
by the prepaid contract owner purchaser, the life insurance policy used to 2
fund the prepaid contract or funds in an amount not less than one hundred 3
percent (100%) of the cash surrender value of the policy used to fund the 4
prepaid contract, not to exceed the premium paid by the purchaser. 5
(ii) After the death of the contract beneficiary, if 6
the contract is irrevocable, the seller shall transfer to the substitute 7
provider not less than one hundred percent (100%) of the policy proceeds paid 8
to the seller, not to exceed the original face amount of the policy; or 9
(3) In the case of a prepaid contract funded by an annuity: 10
(A) Before the death of the contract beneficiary, if the 11
prepaid contract is revocable, the purchaser is entitled to receive a refund 12
of not less than one hundred percent (100%) of the annuity value, not to 13
exceed the premium paid by the purchaser for the annuity funding the prepaid 14
contract; 15
(B) After the death of the contract beneficiary, if the 16
prepaid contract is revocable, the purchaser, if the purchaser is someone 17
other than the prepaid contract beneficiary, or his or her designee is 18
entitled to receive not less than one hundred percent (100%) of the annuity 19
proceeds received by the seller, not to exceed the premium paid by the 20
purchaser; or 21
(C)(i) Before the death of the contract beneficiary, if 22
the prepaid contract is irrevocable, the purchaser shall not have the right 23
to a refund of any funds paid to the seller but shall have the right to 24
change the provider of the prepaid contract services and merchandise to a 25
substitute provider, in which event the seller shall assign or transfer to 26
the substitute provider, as directed by the contract owner purchaser, the 27
annuity policy used to fund the prepaid contract, which shall be in an amount 28
of not less than one hundred percent (100%) of the annuity value, not to 29
exceed the premium paid by the purchaser. 30
(ii) After the death of the contract beneficiary, 31
the seller shall transfer to the substitute provider not less than one 32
hundred percent (100%) of the annuity proceeds received by the seller, not to 33
exceed the premiums paid by the purchaser. 34
35
SECTION 7. Arkansas Code § 23 -40-125 is amended to read as follows: 36 SB97
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23-40-125. Prepaid Funeral Contracts Recovery Program Fund — Created — 1
Prepaid Funeral Contracts Recovery Program Board — Established. 2
(a) There is established within the State Insurance Department Prepaid 3
Trust Fund an account to be known as the “Prepaid Funeral Contracts Recovery 4
Program Fund”, hereinafter “fund” . 5
(b) No money is to be appropriated from this fund for any purpose 6
except for expenses and payment of claims of the Prepaid Funeral Contracts 7
Recovery Program at the direction of the Insurance Commissioner and the 8
Prepaid Funeral Contracts Recovery Program Board. 9
(c) The fund shall be invested under the direction of the commissioner 10
and the Treasurer of State, with advice from the Chief Fiscal Officer of the 11
State as needed from time to time. 12
(d)(1) All income derived through investment of the fund, inc luding, 13
but not limited to, fees, interest, and dividends shall be credited as 14
investment income to the fund and deposited therein. 15
(2) All income derived from fund transfers, subrogation awards, 16
grants, orders or judgments of restitution, refunds, volu ntary reimbursements 17
or restitution, and gifts shall be credited as investment income to the fund 18
and deposited therein. 19
(e) Further, all moneys deposited into the fund shall not be subject 20
to any deduction, tax, levy, or any other type of assessment exc ept as may be 21
provided in this subchapter. 22
(f)(1) The fund shall be administered by the commissioner , with advice 23
from the Prepaid Funeral Contracts Recovery Program Board, hereinafter 24
“board”. 25
(2) The purpose of the fund is to reimburse purchasers of 26
preneed funeral contracts who have suffered financial loss as a result of the 27
impairment, insolvency, business interruption, or improper inactivity of a 28
prepaid funeral organization licensed in this state under this chapter. 29
(g)(1) From the fee for each preneed funeral contract as required by § 30
23-40-119(d)(1)(A) and from any funds transferred to the fund pursuant to § 31
23-40-119(f)(1), the commissioner with board advice and consultation shall 32
administer the Prepaid Funeral Contracts Recovery Program program. 33
(2) The commissioner may suspend fees or unused funds transfers 34
