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Subchapter R. [Minimum Registration, Disclosure and Nondiscrimination Requirements for] Viatical and Life Settlements

28 TAC §§3.1701 - 3.1717

1. INTRODUCTION. The Texas Department of Insurance proposes amendments to §§3.1701 - 3.1703, 3.1705, 3.1707 - 3.1715, and new §§3.1704, 3.1706, 3.1716, and 3.1717 concerning regulation of viatical and life settlements. The proposed amendments and new sections are necessary to implement the provisions of Texas Insurance Code Article 3.50-6A, as amended by Acts 1999, 76th Legislature, in House Bill 792. Prior to HB 792, Insurance Code Article 3.50-6A only applied to viatical settlements, the sale of a life insurance policy on an individual with a catastrophic or life-threatening illness or condition. House Bill 792 amends Insurance Code Article 3.50-6A by addressing life settlements, which are defined as the sale of life insurance policies on individuals who do not have a catastrophic or life-threatening illness or condition. The proposal adds language to address life settlements, clarifies filing requirements, and requires additional disclosures, contract provisions, and reporting requirements.

The proposed amendments and new sections are necessary to: provide additional consumer protections; establish requirements for registration, disclosure, and form approval for persons engaged in the business of life settlements; streamline the process for renewal of registration, disclosure and form approval; more clearly define prohibited practices; ensure that a viator´s, life settlor´s, and owner´s rights remain protected in the event the life insurance policy or certificate is re-sold or transferred to another person, or the viatical or life settlement company elects to no longer engage in the business; protect the confidentiality of the personal information of viators, life settlors, and owners; designate the responsibilities of viatical or life settlement companies or brokers; and provide enforcement mechanisms to ensure compliance with the Insurance Code and this subchapter.

The proposed amendment to §3.1701 applies the subchapter to life settlors, life settlements, and owners. The proposed amendments §3.1702 add, delete, or modify various definitions. The new definition of owner in this proposed section clarifies that, in some situations, the owner, viator, or life settlor are separate persons under an insurance policy.

The proposed amendments to §3.1703 set out new requirements for obtaining a certificate of registration to operate as a viatical or life settlement company or broker, including doing business under an assumed name, or having more than one business location. The proposed amendments also create a new structure for paying fees to obtain a certificate of registration, and change the certificate of registration from a one-year certificate to a two-year certificate. Currently, fees are paid annually at a rate of $250.00 for company registrations and $125.00 for broker registrations. The amendment proposes to charge the same annual rate, but requires payment of fees every two years, since the certificate will be valid for two years. As such, a company will pay $500.00 every two years and a broker will pay $250.00 every two years. The proposed amendment also sets forth requirements for notifying the department of a change in information both during the application process and any time a change occurs thereafter. Proposed §3.1704 sets forth the requirements for renewing, nonrenewing, or surrendering a certificate of registration. Proposed amendments to §3.1705 modify the content and format of the reports required to be filed with the department. Although the proposed amendments require annual reports to be filed both in hard and electronic copy, the amendments also allow a company who does not have the means to file an electronic copy, to contact the department to request permission to file only a hard copy.

Proposed §3.1706 sets forth the requirements for the filing of viatical or life settlement forms, and the process for departmental action on forms filed with the department. Proposed amendments to §3.1707 address life settlements in the filing requirements for advertising, sales, and solicitation materials. Proposed amendments to §3.1708 modify existing requirements, and add new, required disclosure materials. The proposed amendments to §3.1709 modify existing, and add new, mandatory contract and application provisions, including those provisions that allow the owner of a policy to retain an interest in the policy. The proposed section also addresses acknowledgement forms, escrow and/or trust agreements, and the provisions that must be contained in those forms.

Additional prohibitions are proposed in §3.1710 to the list of prohibited practices related to advertising and solicitation of applications and contracts for viatical and life settlements. The proposed amendments to §3.1711 address prohibited practices relating to the payment of commissions and other forms of compensation, modify the section to add life settlement terminology, and create a fiduciary duty between an independent viatical or life settlement broker and the viator, life settlor, and owner.

Section 3.1712 is proposed to be amended to set forth new guidelines outlining the prohibited practices when contacting a viator, life settlor, or owner for information, including contacts for health status inquiries after the settlement contract has been entered into and proceeds have been paid to viators or life settlors. Proposed §3.1713 is amended to add life settlement language and to address the assignment, sale, or transfer of insurance policies subsequent to the initial purchase of the policy by the viatical or life settlement company. Proposed amendments to §3.1714 set forth the limits and practices relating to obtaining confidential information, such as prohibiting the disclosure of an owner´s, viator´s, or life settlor´s confidential information without first obtaining proper written consent; restricting the period of time for medical consent forms to a period not longer than twelve months; and prohibiting use of medical consent forms as a means to continue to monitor a viator´s health status.

The proposed amendment to §3.1715 addresses agent licensing requirements for escrow agents and trustees who receive moneys to pay continuing premiums on insurance policies that are the subject of viatical or life settlement transactions. Proposed §3.1716 sets forth the authority and the procedures for the commissioner to deny, suspend, or revoke a broker´s or company´s certificate of registration. Proposed §3.1717 authorizes the department to examine the business and affairs of any viatical or life settlement company or broker, with expenses for such examinations to be paid by the viatical or life settlement company or broker.

