TX
Texas House Bill HB3370

Texas 2017 - 85th Regular

Texas House Bill HB3370 Compare Versions

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1-By: Craddick (Senate Sponsor - Hancock) H.B. No. 3370
2- (In the Senate - Received from the House May 3, 2017;
3- May 10, 2017, read first time and referred to Committee on Business &
4- Commerce; May 22, 2017, reported adversely, with favorable
5- Committee Substitute by the following vote: Yeas 8, Nays 0;
6- May 22, 2017, sent to printer.)
7-Click here to see the committee vote
8- COMMITTEE SUBSTITUTE FOR H.B. No. 3370 By: Hancock
1+85R16210 MEW-F
2+ By: Craddick H.B. No. 3370
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115 A BILL TO BE ENTITLED
126 AN ACT
13- relating to certain disclosures and notices required for certain
14- life insurance policies.
7+ relating to certain limitations on the increase of a premium, cost,
8+ charge, administrative expense, or fee associated with a life
9+ insurance policy.
1510 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
16- SECTION 1. Chapter 1101, Insurance Code, is amended by
17- adding Subchapter E to read as follows:
18- SUBCHAPTER E. DISCLOSURES AND NOTICES RELATING TO LIFE INSURANCE
19- POLICIES WITH NON-GUARANTEED ELEMENTS
20- Sec. 1101.201. PURPOSE. This subchapter is intended to
21- provide standards for disclosures relating to life insurance
22- policies subject to this subchapter and to recognize that a purpose
23- of those life insurance policies is to provide insurance coverage
24- at a lower initial premium than might otherwise be obtainable from
25- the insurer if the insurer were not allowed to change the premium
26- during the life of the policy.
27- Sec. 1101.202. APPLICABILITY. (a) This subchapter applies
28- to a life insurance policy issued by an insurer, as defined by
29- Section 1102.001, that contains non-guaranteed elements that may
30- change at the discretion of the insurer.
31- (b) This subchapter does not apply to:
32- (1) group life insurance without separately
33- identifiable accounts for insureds; or
34- (2) a life insurance policy in which the insurer
35- assumes all risk and contractually guarantees a death benefit in
36- exchange for a guaranteed premium set at the time of the policy's
37- issuance.
38- Sec. 1101.203. DISCLOSURES AFTER ISSUANCE OF POLICY. (a)
39- Subject to Section 1101.204, and unless the change is made pursuant
40- to a previously implemented current cost of insurance schedule, if
41- an insurer increases a non-guaranteed element in or decreases the
42- credited interest rate for a policy after the policy's issuance,
43- the insurer must provide a written notice to the policy owner
44- disclosing:
45- (1) the non-guaranteed element that is being changed;
46- (2) the value of the non-guaranteed element before and
47- after the proposed change;
48- (3) the maximum or minimum guaranteed value, as
49- applicable, of the non-guaranteed element stated in the policy, if
50- any;
51- (4) the effective date of the change;
52- (5) a comparison of the change to the current and
53- maximum or minimum guaranteed elements, as applicable, if any,
54- stated in the policy; and
55- (6) the options available to the policy owner under
56- the policy.
57- (b) The notice under Subsection (a) must include the
58- insurer's phone number and e-mail address and the following
59- statement in at least 12-point bold type:
60- "IMPORTANT NOTICE: An increase in a non-guaranteed element or
61- a decrease in the credited interest rate will have an adverse impact
62- on the longevity and value of your policy. You should request an
63- illustration of the impact of this change on your policy."
64- (c) Except as provided by this subsection, notice required
65- by Subsection (a) must be given not later than the 90th day before
66- the date the change is applied. For a decrease in the credited
67- interest rate for a policy, notice required by Subsection (a) may be
68- given at the time that the decrease is applied.
69- (d) If a policy owner affirmatively requests a loan, partial
70- surrender, or other action on the policy that might impact the
71- longevity of the policy, the insurer must provide to the policy
72- owner in writing, not later than the 10th day after the date the
73- owner makes the request, the insurer's phone number and e-mail
74- address and the following statement in at least 12-point bold type:
75- "IMPORTANT NOTICE: Your recent request will have an impact on
76- the longevity and value of your policy. You should request an
77- illustration of the impact of this change on your policy."
78- (e) Regardless of whether any non-guaranteed elements are
79- changed, an insurer that issues a policy subject to this subchapter
80- must provide to the policy owner at least annually an illustration
81- containing elements specified by the commissioner by rule.
