Stricken language would be deleted from and underlined language would be added to present law.
Act 345 of the Regular Session
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State of Arkansas As Engrossed: S3/7/23 1
94th General Assembly A Bill 2
Regular Session, 2023 SENATE BILL 97 3
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By: Senator D. Wallace 5
By: Representative Joey Carr 6
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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 ENHANC E THE ADMINISTRATION OF 13
THE ARKANSAS PREPAID FUNERAL BENEFITS LAW ; AND FOR 14
OTHER PURPOSES. 15
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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
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BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF ARKANSAS: 26
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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 Reco very Program Board as set out in § 23 -40-125 34
commissioner. 35
36 As Engrossed: S3/7/23 SB97
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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 add itional subdivisions to 3
read as follows: 4
(6)(A)(i)(a) Under § 23 -40-110(c), a licensee's permit expires 5
on June 1 of each year. 6
(b) For each licensee that has not renewed a 7
permit by June 1, the commissioner shall send a notice to the licensee tha t 8
the licensee is required to renew the permit within thirty (30) days of June 9
1. 10
(c) If a licensee's permit is not renewed 11
within thirty (30) days of June 1 or is suspended or is revoked, then the 12
licensee shall surrender to the commissioner: 13
(1) Any existing nonfulfilled prepaid 14
contracts; 15
(2) Contract files; 16
(3) Inventory reports; 17
(4) In-force reports; and 18
(5) Any other documentation pertaining 19
to the administration of the licensee's prepaid funeral benefits business. 20
(ii)(a) If the licensee's permit has lapsed, then 21
the licensee shall surrender the documentation under subdivision 22
(b)(6)(A)(i)(c) of this section within thirty (30) days of the date of the 23
expiration of the permit. 24
(b) If the licensee renews the licensee's 25
permit, then at the time the renewal is approved, the commissioner shall 26
return the documentation to the licensee. 27
(iii)(a) If the licensee's permit is suspended, then 28
the licensee shall surrender the documentation under subdivision 29
(b)(6)(A)(i)(c) of this section within thirty (30) days of the date the 30
commissioner's order is entered or within thirty (30) days after the deadline 31
to appeal the commissioner's order. 32
(b) At the end of the period of suspension, if 33
no other action is taken against the licensee, then the commissioner shall 34
return the documentation to the licensee. 35
(c) If the permit is subsequently revoked, 36 As Engrossed: S3/7/23 SB97
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then the commissioner shall not return any documentation to the licensee. 1
(iv) If the licensee's permit is revoked, then the 2
licensee shall surrender the documentation under subdivision (b)(6)(A)(i)(c) 3
of this section within thirty (30) days of the date the commissioner's order 4
is entered or within thirty (30) days after the deadline to appeal the 5
commissioner's order. 6
(B) The licensee's failure to surrender all the 7
documentation under subdivision (b)(6)(A)(i)(c) of this section if there has 8
been a nonrenewal within thirty (30) days of June 1 of a permit, suspension, 9
or revocation, shall subject the licensee to an administrative penalty of: 10
(i) One thousand dollars ($1,000) per violation if 11
the licensee fails to comply with the applicable thirty -day timeline to 12
surrender the documentati on under this subdivision (b)(6); and 13
(ii) Five thousand dollars ($5,000) per violation if 14
the licensee: 15
(a) Fails to comply with the applicable 16
thirty-day timeline to surrender the documentation under this subdivision 17
(b)(6); and 18
(b) The commissioner finds willful misconduct 19
or a willful violation of this subdivision (b)(6). 20
21
SECTION 3. Arkansas Code § 23 -40-119(a), concerning the annual report 22
and annual report fee under the Arkansas Prepaid Funeral Benefits Law, is 23
amended to read as follows: 24
(a) Each organization shall file an annual report and an annual report 25
fee with the Insurance Commissioner on or before March 15 of each year in 26
