81R11218 PMO-F
By: Eiland H.B. No. 1857
A BILL TO BE ENTITLED
AN ACT
relating to the sale of charitable gift annuities.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Sections 102.002, 102.051, 102.102, and 102.152,
Insurance Code, are amended to read as follows:
Sec. 102.002. QUALIFIED CHARITABLE GIFT ANNUITY. A
charitable gift annuity is a qualified charitable gift annuity for
purposes of this chapter if it was issued before September 1, 1995,
or if it is:
(1) described by Section 501(m)(5), Internal Revenue
Code of 1986; and
(2) issued by a charitable organization that on the
date of the annuity agreement:
(A) has, exclusive of the assets funding the
annuity agreement, a minimum of $100,000 in unrestricted cash, cash
equivalents, or publicly traded securities; [and]
(B) has been in continuous operation for at least
three years or is a successor or affiliate of a charitable
organization that has been in continuous operation for at least
three years; and
(C) is approved by the department under Section
102.102.
Sec. 102.051. [NOT INSURANCE;] EFFECT OF CERTAIN
LAWS. (a) The issuance of a qualified charitable gift annuity:
(1) does not constitute engaging in the business of
insurance in this state;
(2) does not violate Section 15.05 or 17.46, Business &
Commerce Code; and
(3) is not an unconscionable action or course of
action for purposes of Section 17.50(a)(3), Business & Commerce
Code.
(b) Notwithstanding Subsection (a)(1), an organization that
issues a charitable gift annuity without the approval of the
department under Section 102.102 engages in the unauthorized
business of insurance and is subject to Chapter 101.
Sec. 102.102. NOTICE AND APPROVAL OF QUALIFIED STATUS [TO
DEPARTMENT]. (a) Not later than the 60th day before the date on
which a charitable organization sells the organization's first
qualified charitable gift annuity, the [A charitable] organization
[that issues qualified charitable gift annuities] shall:
(1) notify the department's annuities division in
writing of the organization's intention to issue a charitable gift
annuity; and
(2) request in writing the department's approval of
the organization as a qualified charitable organization under this
chapter [not later than the date on which the organization enters
into the organization's first qualified charitable gift annuity
agreement].
(b) The notice required by this section must:
(1) be signed by an officer or director of the
organization;
(2) identify the organization; [and]
(3) certify that:
(A) the organization is a charitable
organization; and
(B) the annuities issued by the organization are
[qualified] charitable gift annuities; and
(4) be submitted in a form and manner adopted by the
commissioner by rule under Subsection (c).
(c) The commissioner may adopt rules that establish the form
and manner of information that a charitable organization must [may
not be required to] submit to request approval under this section
[additional information except to determine appropriate penalties
under Section 102.104].
(d) A postsecondary educational institution authorized to
grant degrees under a certificate of authority issued by the Texas
Higher Education Coordinating Board is exempt from Subsections
(b)(4) and (c).
(e) On receipt of notice and request for approval under this
section, the department may:
(1) approve a request for a charitable organization to
issue charitable gift annuities; or
(2) disapprove a request and notify the issuer in
writing of the grounds for the disapproval in sufficient detail to
allow remediation.
(f) A request under Subsection (b) is considered approved if
the commissioner does not act on the request on or before the 60th
day after the date that the department received the request.
(g) The department may withdraw the approval of a request
for qualified status of a charitable organization if the
organization no longer satisfies the requirements for approval.
The department shall notify the organization in writing of the
grounds for the withdrawal of approval in sufficient detail to
allow remediation.
(h) A proceeding under this chapter for the disapproval or
withdrawal of approval is a contested case subject to Chapter 2001,
Government Code.
Sec. 102.152. TREATMENT OF ANNUITY AS CHARITABLE GIFT
ANNUITY; ESTOPPEL. In any litigation or other proceeding brought
by or on behalf of a donor or the donor's heirs or distributees, an
annuity that the donor has treated as a charitable gift annuity in a
filing with the United States Internal Revenue Service shall be
considered to be a qualified charitable gift annuity issued by a
charitable organization, as described by Subchapters A and B and
Section 101.053(b).
SECTION 2. Subchapter B, Chapter 4005, Insurance Code, is
amended by adding Section 4005.056 to read as follows:
Sec. 4005.056. MODIFICATION OF METHOD OF COMPENSATION FOR
SALE OF ANNUITIES. In addition to any other remedy available, the
commissioner may order the modification of a method of compensation
for the sale of an annuity that the commissioner finds, after
notice and an opportunity for hearing, results in a pattern or
practice that violates Chapter 1115.
SECTION 3. (a) Section 1 of this Act applies only to an
annuity that is delivered, issued for delivery, or renewed on or
after January 1, 2010. An annuity that is delivered, issued for
delivery, or renewed before January 1, 2010, is governed by the law
as it existed immediately before the effective date of this Act, and
that law is continued in effect for that purpose.
(b) Section 2 of this Act applies only to a method of
compensation resulting in a sale occurring on or after September 1,
2009. A method of compensation resulting in a sale occurring before
September 1, 2009, is governed by the law as it existed immediately
before the effective date of this Act, and that law is continued in
effect for that purpose.
SECTION 4. This Act takes effect September 1, 2009.