82- Sec. 1101.204. NOTICE TO DEPARTMENT OF CERTAIN CHANGES TO
83- NON-GUARANTEED ELEMENTS. (a) Not later than the 180th day before
84- the effective date of an increase in a non-guaranteed element in an
85- individual's policy or certificate subject to this subchapter,
86- other than an increase pursuant to a previously implemented current
87- cost of insurance schedule, the insurer must provide notice to the
88- department if:
89- (1) except as provided by Subsection (b), the increase
90- in the non-guaranteed element will result in an aggregate increase
91- in the cost of insurance rate that is greater than 40 percent of the
92- cost of insurance rate for the preceding year; and
93- (2) the increase will be applied to a policy issued in
94- this state.
95- (b) The commissioner by rule may adopt a lower percentage
96- increase in a cost of insurance rate for which an insurer must
97- provide notice to the department under Subsection (a), but the
98- percentage adopted may not be lower than 20 percent.
99- (c) The notice under Subsection (a) must include:
100- (1) the specific approved policy form for which the
101- insurer will implement the increase;
102- (2) a copy of the disclosure to be provided under
103- Section 1101.203 to each owner whose policy was issued in this
104- state;
105- (3) information on the classes of owners who will
106- receive the disclosure;
107- (4) sufficient information for the department to
108- determine if the increase is actuarially justified;
109- (5) if applicable, sufficient information to
110- demonstrate compliance with the nonforfeiture values under Chapter
111- 1105 for the increased premium; and
112- (6) any other information necessary to determine if
113- the increase will comply with the standards in this code.
114- (d) Not later than the 60th day after receipt of a notice
115- under this section, the commissioner may:
116- (1) disapprove the proposed increase if the
117- commissioner determines that the increase is not actuarially
118- justified or not in compliance with this code and provide the
119- insurer with a description in adequate detail of the changes
120- necessary to avoid disapproval; or
121- (2) withdraw approval under Section 1701.055 of the
122- applicable individual life insurance policy form.
123- (e) If the commissioner does not take action under
124- Subsection (d), the insurer may provide the disclosure required by
125- Section 1101.203 and apply the proposed increase in the
126- non-guaranteed element in the policy.
127- Sec. 1101.205. RULES. (a) The commissioner may adopt rules
128- as necessary to implement this subchapter.
129- (b) The commissioner by rule may exempt certain types of
130- life insurance policies from one or more of the requirements of this
131- subchapter.
132- SECTION 2. Subchapter E, Chapter 1101, Insurance Code, as
133- added by this Act, applies only to an increase in a non-guaranteed
134- element or a decrease in a credited interest rate that is applied to
135- an insurance policy on or after January 1, 2018.
136- SECTION 3. This Act takes effect September 1, 2017.
137- * * * * *
11+ SECTION 1. The heading to Subchapter B, Chapter 1101,
12+ Insurance Code, is amended to read as follows:
13+ SUBCHAPTER B. PROHIBITIONS RELATED TO POLICIES AND [PROHIBITED]
14+ POLICY PROVISIONS
15+ SECTION 2. Subchapter B, Chapter 1101, Insurance Code, is
16+ amended by adding Section 1101.057 to read as follows:
17+ Sec. 1101.057. LIMITATIONS ON INCREASES OF PREMIUMS, COSTS,
18+ CHARGES, EXPENSES, OR FEES. (a) In this section, "insurer" has the
19+ meaning assigned by Section 1102.001.
20+ (b) Except as provided by Subsection (c), an insurer may not
21+ increase a premium, cost, charge, administrative expense, or fee
22+ associated with a life insurance policy by an amount that exceeds 10
23+ percent of the premium, cost, charge, expense, or fee during any
24+ year.
25+ (c) Subsection (b) does not apply to an increase in a
26+ premium, cost, charge, administrative expense, or fee associated
27+ with a life insurance policy, including an increase in premium
28+ based on a policyholder's attained age, if the schedule and amount
29+ of the increase are disclosed to the policyholder at the time the
30+ policy is issued.
31+ SECTION 3. Section 1101.057, Insurance Code, as added by
32+ this Act, applies only to a premium, cost, charge, administrative
33+ expense, or fee associated with a life insurance policy that is
34+ delivered, issued for delivery, or renewed on or after January 1,
35+ 2018. A premium, cost, charge, administrative expense, or fee
36+ associated with a life insurance policy delivered, issued for
37+ delivery, or renewed before January 1, 2018, is governed by the law
38+ as it existed immediately before the effective date of this Act, and
39+ that law is continued in effect for that purpose.
40+ SECTION 4. This Act takes effect September 1, 2017.