In conjunction with these proposed amendments and new sections, the department is proposing the repeal of existing §§3.1704, 3.1706 and 3.1716 - 3.1718. Notice of the proposed repeal is published elsewhere in this issue of the Texas Register.

2. FISCAL NOTE. Ana M. Smith-Daley, Deputy Commissioner, Life/Health Division, has determined that for each year of the first five years the proposed sections will be in effect, there will be no fiscal impact to state and local governments as a result of the enforcement or administration of the sections. There will be no measurable effect on local employment or the local economy as a result of the proposal.

3. PUBLIC BENEFIT/COST NOTE. Ms. Smith-Daley has also determined that for each year of the first five years the sections are in effect, the public benefits anticipated as a result of the proposed sections will be: increased consumer protection for those persons entering into viatical or life settlement transactions; reduced administrative costs for companies and brokers who will only have to renew their certificates every two years instead of annually as currently required; and a more efficient and expedited review process which streamlines the procedures and requirements for filing forms used in viatical or life settlement transactions.

Ms. Smith-Daley estimates that the costs to viatical or life settlement companies or brokers to create or modify the forms they use to effectuate viatical or life settlements will vary depending upon which forms the viatical or life settlement company or broker uses in its operations, and which of its forms requires amending due to the changes in this proposal. The department estimates that the average cost for viatical and life settlement companies and brokers to prepare new forms or modify existing forms for submission to the department, is approximately $1.00 - $5.00 for each page of information required by this proposal. This figure represents labor, printing, and paper costs for the total amount of language that would have to be added to the existing language used by the company or broker. The labor figures are based upon the Texas Workforce Commission 1998 - 1999 Occupational Wage Survey, with figures adjusted for the year 2000. The department´s cost estimate assumes that labor could be provided by either an in-house person or outside consultant, at an estimated cost of $20 - $35 per hour of labor. Paper and printing costs are estimated at a range of $.05 - $.10 per page of additional language using both the front and back of a page. In order to help minimize the costs associated with creating and modifying forms, the department has created some forms available for downloading from the department´s web site. Use of these forms may also reduce costs associated with filing forms with the department, for small, micro, and large businesses.

Because the existing sections currently require registration for persons engaging in the business of viatical settlements, viatical settlement companies and brokers will incur no additional costs as a result of the registration requirements added by this proposal. For all applicants that are required to provide a fingerprint card to the department, it is estimated that the cost will be $15.00 per fingerprint card. A life settlement company or broker seeking registration will incur a cost of $500 every two years for companies; and $250 every two years for brokers.

The proposal requires the annual reports to be submitted to the department in both electronic and hard copy, and also requires additional items of information to be included. The estimated hourly costs for companies and brokers submitting annual reports under the proposed rule is approximately $9.00 - $11.00. This hourly cost considers such variables as labor, printing, and paper costs, and costs associated with sending the information electronically via a 3.5" floppy computer disc. These costs will vary according to the volume of business, which will determine the size of the annual report. Therefore, any paper costs are based upon the additional pages of information required by the proposal (approximately 1 - 3 additional pages). Additionally, the proposed amendments attempt to minimize costs associated with the report by allowing a company or broker to request to file only a paper copy of the report if it does not have the capability to file an electronic copy.

There is no anticipated adverse economic impact on small or micro businesses as a result of the proposed sections. The cost per hour of labor will not vary between the smallest and largest businesses, assuming that small viatical/life settlement companies and brokers are reporting on a smaller volume of business than the largest viatical/life settlement companies and brokers. By considering the statute´s purposes, it is neither legal nor feasible to waive or modify the requirements of these sections for small and micro businesses, as doing so would result in a disparate effect on persons wishing to sell their life insurance policies.

4. REQUEST FOR PUBLIC COMMENT. To be considered, written comments on the proposal must be submitted no later than 5:00 p.m. on September 11, 2000 to Lynda H. Nesenholtz, General Counsel and Chief Clerk, Mail Code 113-2A, Texas Department of Insurance, P. O. Box 149104, Austin, Texas 78714-9104. An additional copy of the comment must be simultaneously submitted to Diane Moellenberg, Chief Director, Regulatory Development, Mail Code 107-2A, Texas Department of Insurance, P.O. Box 149104, Austin, Texas 78714-9104. A request for a public hearing should be submitted separately to the Office of the Chief Clerk.

5. STATUTORY AUTHORITY. The sections are proposed under the Insurance Code Article 3.50-6A and Section 36.001. Article 3.50-6A provides that the commissioner shall adopt reasonable rules to implement this article as it relates to viatical and life settlements. Section 36.001 provides that the commissioner of Insurance may adopt rules to execute the duties and functions of the Texas Department of Insurance only as authorized by statute.

6. CROSS REFERENCE TO STATUTE. The following articles are affected by this proposal:

Rule Statute

§§3.1701 - 3.1717 Insurance Code Article 3.50-6A

7. TEXT.

§3.1701. Purpose[ , Scope] and Severability.