such form as the commissioner may require, showing the: 27
(1) Names or account The names or contract numbers, or both, of 28
all persons with whom contracts for prepaid funeral benefits have been made 29
prior to before January 1 of that year that had not been fully discharged on 30
January 1; 31
(2) Date The date of contract; 32
(3) Name If the prepaid contract is funded by cash or trust, 33
the: 34
(A) Name of the trustee holding the trust fund; and 35
(4)(B) Amount in the trust fund under each contract on the 36 As Engrossed: S3/7/23 SB97
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preceding December 31 .; and 1
(4) If the prepaid contract is funded by an insurance policy or 2
an annuity, the: 3
(A) Information required under subdivisions (a)(1) and (2) 4
of this section; 5
(B) Name of the insurance company or third party 6
administrator holding the insurance policy or annuity; 7
(C) Insurance policy number; 8
(D) Date the insurance policy or annuity is issued; and 9
(E) Amount of the insurance policy or annuity. 10
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SECTION 4. Arkansas Code § 23 -40-119(d)(1), concerning the per -12
contract fee under the Arkansas Prepaid Funeral Benefits Law, is amended to 13
read as follows: 14
(d)(1)(A)(i)(a) Effective for all prepaid funeral benefits contracts 15
executed on and after April 1, 1997, each licensee selling a prepaid funeral 16
benefits contract shall remit to the State Insurance Department a one -time, 17
per-contract fee of not less than fiv e dollars ($5.00) for each prepaid 18
funeral benefits contract, including any amendments thereto, entered into by 19
the licensee, whether cash or trust funded or funded by an insurance policy 20
or annuity contract, unless the per -contract fees are otherwise elim inated or 21
suspended by the commissioner pursuant to a rule. 22
(b) However, the per -contract fees once 23
eliminated or suspended by rule of the commissioner may be reinstated by 24
subsequent rule of the commissioner adopted upon a public hearing at a later 25
date upon the commissioner's determination that these fees are essential and 26
necessary to the operation of the Division of Prepaid Funeral Benefits of the 27
State Insurance Department. 28
(ii) On and after July 1, 2001, the commissioner 29
shall then transfer from each per-contract fee remitted to the department, 30
into the Prepaid Funeral Contracts Recovery Program Fund pursuant to this act 31
a portion of the fee in an amount to be determined by rules of the 32
commissioner and thereafter to be administered by the c ommissioner with 33
advice from the Prepaid Funeral Contracts Recovery Program Board, pursuant to 34
the provisions of under this subchapter. 35
(B) The per-contract fees shall be remitted quarterly 36 As Engrossed: S3/7/23 SB97
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annually to the department for each quarter month of the calendar year with a 1
quarterly fee the annual report form as prescribed by the commissioner. 2
(C) The fees shall be remitted to the department no later 3
than forty-five (45) days after each quarter. 4
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SECTION 5. Arkansas Code § 23 -40-119(f)(1), concerning un used funds 6
from fees under the Arkansas Prepaid Funeral Benefits Law, is amended to read 7
as follows: 8
(f)(1) Notwithstanding the provisions of § 23 -40-107, if there are any 9
unused funds from fees collected from organizations under subsections (c) and 10
(d) of this section not disbursed for personal services, operating expenses, 11
maintenance and operations, and support and improvements for the Division of 12
Prepaid Funeral Benefits, such the excess funds, if any, may be transferred 13
to the Prepaid Funeral Contrac ts Recovery Program Fund to provide reparations 14
to purchasers of prepaid funeral contracts who have purchased cash -funded, 15
insurance-funded, or annuity-funded prepaid funeral contracts from 16
organizations that have been: 17
(A) Declared insolvent by a stat e or federal court of 18
competent jurisdiction; or 19
(B) Determined by either the commissioner or a state or 20
federal court of competent jurisdiction to have fund account deficiencies. 21
22
SECTION 6. Arkansas Code § 23 -40-122(a), concerning the cancellation 23
or transfer of a prepaid contract under the Arkansas Prepaid Funeral Benefits 24
Law, is amended to read as follows: 25
