Texas 2009 - 81st Regular

Texas Senate Bill SB961 Compare Versions

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1	1	81R33271 PMO-D
2	2	By: Ellis, et al. S.B. No. 961
3	3	Substitute the following for S.B. No. 961:
4	4	By: Eiland C.S.S.B. No. 961
5	5
6	6
7	7	A BILL TO BE ENTITLED
8	8	AN ACT
9	9	relating to the sale of certain annuities.
10	10	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
11	11	SECTION 1. Section 102.001, Insurance Code, is amended by
12	12	amending Subdivision (1) and adding Subdivision (3) to read as
13	13	follows:
14	14	(1) "Charitable gift annuity" means an annuity:
15	15	(A) that is payable over the lives of one or two
16	16	individuals;
17	17	(B) that is made in return for the transfer of
18	18	cash or other property to a charitable organization or qualified
19	19	educational organization; and
20	20	(C) the actuarial value of which is less than the
21	21	value of the cash or other property transferred, with the
22	22	difference in those values being a charitable deduction for federal
23	23	tax purposes.
24	24	(3) "Qualified educational organization" means an
25	25	issuer of a charitable gift annuity that is:
26	26	(A) an institution of higher education as defined
27	27	by Section 61.003, Education Code;
28	28	(B) a private or independent institution of
29	29	higher education as defined by Section 61.003, Education Code; or
30	30	(C) a foundation designated in writing by an
31	31	institution described by Paragraph (A) or (B) to issue charitable
32	32	gift annuities for the benefit of the institution.
33	33	SECTION 2. Section 102.002, Insurance Code, is amended to
34	34	read as follows:
35	35	Sec. 102.002. QUALIFIED CHARITABLE GIFT ANNUITY. (a) A
36	36	charitable gift annuity is a qualified charitable gift annuity for
37	37	purposes of this chapter if it was issued before September 1, 1995,
38	38	or if it is:
39	39	(1) described by Section 501(m)(5), Internal Revenue
40	40	Code of 1986; and
41	41	(2) issued by a charitable organization that on the
42	42	date of the annuity agreement:
43	43	(A) has, exclusive of the assets funding the
44	44	annuity agreement, a minimum of $300,000 [$100,000] in unrestricted
45	45	cash, cash equivalents, or publicly traded securities; and
46	46	(B) has been in continuous operation for at least
47	47	three years or is a successor or affiliate of a charitable
48	48	organization that has been in continuous operation for at least
49	49	three years.
50	50	(b) A charitable gift annuity is a qualified charitable gift
51	51	annuity if it is issued by a qualified educational organization
52	52	that, on the date of the annuity agreement:
53	53	(1) has, exclusive of the assets funding the annuity
54	54	agreement, a minimum of $300,000 in unrestricted cash, cash
55	55	equivalents, or publicly traded securities; and
56	56	(2) has been in continuous operation for at least
57	57	three years or is a successor or affiliate of an institution or
58	58	foundation described by Section 102.001(3) that has been in
59	59	continuous operation for at least three years.
60	60	SECTION 3. Subchapter C, Chapter 102, Insurance Code, is
61	61	amended by amending Section 102.102 and adding Section 102.105 to
62	62	read as follows:
63	63	Sec. 102.102. NOTICE AND APPROVAL OF QUALIFIED STATUS OF
64	64	CHARITABLE ORGANIZATION [TO DEPARTMENT]. (a) Not later than the
65	65	60th day before the date on which a charitable organization sells
66	66	the organization's first qualified charitable gift annuity, the [A]
67	67	charitable organization [that issues qualified charitable gift
68	68	annuities] shall:
69	69	(1) notify the department's annuities division in
70	70	writing of the organization's intention to issue a charitable gift
71	71	annuity; and
72	72	(2) request in writing the department's approval of
73	73	the organization as a qualified charitable organization under this
74	74	chapter [not later than the date on which the organization enters
75	75	into the organization's first qualified charitable gift annuity
76	76	agreement].
77	77	(b) The notice required by this section must:
78	78	(1) be signed by an officer or director of the
79	79	organization;
80	80	(2) identify the organization; [and]
81	81	(3) certify that:
82	82	(A) the organization is a charitable
83	83	organization; and
84	84	(B) the annuities issued by the organization are
85	85	[qualified] charitable gift annuities; and
86	86	(4) be submitted in a form and manner adopted by the
87	87	commissioner by rule under Subsection (c).
88	88	(c) The commissioner may adopt rules that establish the form
89	89	and manner of information that a charitable organization must [may
90	90	not be required to] submit to request approval under this section
91	91	[additional information except to determine appropriate penalties
92	92	under Section 102.104].
93	93	(d) On receipt of notice and request for approval under this
94	94	section, the department may:
95	95	(1) approve a request for a charitable organization to
96	96	issue charitable gift annuities; or
97	97	(2) disapprove a request and notify the issuer in
98	98	writing of the grounds for the disapproval in sufficient detail to
99	99	allow remediation.
100	100	(e) A request under Subsection (b) is considered approved if
101	101	the commissioner does not act on the request on or before the 60th
102	102	day after the date the department received the request.