(a) Purpose[ Scope and purpose]. This subchapter implements the provisions of [ the] Insurance Code[ ,] Article 3.50-6A. The commissioner implements this subchapter[ enacts these rules] for the following purposes:

(1) to provide consumer protection in a viatical or life settlement transaction for a viator or life settlor and owner [ the person with a terminal illness] who assigns, sells , or otherwise transfers a [ life insurance] policy or its net death benefit, or who attempts to do so;

(2) to establish requirements for registration, disclosure , and form approval for persons engaged in the business of viatical or life settlements;

(3) to define prohibited practices for persons engaged in[ ,] or involved in transactions relating to[ ,] the business of viatical or life settlements;

(4) to ensure that a viator´s or life settlor´s and owner´s rights under the Insurance Code and this subchapter remain protected if a viatical or life settlement company assigns, sells , or otherwise transfers a [ the life insurance] policy or net death benefit[ benefits] under the policy which served as the basis for a viatical or life settlement transaction [ to another person];

(5) to protect the confidential [ confidentiality of the personal, financial, and medical] information of viators or life settlors and owners [ persons] who assign, sell , or otherwise transfer their [ life insurance] policies or net death benefits under such policies, or who seek to do so; and

(6) to provide enforcement mechanisms to ensure that persons engaged in, or involved in transactions relating to[ ,] the business of viatical or life settlements comply with the Insurance Code , [ and] this subchapter , or any other applicable law of this state or the United States.

(b) (No change.)

§3.1702. Definitions.

(a) The following words and terms, when used in this subchapter, have the following meanings, unless the context clearly indicates otherwise.

(1) Advertisement -- Includes, but is not limited to:

(A) printed and published material, audio-visual material, and descriptive literature of a viatical or life settlement company or broker, including materials used in direct mail, newspapers, magazines, the internet, radio, telephone and television scripts, billboards, and similar displays;

(B) descriptive literature and sales aids of all kinds used by a viatical or life settlement company or broker and distributed to members of the public, including circulars, leaflets, booklets, depictions, illustrations, and form letters;

(C) prepared sales talks, presentations, and materials for use by a viatical or life settlement company or broker, and those representations made to members of the public;

(D) materials used to solicit policies for viatical or life settlements;

(E) material included with a viatical or life settlement or an application for a viatical or life settlement, when the settlement is solicited or when the contract is delivered, including materials used in connection therewith;

(F) lead card solicitations, which are communications that, regardless of form, content, or stated purpose, are used to compile a list containing names or other personal information regarding individuals who have expressed a specific interest in a product and are used to solicit persons in this state for a viatical or life settlement; and

(G) any other communication directly or indirectly related to a viatical or life settlement or application for a viatical or life settlement, and used in the eventual sale or solicitation of a viatical or life settlement or application for a viatical or life settlement.

( H) The term "advertisement" does not include:

(i) communications or materials used within a viatical or life settlement company´s or broker´s own organization, not used as sales aids and not disseminated to members of the public;

(ii) communications with individuals, other than materials urging individuals to purchase or inquire into the potential purchase of a viatical or life settlement;

(iii) materials used solely for the recruitment, training, and education of a viatical or life settlement company´s or broker´s personnel, provided it is not also used to induce individuals to inquire into the potential purchase of a viatical or life settlement or application for a viatical or life settlement.

(2) Business of viatical or life settlements -- The making of, or proposing to make, as a viatical or life settlement company or broker, a viatical or life settlement contract, or taking or receiving any application for a viatical or life settlement, or doing the acts of a viatical or life settlement company or broker.

(3) Captive broker -- A viatical or life settlement broker who is employed by, or contracts with, a viatical or life settlement company, and who, by agreement or by nature of the broker´s employment, refers viators, life settlors, or owners exclusively to the viatical or life settlement company with whom the broker is employed or contracted.

(4) Catastrophic or life-threatening illness -- An illness or physical condition that is likely to cause premature death, including but not limited to acquired immunodeficiency syndrome (AIDS), cancer, or other illness.

(5) Certificate holder -- An individual, including any dependent, who is insured under a group policy.

(6) Confidential information -- A viator´s, life settlor´s, or owner´s name, address, telephone number, facsimile number, electronic mail address, photograph or likeness, employer, employment status, social security number, genetic information, medical information, financial information, or any other information that is likely to lead to the identification of a viator, life settlor, or owner, including the identity of any family member, spouse, or significant other.

(7) Control -- As defined in Insurance Code Article 21.49-1, §2.

(8) Escrow account -- An account established by a viatical or life settlement company for the sole purpose of entering into viatical or life settlements wherein the funds payable to the owner are placed with an independent third party to be paid to the owner on the fulfillment of the conditions of the viatical or life settlement contract.

(9) Escrow agent or trustee -- An attorney, certified public accountant, financial institution, or other person providing escrow or trust services whose acts are governed under the authority of a regulatory body.

(10) Escrow or trust agreement -- An agreement establishing an escrow account or a trust.

(11) Financing entity -- An underwriter, placement agent, lender, purchaser of securities, purchaser of a policy from a viatical or life settlement company, credit enhancer, reinsurer, or any person whose sole activity related to the viatical or life settlement is providing funds to effect the viatical or life settlement, and who has an agreement in writing with a registered viatical or life settlement company to act as a participant in financing the viatical or life settlement.