(a) A purchaser may cancel or transfer a prepaid contract under this 26
section, whether revocable or irrevocable, or whether cash-funded or funded 27
by insurance or an annuity, at any time before performance of the contract by 28
the seller, under the following conditions: 29
(1) In the case of a cash-funded or trust-funded prepaid 30
contract: 31
(A) Before the death of the contract beneficiary, if the 32
prepaid contract is revocable, the purchaser is entitled to receive a refund 33
of not less than one hundred percent (100%) of all sums paid to the seller by 34
the purchaser, not to exceed the contract price; 35
(B) After the death of the contract beneficiary, if the 36 As Engrossed: S3/7/23 SB97
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prepaid contract is revocable, the purchaser or, his or her representative if 1
the purchaser is someone other than the prepaid contract beneficiary, the 2
contract beneficiary's family member or responsible party as determined under 3
§ 20-17-102(d), is entitled to receive one hundred percent (100%) of the 4
amount paid to the seller by the purchaser, not to exceed the contract price; 5
or 6
(C) If Before the death of the contract beneficiary, if 7
the prepaid contract is irrevocable, the purchaser shall not have the right 8
to a refund of any funds paid by him or her or proceeds paid to the seller 9
but shall have the right to change the provider of the contract services and 10
merchandise to a substitute provider, in which event the seller shall 11
transfer to the substitute provider not less than one hundred percent (100%) 12
of the amount paid to the seller by the purchaser, not to exceed the contract 13
price; or 14
(D)(i) After the death of the contract beneficiary, if the 15
prepaid contract is irrevocable, the purchaser or, if the purchaser is 16
someone other than the prepaid contract beneficiary, the contract 17
beneficiary's family member or responsible party as determined under § 20-17-18
102(d), does not have the right to a refund of any funds paid by the 19
purchaser or proceeds paid to the seller but does have the right to change 20
the provider of the contract services and merchandise to a substitute 21
provider. 22
(ii) If a substitute provider is used under 23
subdivision (a)(1)(D)(i) of this section, then the seller shall transfer to 24
the substitute provider one hundred percent (100%) of the amount paid to the 25
seller by the purchaser, not to exceed the contract price; 26
(2) In the case of a prepaid contract funded by life insurance: 27
(A) Before the death of the contract beneficiary, if the 28
prepaid contract is revocable, the purchaser shall have the right to receive 29
not less than one hundred percent (100%) of the cash surrender value of the 30
policy used to fund the prepaid contract, not to exceed the premium paid by 31
the purchaser; 32
(B) After the death of the contract beneficiary, if the 33
prepaid contract is revocable, the purchaser, if the purchaser is someone 34
other than the prepaid contract beneficiary, or his or her designee is 35
entitled to receive not less than one hundred percent (100%) of the policy 36 As Engrossed: S3/7/23 SB97
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proceeds paid to the seller, not to exceed the original face amount of the 1
policy; or 2
(C)(i) Before the death of the contract beneficiary, if 3
the contract is irrevocable, the prepaid contract purchaser shall not have 4
the right to a refund of any funds paid to the seller or the insurance 5
company but shall have the right to change the provider of the prepaid 6
contract services and merchandise to a substitute provider, in which event 7
the seller shall assign or transfer to the substitute provider, as directed 8
by the prepaid contract owner purchaser, the life insurance policy used to 9
fund the prepaid contract or funds in an amount not less than one hundred 10
percent (100%) of the cash surrender value of the policy used to fund the 11
prepaid contract, not to exceed the premium paid by the purchaser. 12
(ii) After the death of the contract beneficiary, if 13
the contract is irrevocable, the seller shall transfer to the substitute 14
provider not less than one hundred percent (100%) of the policy proceeds paid 15
to the seller, not to exceed the original face amount of the policy; or 16
(3) In the case of a prepaid contract funded by an annuity: 17
(A) Before the death of the contract beneficiary, if the 18