103	103	(f) The department may withdraw the approval of a request
104	104	for qualified status of a charitable organization if the
105	105	organization no longer satisfies the requirements for approval.
106	106	The department shall notify the organization in writing of the
107	107	grounds for the withdrawal of approval in sufficient detail to
108	108	allow remediation.
109	109	(g) A proceeding under this chapter for the disapproval or
110	110	withdrawal of approval is a contested case under Chapter 2001,
111	111	Government Code.
112	112	Sec. 102.105. NOTICE OF QUALIFIED EDUCATIONAL ORGANIZATION
113	113	STATUS. (a) Not later than the 60th day before the date on which a
114	114	qualified educational organization sells the organization's first
115	115	qualified charitable gift annuity, the organization shall:
116	116	(1) notify the department's annuities division in
117	117	writing of the organization's intention to issue a charitable gift
118	118	annuity; and
119	119	(2) request in writing the department's acknowledgment
120	120	of the organization as a qualified educational organization under
121	121	this chapter.
122	122	(b) The notice required by this section must:
123	123	(1) be signed by an officer or director of the
124	124	organization;
125	125	(2) identify the organization; and
126	126	(3) certify that:
127	127	(A) the organization is an institution of higher
128	128	education or a private or independent institution of higher
129	129	education as defined by Section 61.003, Education Code, or a
130	130	foundation designated by the institution as described by Section
131	131	102.001(3); and
132	132	(B) the annuities issued by the organization are
133	133	charitable gift annuities.
134	134	(c) On receipt of notice and request for acknowledgment
135	135	under this section, the department shall acknowledge that the
136	136	organization may issue a charitable gift annuity.
137	137	SECTION 4. Section 102.152, Insurance Code, is amended to
138	138	read as follows:
139	139	Sec. 102.152. TREATMENT OF ANNUITY AS CHARITABLE GIFT
140	140	ANNUITY; ESTOPPEL. In any litigation or other proceeding brought
141	141	by or on behalf of a donor or the donor's heirs or distributees, an
142	142	annuity that the donor has treated as a charitable gift annuity in a
143	143	filing with the United States Internal Revenue Service shall be
144	144	considered to be a qualified charitable gift annuity issued by a
145	145	charitable organization or a qualified educational organization,
146	146	as described by Subchapters A and B and Section 101.053(b).
147	147	SECTION 5. Section 1107.006, Insurance Code, is amended to
148	148	read as follows:
149	149	Sec. 1107.006. MATURITY DATE. [(a)] In determining the
150	150	value of benefits under Sections 1107.102, 1107.103, and 1107.104,
151	151	[and subject to Subsection (b), if an annuity contract permits an
152	152	election to have annuity payments begin on optional maturity
153	153	dates,] the maturity date is [considered to be] the latest date on
154	154	which an election is permitted by the contract, but[.
155	155	[(b) A maturity date determined under this section may] not
156	156	[be] later than the later of:
157	157	(1) the next anniversary of the annuity contract that
158	158	follows the annuitant's 70th birthday; or
159	159	(2) the 10th anniversary of the contract.
160	160	SECTION 6. Section 1115.102, Insurance Code, is amended by
161	161	adding Subsections (c) and (d) to read as follows:
162	162	(c) In addition to any other remedy available for a
163	163	violation of this chapter, if the commissioner finds a pattern or
164	164	practice of unsuitable sales of annuities, or such a pattern or
165	165	practice is reasonably expected, because of the compensation
166	166	offered by an insurer for the sale of annuities, the commissioner
167	167	may, after notice and hearing, order the insurer to cease and desist
168	168	or modify the compensation offered.
169	169	(d) An order issued under Subsection (c) may not include a
170	170	regular salaried officer or employee of a licensed insurer, a
171	171	jointly managed affiliate of a licensed insurer, or a licensed
172	172	insurance agent if the officer or employee does not receive a
173	173	commission or other compensation for the services of the officer or
174	174	employee that is directly dependent on the amount of business done.
175	175	SECTION 7. Sections 2 and 3 of this Act apply only to an
176	176	annuity that is delivered or issued for delivery on or after January
177	177	1, 2010. An annuity that is delivered or issued for delivery before
178	178	January 1, 2010, is governed by the law as it existed immediately
179	179	before the effective date of this Act, and that law is continued in
180	180	effect for that purpose.
181	181	SECTION 8. Section 1107.006, Insurance Code, as amended by
182	182	this Act, applies only to an annuity that is delivered or issued for
183	183	delivery on or after June 1, 2010. An annuity that is delivered or
184	184	issued for delivery before June 1, 2010, is governed by the law as
185	185	it existed immediately before the effective date of this Act, and
186	186	that law is continued in effect for that purpose.
187	187	SECTION 9. Section 1115.102, Insurance Code, as amended by
188	188	this Act, applies only to conduct that occurs on or after the
189	189	effective date of this Act. Conduct that occurs before the
190	190	effective date of this Act is covered by the law in effect when the
191	191	conduct occurred, and the former law is continued in effect for that
192	192	purpose.
193	193	SECTION 10. This Act takes effect September 1, 2009.