(12) Genetic information -- Information derived from the results of a genetic test.

(13) Genetic test -- A laboratory test of an individual´s DNA, RNA, proteins, or chromosomes to identify by analysis of the DNA, RNA, proteins, or chromosomes, the genetic mutations or alterations in the DNA, RNA, proteins, or chromosomes that are associated with a predisposition for a clinically-recognized disease or disorder. The term does not include:

(A) a routine physical examination or a routine test performed as part of a physical examination;

(B) a chemical, blood, or urine analysis;

(C) a test to determine drug use; or

(D) a test for the presence of the human immunodeficiency virus.

(14) Independent broker -- A viatical or life settlement broker who is not a captive broker, and who, by representing the viator, life settlor, or owner, acts as a middleman or negotiator between the viator, life settlor, or owner and various viatical or life settlement companies to find the best offer for the viator´s, life settlor´s, or owner´s policy.

(15) Insured -- An individual covered by a policy.

(16) Life expectancy -- The mean number of months a viator or life settlor can be expected to live as determined by the viatical or life settlement company considering medical records and appropriate experiential data.

(17) Life settlement -- A transaction whereby a written agreement is solicited, negotiated, offered, entered into, delivered, or issued for delivery in this state, under which a life settlement company acquires, through assignment, sale, or transfer, a policy insuring the life of an individual who does not have a catastrophic or life-threatening illness or condition by paying the owner or certificate holder compensation or anything of value that is less than the net death benefit of the policy.

(18) Life settlor -- An individual who:

(A) is the insured under an individual policy or a certificate holder under a group policy, and who does not have a catastrophic or life-threatening illness or condition; and

(B) enters into a life settlement contract with a life settlement company or attempts to do so through inquiry to, negotiation with, or by providing or consenting to the provision of confidential information to, a life settlement company or broker. The term does not include a life settlement company that assigns, sells, or otherwise transfers a policy that it has purchased from a life settlor and owner.

(19) Mature or matured --

(A) as it relates to viatical or life settlement brokers, occurs when the owner has received full payment of the settlement for the assignment, sale, or transfer of the policy that served as the basis for the viatical or life settlement; and

(B) as it relates to viatical or life settlement companies, occurs when the viator or life settlor has died.

(20) Net death benefit -- The amount of the death benefit under a policy to be purchased, less any outstanding debts or liens.

(21) Owner -- The person who has all the rights and responsibilities under the policy. This definition recognizes that, in some instances, the owner and viator or life settlor may not be the same person under the policy.

[ (1) Identity--The complete name, last known business address and last known business telephone number of a person, and, if the person is an entity rather than an individual, the form of the entity.]

(22)[ (2)] Person -- An individual, corporation, trust, partnership, association, or any other legal entity.

(23)[ (3)] Policy -- An individual life insurance policy, a rider to an individual life insurance policy, or a certificate or a rider to a certificate evidencing coverage under a group life insurance policy. This term does not include a rider to, or a provision of, a life insurance policy insuring the viator´s or life settlor´s spouse or dependent, providing an additional death benefit for accidental death, or future increases in the death benefit. [ The term also is used to refer to the death benefit of a policy (that is, a reference to selling or otherwise transferring a policy also encompasses selling, or otherwise transferring the death benefit of a policy or irrevocably designating a beneficiary to receive the death benefit).]

(24) Settlement application -- A written form provided by a viatical or life settlement company or broker to be completed by a viator or life settlor and owner for the purpose of applying to a viatical or life settlement company or broker to be considered by the company or broker for the sale of the policy insuring the life of a viator or life settlor.

(25) Settlement contract -- The written document evidencing the agreement entered into between a viatical or life settlement company and a viator or life settlor and owner that establishes the terms under which the viatical or life settlement company will pay compensation or anything of value in return for the viator´s or life settlor´s and owner´s assignment, sale, or transfer of the net death benefit or ownership of all or a portion of the policy or benefit which served as the basis for the viatical or life settlement.

[ (4) Referral agent--A person who, for compensation, refers or introduces a viator to a viatical settlement company or broker but does not advertise his or her services as a referral agent, the availability of viatical settlements or on behalf of any viatical settlement company or broker, or perform services or take part in negotiations relating to effecting a viatical settlement. A referral agent who makes five or more such referrals in a calendar year must register as a viatical settlement broker.]

(26) Trust -- An account or trust established by a viatical or life settlement company for the sole purpose of entering into viatical or life settlements wherein the funds payable to the owner are placed with a trustee to be paid to the owner on the fulfillment of the conditions of the viatical or life settlement contract.

(27)[ (5)] Viatical settlement -- A transaction whereby a written [ An] agreement [ that] is solicited, negotiated, offered, entered into, delivered, or issued for delivery in this state, under which a viatical settlement company[ person] acquires[ ,] through assignment, sale, or transfer, [ sale, devise, bequest, or otherwise,] a policy insuring the life of an individual who has [ with] a catastrophic or life-threatening illness or condition by paying the owner or certificate holder[ of the policy] compensation[ ,] or anything of value[ ,] that is less than the net [ expected] death benefit of the policy.