prepaid contract is revocable, the purchaser is entitled to receive a refund 19
of not less than one hundred percent (100%) of the annuity value, not to 20
exceed the premium paid by the purchaser for the annuity funding the prepaid 21
contract; 22
(B) After the death of the contract beneficiary, if the 23
prepaid contract is revocable, the purchaser, if the purchaser is someone 24
other than the prepaid contract beneficiary, or his or her designee is 25
entitled to receive not less than one hundred percent (100%) of the annuity 26
proceeds received by the seller, not to exceed the premium paid by the 27
purchaser; or 28
(C)(i) Before the death of the contract beneficiary, if 29
the prepaid contract is irrevocable, the purchaser shall not have the right 30
to a refund of any funds paid to the seller but shall have the right to 31
change the provider of the prepaid contract services and merchandise to a 32
substitute provider, in which event the seller shall assign or transfer to 33
the substitute provider, as directed by the contract owner purchaser, the 34
annuity policy used to fund the prepaid contract, which shall be in an amount 35
of not less than one hundred percent (100%) of the annuity value, not to 36 As Engrossed: S3/7/23 SB97
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exceed the premium paid by the purchaser. 1
(ii) After the death of the contract beneficiary, 2
the seller shall transfer to the substitute provider not less than one 3
hundred percent (100%) of the annuity proceeds received by the seller, not to 4
exceed the premiums paid by the purchaser. 5
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SECTION 7. Arkansas Code § 23 -40-125 is amended to read as follows: 7
23-40-125. Prepaid Funeral Contracts Recovery Program Fund — Created — 8
Prepaid Funeral Contracts Recovery Program Board — Established. 9
(a) There is established within the State Insurance Department Prepaid 10
Trust Fund an account to be known as the “Prepaid Funeral Contracts Recovery 11
Program Fund”, hereinafter “fund” . 12
(b) No money is to be appropriated from this fund for any purpose 13
except for expenses and payment of claims of the Prepaid Funeral Contracts 14
Recovery Program at the direction of the Insurance Commissioner and the 15
Prepaid Funeral Contracts Recovery Program Board. 16
(c) The fund shall be invested under the direction of the commissioner 17
and the Treasurer of State, with advice from the Chief Fiscal Officer of the 18
State as needed from time to time. 19
(d)(1) All income derived through investment of the fund, inc luding, 20
but not limited to, fees, interest, and dividends shall be credited as 21
investment income to the fund and deposited therein. 22
(2) All income derived from fund transfers, subrogation awards, 23
grants, orders or judgments of restitution, refunds, volu ntary reimbursements 24
or restitution, and gifts shall be credited as investment income to the fund 25
and deposited therein. 26
(e) Further, all moneys deposited into the fund shall not be subject 27
to any deduction, tax, levy, or any other type of assessment exc ept as may be 28
provided in this subchapter. 29
(f)(1) The fund shall be administered by the commissioner , with advice 30
from the Prepaid Funeral Contracts Recovery Program Board, hereinafter 31
“board”. 32
(2) The purpose of the fund is to reimburse purchasers of 33
preneed funeral contracts who have suffered financial loss as a result of the 34
impairment, insolvency, business interruption, or improper inactivity of a 35
prepaid funeral organization licensed in this state under this chapter. 36 As Engrossed: S3/7/23 SB97
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(g)(1) From the fee for each preneed funeral contract as required by § 1
23-40-119(d)(1)(A) and from any funds transferred to the fund pursuant to § 2
23-40-119(f)(1), the commissioner with board advice and consultation shall 3
administer the Prepaid Funeral Contracts Recovery Program program. 4
(2) The commissioner may suspend fees or unused funds transfers 5
or deposits into the fund at any time and for any period for which the 6
commissioner determines that a sufficient amount is available to meet likely 7
disbursements and to maintain an ade quate reserve in compliance with a rule 8
of the commissioner. 9
(h) The commissioner with board assistance shall adopt procedures 10
governing management of the fund, the presentation and processing of 11