or deposits into the fund at any time and for any period for which the 35
commissioner determines that a sufficient amount is available to meet likely 36 SB97
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disbursements and to maintain an adequate reserve in compliance with a rule 1
of the commissioner. 2
(h) The commissioner with board assistance shall adopt procedures 3
governing management of the fund, the presentation and processing of 4
applications for reimbursement, and subrogation or assi gnment of the rights 5
of any reimbursed applicant. 6
(i)(1) The commissioner may expend moneys in the fund for the 7
following purposes: 8
(A) To make reimbursements on approved applications; and 9
(B) To pay related expenses involved in operating the 10
program as permitted under state law. 11
(2) Reimbursements from the fund shall be made only to the 12
extent to which such losses are not bonded or otherwise covered, protected, 13
or reimbursed, and only after the applicant has complied with all applicable 14
rules of the fund. 15
(j)(1) The commissioner , or his or her representatives, shall 16
investigate all applications made and may reject or allow the claims, in 17
whole or in part, to the extent that moneys are available in the fund. 18
(2) The commissioner may approve one (1) application that 19
includes more than one (1) reparation claim for the benefit of purchasers of 20
prepaid contracts of a licensee ordered liquidated under § 23 -40-123, as part 21
of a plan to arrange for another licensee to assume the obligations of the 22
licensee being liquidated, if: 23
(A) The commissioner finds that the plan is reasonable and 24
is in the best interests of the contract beneficiaries; and 25
(B) The plan is approved by a court. 26
(k)(1) In the event reimbursement is made to an applicant u nder this 27
section, the commissioner, on behalf of the state, shall be subrogated in the 28
reimbursed amount and may bring any action the commissioner deems advisable 29
for the program against any person, including a prepaid licensee. 30
(2) The commissioner ma y enforce any claims that the program, on 31
behalf of the state, may have for restitution or otherwise and may employ and 32
compensate consultants, agents, legal counsel, accountants, and any other 33
persons that the commissioner deems appropriate. Payments shal l be made from 34
the fund for such services. 35
(l)(1) There is created the Prepaid Funeral Contracts Recovery Program 36 SB97
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Board. 1
(2)(A) Members of the board shall consist of no fewer than five 2
(5) nor more than nine (9) members of various licensed Arkansas pr epaid 3
funeral organizations, including one (1) consumer member selected from the 4
Arkansas public at large. 5
(B) The members of the board shall be selected by member 6
licensees, subject to approval of the commissioner. 7
(C)(i) Each member of the board may serve up to two (2) 8
consecutive four-year terms. 9
(ii) Vacancies on the board shall be filled for the 10
remaining period of the term by a majority vote of the remaining board 11
members, subject to approval of the commissioner. 12
(D) In approving sele ctions to the board, the commissioner 13
shall consider, among other things, whether all member licensees are fairly 14
represented. 15
(m)(1) The board shall assist the commissioner and come under the 16
immediate supervision of the commissioner and shall be subjec t to the 17
applicable provisions of the laws of this state. 18
(2) The fund, as well as board action, shall be is subject to 19
examination and regulation by the commissioner. 20
(3)(A)(2)(A) The board commissioner, or his or her 21
representatives, shall prepare and submit to the commissioner each year, not 22
later than one hundred twenty (120) days after the program's fiscal year, a 23
financial report in a form approved by the commissioner and a report of 24
program activities during the preceding fiscal year. 25
(B) Upon request of a licensed prepaid funeral 26
organization in this state, the commissioner shall provide the member prepaid 27
funeral organization with a copy of the report. 28
(n)(m) There shall be no liability on the part of and no cause of 29
action of any nature shall arise against any member of the board, the 30
commissioner, or his or her representatives, agents, or employees for any act 31
or omission by them in the performance of their powers and duties under this 32
chapter, or in its administration, dispensation, ha ndling, or collection of 33
funds for the program. 34
35
36