(28) Viatical or life settlement broker -- A person who is either a captive broker or an independent broker, and who for a commission or other form of compensation, or in the hopes of obtaining such compensation:

(A) offers or attempts to negotiate a viatical or life settlement between a viator or life settlor and owner and one or more viatical or life settlement companies;

(B) performs services related to the gathering, organization, or analysis of confidential information about a viator, life settlor, or owner, including contacting a viator, life settlor, or owner, or a viator´s or life settlor´s designee as provided in §3.1712 of this subchapter (relating to Contacting the Viator, Life Settlor, or Owner for Health Status Inquiries: Limits and Prohibited Practices) for the purpose of monitoring or tracking the viator´s or life settlor´s health status after a viatical or life settlement has been signed by all necessary parties and payments have been made to the owner; or

(C) refers or introduces a viator, life settlor, or owner to a viatical or life settlement company or another broker.

(D) The term does not include: an owner of a policy insuring the life of a viator or life settlor; a family member of a viator or life settlor who does not receive, or expect to receive, any form of compensation from a viatical or life settlement company or broker for referring a family member; an attorney, accountant, estate planner, financial planner, or individual acting under power of attorney from the viator, life settlor, or owner, who is retained to represent the viator, life settlor, or owner and whose compensation is paid entirely by the viator, life settlor, or owner or at the direction and on behalf of the viator, life settlor, or owner without regard to whether a viatical or life settlement is effected; an attorney or accountant representing the viator, life settlor, or owner in relation to the viatical or life settlement, who receives a contingent fee from the viator, life settlor, or owner; a person who solicits only potential investors in viatical or life settlements, and who does not in any way advertise, solicit, or promote viatical or life settlements in a manner that reasonably could attract viators, life settlors, or owners; or any physician acting within the scope of the physician´s medical license who provides medical analysis for the physician´s own patient or who, on a contract or employment basis, performs medical analysis for a person who performs services for a viatical or life settlement company or broker related to the gathering, organization, or analysis of confidential information about a viator or life settlor for the purpose of effecting a viatical or life settlement.

[ (6)] Viatical settlement broker -- A person, including an insurance agent licensed by the commissioner, who is not a viatical settlement company and who for a commission or other form of compensation, or in the hopes of obtaining such compensation:]

[ (A) offers or advertises the availability of viatical settlements;]

[ (B) offers or attempts to negotiate a viatical settlement between a viator and a viatical settlement company;]

[ (C) in regards to a potential viatical settlement, performs services relating to the gathering, organization or analysis of medical, financial or personal information about a viator or]

[ (D) acting as a referral agent, refers or introduces a viator to a viatical settlement company or broker five or more times in a calendar year.] The term does not include: an attorney, accountant, or person acting under power of attorney from the viator, who is retained to represent the viator and whose compensation is paid entirely by the viator without regard to whether a viatical settlement is effected; an attorney or accountant representing the viator in relation to the viatical settlement, who receives a contingent fee from the viator; a person who solicits only potential investors in viatical settlements, and who does not in any way advertise, solicit, or promote viatical settlements in a manner that reasonably could attract viators or any print, broadcast or other media which prints or broadcasts advertisements of a viatical settlement company or broker].

(29)[ (7)] Viatical or life settlement company -- A person , other than a viator, life settlor, or owner of an individual policy or certificate holder under a group policy insuring the life of a viator or life settlor, who enters into a viatical or life settlement with a viator or life settlor and owner or certificate holder [ either on the person's own behalf or as an attorney-in-fact or other agent for persons referenced in subparagraph (D) of this paragraph], or who attempts to do so through negotiation [ negotiations], solicitation, or acquisition of confidential [ medical, financial or personal] information from or about a viator , life settlor, or owner. The term does not include:

(A) a bank, savings bank, savings and loan association, credit union, or other licensed lending institution that takes an assignment of a policy as collateral for a loan;

(B) the issuer of a policy that makes a loan or pays benefits, including accelerated benefits, under the policy or in exchange for surrender of the policy;

(C) a financing entity[ any person who, within a three-year period, enters into viatical settlements with no more than one viator, provided that the person enters into no more than three viatical settlements with that viator]; or

(D) a trustee or escrow agent[ any person who may be a party to a viatical settlement, but whose sole activity related to the transaction is providing funds to effect the viatical settlement in exchange for future investment proceeds, and who has appointed in writing a registered viatical settlement company to act as the person's agent in such transactions].

(30)[ (8)] Viator -- An individual who:

(A) is the insured under an individual policy or a certificate holder under a group policy, and who has a catastrophic or life-threatening illness or condition [ owner or holder of a policy insuring the life of an individual who has a catastrophic or life-threatening illness or condition]; and

(B) enters into a viatical settlement contract with a viatical settlement company [ ,] or attempts to do so through inquiry to , [ or] negotiation with [ a viatical settlement company or broker, or through] , or by providing[ ,] or consenting to the provision of[ ,] confidential [ medical, financial or personal] information to a viatical settlement company or broker. The term does not include a viatical settlement company that assigns, sells , or otherwise transfers [ or pledges] a policy that it has purchased from a viator and owner.

(b) Insurance Code §§31.001, 31.002, 31.003, and 31.007 [ Article 1.01A, Insurance Code,] which include [ includes] definitions of "department" and "commissioner" and describe [ describes] the structure and duties of the Texas Department of Insurance, apply [ applies] to this subchapter and to Insurance Code Article 3.50-6A[ , Insurance Code].