applications for reimbursement, and subrogation or assignm ent of the rights 12
of any reimbursed applicant. 13
(i)(1) The commissioner may expend moneys in the fund for the 14
following purposes: 15
(A) To make reimbursements on approved applications; and 16
(B) To pay related expenses involved in operating the 17
program as permitted under state law. 18
(2) Reimbursements from the fund shall be made only to the 19
extent to which such losses are not bonded or otherwise covered, protected, 20
or reimbursed, and only after the applicant has complied with all applicable 21
rules of the fund. 22
(j)(1) The commissioner , or his or her representatives, shall 23
investigate all applications made and may reject or allow the claims, in 24
whole or in part, to the extent that moneys are available in the fund. 25
(2) The commissioner may approve on e (1) application that 26
includes more than one (1) reparation claim for the benefit of purchasers of 27
prepaid contracts of a licensee ordered liquidated under § 23 -40-123, as part 28
of a plan to arrange for another licensee to assume the obligations of the 29
licensee being liquidated, if: 30
(A) The commissioner finds that the plan is reasonable and 31
is in the best interests of the contract beneficiaries; and 32
(B) The plan is approved by a court. 33
(k)(1) In the event reimbursement is made to an applicant unde r this 34
section, the commissioner, on behalf of the state, shall be subrogated in the 35
reimbursed amount and may bring any action the commissioner deems advisable 36 As Engrossed: S3/7/23 SB97
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for the program against any person, including a prepaid licensee. 1
(2) The commissioner may e nforce any claims that the program, on 2
behalf of the state, may have for restitution or otherwise and may employ and 3
compensate consultants, agents, legal counsel, accountants, and any other 4
persons that the commissioner deems appropriate. Payments shall b e made from 5
the fund for such services. 6
(l)(1) There is created the Prepaid Funeral Contracts Recovery Program 7
Board. 8
(2)(A) Members of the board shall consist of no fewer than five 9
(5) nor more than nine (9) members of various licensed Arkansas prepa id 10
funeral organizations, including one (1) consumer member selected from the 11
Arkansas public at large. 12
(B) The members of the board shall be selected by member 13
licensees, subject to approval of the commissioner. 14
(C)(i) Each member of the board may serve up to two (2) 15
consecutive four-year terms. 16
(ii) Vacancies on the board shall be filled for the 17
remaining period of the term by a majority vote of the remaining board 18
members, subject to approval of the commissioner. 19
(D) In approving selecti ons to the board, the commissioner 20
shall consider, among other things, whether all member licensees are fairly 21
represented. 22
(m)(1) The board shall assist the commissioner and come under the 23
immediate supervision of the commissioner and shall be subject t o the 24
applicable provisions of the laws of this state. 25
(2) The fund, as well as board action, shall be is subject to 26
examination and regulation by the commissioner. 27
(3)(A)(2)(A) The board commissioner, or his or her 28
representatives, shall prepare and submit to the commissioner each year, not 29
later than one hundred twenty (120) days after the program's fiscal year, a 30
financial report in a form approved by the commissioner and a report of 31
program activities during the preceding fiscal year. 32
(B) Upon request of a licensed prepaid funeral 33
organization in this state, the commissioner shall provide the member prepaid 34
funeral organization with a copy of the report. 35
(n)(m) There shall be no liability on the part of and no cause of 36 As Engrossed: S3/7/23 SB97
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action of any nature sh all arise against any member of the board, the 1
commissioner, or his or her representatives, agents, or employees for any act 2
or omission by them in the performance of their powers and duties under this 3
chapter, or in its administration, dispensation, handl ing, or collection of 4
funds for the program. 5
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/s/D. Wallace 7
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APPROVED: 3/21/23 10
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