§3.1703. Application for Certificate of Registration for Viatical or Life Settlement Companies or Brokers; [ and Initial] Fees [ and Reports].

(a) A [ Subject to the grace period allowed by subsection (e) of this section, a] person shall not engage in the business of [ act as a] viatical or life settlements in this state [ settlement company or broker] unless the person holds a certificate of registration issued by the department as required by this subchapter [ commissioner].

(b) A viatical or life settlement company or broker may hold no more than one certificate of registration of the same type in the same legal name at the same time.

(c) A viatical or life settlement company or broker doing viatical or life settlement business subject to the provisions of this subchapter shall have the viatical or life settlement company´s or broker´s certificate of registration issued in the company´s or broker´s legal name, and may only act within the scope of authority granted by the certificate of registration. If a person holds a certificate of registration authorizing the person to act as:

(1) a viatical settlement company or broker, that person need not obtain an additional certificate of registration to participate in a registered partnership or corporate entity of the same type in this state, but the partnership or corporate entity with which the person participates must hold, in its own legal name, a separate certificate of registration to conduct the business of viatical settlements in this state.

(2) a life settlement company or broker, that person need not obtain an additional certificate of registration to participate in a registered partnership or corporate agency of the same type in this state, but the partnership or corporate agency with which the person participates must hold, in its own legal name, a separate certificate of registration to conduct the business of life settlements in this state.

(d) Any registered viatical or life settlement company or broker may have additional offices or do business under assumed names as that term is defined in §19.901 of this title (relating to Definitions Concerning Conduct of Licensed Agents) without obtaining an additional certificate of registration; provided, each viatical or life settlement company or broker shall furnish the department with a list identifying any and all offices from which the viatical or life settlement company or broker will conduct viatical or life settlement business, and show any and all assumed names which the viatical or life settlement company or broker will utilize in conducting viatical or life settlement business at each of those offices.

(1) Where such a filing is required under the Assumed Business or Professional Name Act, Texas Business and Commerce Code §36.01, et seq., or any similar statute, the viatical or life settlement company or broker shall provide the department with a copy of the valid assumed name certificate reflecting proper registration of each assumed name utilized by the viatical or life settlement company or broker.

(2) The assumed name shall comply with subsection (e) of this section.

(e) A viatical or life settlement company or broker desiring to use assumed names in the conduct of viatical or life settlement business under a certificate of registration shall be subject to the requirements of §19.902 of this title (relating to One Agent, One License) except that a separate application shall not be required for a viatical or life settlement company or broker who conducts business under a single assumed name and registers that name with the department on the viatical or life settlement company´s or broker´s initial application for certificate of registration.

(f) Each person engaging in, or desiring to engage in, business as a viatical or life settlement company or broker in this state shall file with the department a completed application for certificate of registration in such form as the department may require. The application shall be signed and sworn to by the person. Persons may obtain forms for application for a certificate of registration by making a request to the Texas Department of Insurance, P.O. Box 149104, Austin, Texas, 78714-9107 or 333 Guadalupe, Austin, Texas, 78701, or by accessing the department´s website at www.tdi.state.tx.us.

[ To obtain a certificate of registration as a viatical settlement company, a person must apply to the department in the format prescribed by Figure 1 in §3.1718 of this title (relating to Application and Reporting Forms) (Form VIAT-CO.APP). The application form must be accompanied by:]

(g) Each completed application for certificate of registration, when filed with the department, shall be accompanied by[ :(1)] a two-year registration fee in the amount of $500[ $250,] if the applicant is a viatical or life settlement company, and $250 if the applicant is a viatical or life settlement broker [ in the form of a cashier's check or money order made payable to the Texas Department of Insurance]. All registration fees are non-refundable and non-transferable, except as otherwise provided in §3.1704(f) of this subchapter (relating to Renewal; Fees).

[ (2) samples of all forms that the company uses or plans to use to enter into viatical settlements with viators, and that must be approved by the department pursuant to §3.1706 of this title (relating to Approval of Forms Relating to Viatical Settlements);]

[ (3) the written informational materials that are required by §3.1708 of this title (relating to Required Informational Materials), and must be filed pursuant to §3.1707 of this title (relating to Required Filings for Informational Purposes);]

[ (4) samples of all advertising or other solicitation materials that the company is disseminating or plans to disseminate in Texas, and must be filed pursuant to §3.1707 of this title (relating to Required Filings for Informational Purposes);]

[ (5) (if the viatical settlement company is applying on or before March 1, 1997) historical data regarding the company's conduct of the business of viatical settlements with viators in Texas, in the format prescribed by Figure 3 in §3.1718 of this title (relating to Application and Reporting Forms) (Form VIAT-CO.RPT).]

(h) In addition to submitting the application and two-year registration fee required by subsection (g) of this section, a person engaging in, or desiring to engage in, business as a captive broker in this state shall submit to the department with his or her application for certificate of registration, a notice of exclusive representation from the viatical or life settlement company on whose behalf the applicant, as a captive broker, will solicit business. The notice shall include a certification from the viatical or life settlement company stating that the viatical or life settlement company desires to designate the applicant as its captive broker.

(i) A designation made under subsection (h) of this section continues in effect until it is terminated or withdrawn by the viatical or life settlement company. Such termination and withdrawal shall be in writing, a copy of which shall be sent to the department, no later than 10 calendar days after the date the designation is terminated and withdrawn.

(j) If the applicant is domiciled in another state, and if:

(1) the domiciliary state licenses or registers persons engaged in the business of viatical or life settlements, the applicant shall attach to the application for certificate of registration either:

(A) a current copy of a letter of good standing obtained from the regulatory body which issued the license or certificate of registration; or

(B) a copy of the applicant´s current license or certificate of registration issued by the domiciliary state.

(2) the domiciliary state does not license or register persons engaged in the business of viatical or life settlements, the applicant shall attach to the application for certificate of registration, a current copy of a letter of good standing obtained from the secretary of state or other regulatory body, as applicable, which maintains records relating to incorporation.

(k) If the applicant is domiciled in another state, the applicant shall complete and execute forms as required by the department for appointment of agent for service of process and for irrevocable consent to jurisdiction of the commissioner of insurance and Texas courts. Both forms shall be attached to the application for certificate of registration. The agent for service of process must be a person with a Texas address who has an established place of business and who can be easily located and served with notices, legal process, and papers.

(l) A partnership may file an application for certificate of registration to engage in business as a viatical or life settlement company or broker provided that all persons having control in the affairs of any such partnership are named in the application for certificate of registration, and the partnership submits with its application for certificate of registration, a copy of its certificate of registration as a registered partnership from the applicant´s domiciliary state.

(m) A corporation may file an application for certificate of registration to engage in business as a viatical or life settlement company or broker provided that the corporation submits with its application:

(1) a copy of its articles of incorporation and all amendments thereto, certified with original seal and/or signature by the applicant´s domiciliary state;

(2) a copy of its by-laws, signed by the applicant´s corporate secretary; and

(3) a copy of its certificate of authority, certified with original seal and/or signature by the applicant´s domiciliary state.

[ (c) To obtain a certificate of registration as a viatical settlement broker, a person must apply to the department in the format prescribed by Figure 2 in §3.1718 of this title (relating to Application and Reporting Forms) (Form VIAT-BR.APP). The application form must be accompanied by:]

[ (1) a registration fee in the amount of $250, in the form of a cashier's check or money order made payable to the Texas Department of Insurance;]

[ (2) (if the viatical settlement broker is not a referral agent) samples of all advertising or other solicitation materials that the broker is disseminating or plans to disseminate in Texas, as must be filed pursuant to §3.1707 of this title (relating to Required Filings for Informational Purposes);]

[ (3) a list identifying all viatical settlement companies or brokers which have paid or shared commissions with the broker in relation to viatical settlement transactions with viators in Texas, or with which the broker intends to transact business in or from Texas during the first year of registration;]

[ (4) (if the viatical settlement broker is applying on or before March 1, 1997) historical data regarding the broker's conduct of the business of viatical settlements in relation to viatical transactions with viators in Texas, in the format prescribed by Figure 4 in §3.1718 of this title (relating to Application and Reporting Forms) (Form VIAT-BR.RPT).]

(n) [ (d)] If an applicant for a certificate of registration to operate as a viatical or life settlement company or broker has complied with all application procedures in [ subsections (b) and (c) of] this section , and the department is satisfied that the applicant meets all legal requirements, the department[ commissioner] shall issue the applicant a certificate of registration to engage in business as a viatical or life settlement company or broker [ a certificate of registration] unless the department determines that the application should be denied based on any one or more of the factors set forth in Insurance Code Article 3.50-6A, [ §3.1716(a) of this title (relating to Enforcement)] or other applicable law. If the department denies the application, or if, at any time, the applicant no longer meets the requirements for registration, the procedure for the grant, denial, renewal, revocation, suspension, annulment, or withdrawal of a certificate of registration shall be governed by §1.32 of this title (relating to Licenses).[ The department shall provide written notice to an applicant of the denial of the application and the applicant may make a written request for a hearing to the Chief Clerk, Texas Department of Insurance, P.O. Box 149104, MC 113-1C, Austin, Texas 78714-9104, within 30 days after denial of the application by the department. The department may use the investigatory or subpoena powers referenced in §3.1716 of this title (relating to Enforcement) to perform any investigation of an applicant that the department deems necessary.]

(o) If there is a change to any information provided in an application for certificate of registration by an applicant, the viatical or life settlement company or broker shall submit written notification of the change to the department within 30 days of the change. This requirement includes changes in information that occur after the certificate of registration has been issued and during which time the certificate of registration remains valid and unexpired. Such notifications of change in information shall be separate from any other submission of information to the department; and

(1) each applicant shall at all times keep the department informed of both the applicant´s current mailing and physical addresses;

(2) the mailing and physical addresses on the most recent application or notification shall be considered the viatical or life settlement company´s or broker´s last known addresses for purposes of notice to the viatical or life settlement company or broker by the department.

(3) Nothing in paragraphs (1) and (2) of this subsection releases a registered viatical or life settlement company or broker relocating outside Texas from complying with subsections (j) - (m) of this section.

(p) A viatical or life settlement company or broker shall notify the department, and shall deliver a copy of any applicable order or judgment to the department not later than the 30th day after the date of the:

(1) suspension or revocation of the viatical or life settlement company´s or broker´s right to transact business in another state;

(2) receipt of an order to show why the viatical or life settlement company´s or broker´s license or certificate of registration in another state should not be suspended or revoked; or

(3) imposition of a penalty, forfeiture, or sanction on the viatical or life settlement company or broker for the violation of the laws of this state, any other state, or the United States.

(q) An applicant shall comply with the requirements of Chapter 19, Subchapter S of this title (relating to Fingerprint Card Requirements for Applicants for License).

(r) In addition to the information required in this section, the department may ask for other information necessary to determine whether the applicant complies with the requirements of Insurance Code Article 3.50-6A and this subchapter for purposes of issuing a certificate of registration to the applicant.

[ (e) Each viatical settlement company or broker which has filed an application for a certificate of registration and has submitted the accompanying materials required in this section on or before April 1, 1996, or the 90th day after the commissioner promulgates the sections of this subchapter, whichever date is earlier:]

[ (1) may do the business of viatical settlements until the commissioner approves the application, or the department issues a notice of denial regarding the application;]

[ (2) may continue to use the forms submitted pursuant to this section and §3,1706 of this title (relating to Approval of Forms Relating to Viatical Settlements), until the commissioner has completed the review of the forms and either has approved or disapproved them.]

[ (f) In complying with the reporting requirements of this section, viatical settlement companies or brokers shall not include the name of the viator, or in any other way compromise the anonymity of the viator, or the viator's family, spouse or significant other.]

[ (g) The registration of any viatical settlement company or broker with a principal place of business outside of Texas shall not be approved unless the application is accompanied by:]

[ (1) a written designation of an agent for service of process in Texas; and]

[ (2) a written irrevocable consent to the jurisdiction of the commissioner and Texas courts.]

[ (h) If there is a material change to any information provided in an application by a viatical settlement company or broker, the company or broker shall submit a new application containing the changed information.]

§3.1704. Renewal; Fees.

(a) Unexpired certificates of registration may be renewed every two years by filing with the department a completed application for renewal in such form as the department may require. Each renewal application, when filed, shall be accompanied by a two-year renewal fee of $500 if the renewal applicant is a viatical or life settlement company, and $250 if the renewal applicant is a viatical or life settlement broker. All renewal fees are nonrefundable and non-transferable, except as otherwise provided in subsection (f) of this section.

(b) If an applicant subsequently adds additional certificates of registration, the department may designate one expiration date per applicant to apply to all certificates of registration held by the applicant. The designated date shall be the date on which the initial certificate of registration would normally expire. For certificates of registration which would normally expire after the designated expiration date, renewal fees shall be adjusted pro rata on a monthly basis. The fee adjustment shall be for the renewal immediately following the institution of the designated expiration date. On each subsequent renewal, the applicant shall pay the full registration fee for each certificate of registration.

(c) If the renewal applicant is domiciled in another state, the renewal applicant shall comply with the requirements of §3.1703(j) - (m) of this subchapter (relating to Application for Certificate of Registration for Viatical or Life Settlement Companies or Brokers; Fees).

(d) Upon filing the completed renewal application and payment of the proper fee, the viatical or life settlement company´s or broker´s current certificate of registration shall continue in force until the renewal certificate is issued by the department or until the department has refused, for cause, to issue such renewal certificate as provided in Insurance Code Article 3.50-6A, or §3.1716 of this subchapter (relating to Denial, Suspension, or Revocation of Certificate of Registration; Enforcement), or other applicable law, and has given notice of such refusal in writing to the renewal applicant.

(e) If a viatical or life settlement company or broker does not intend to renew or elects to surrender its certificate of registration, the viatical or life settlement company or broker shall notify the department in writing. The company´s or broker´s written notification of nonrenewal or surrender shall be mailed not later than the 60th day before the date its current certificate of registration expires or is to be surrendered. The viatical or life settlement company or broker that is nonrenewing or surrendering its certificate of registration shall comply with paragraph (1) or (2) of this subsection.

(1) A viatical or life settlement company that has viatical or life settlements that will not mature by the date the current certificate of registration expires or is to be surrendered shall take one of the following actions:

(A) renew its current certificate of registration, subject to subsection (f) of this section, or not surrender the certificate of registration until the date the last viatical or life settlement has matured and file the report required by §3.1705 of this subchapter (relating to Reporting Requirements);

(B) sell the viatical or life settlements that have not matured and file the report required by §3.1705 of this subchapter; or

(C) appoint in writing a Texas registered viatical or life settlement company to continue to monitor the viator´s or life settlor´s health status for purposes of continuing the administration of the viatical or life settlement. Appointments shall comply with the following:

(i) The appointed viatical or life settlement company must agree in writing to make all inquiries to the viator or life settlor or the viator´s or life settlor´s designee in accordance with §3.1712 of this subchapter (relating to Contacting the Viator, Life Settlor, or Owner for Health Status Inquiries: Limits and Prohibited Practices), and include the transferred viatical or life settlement information in its annual reports required by §3.1705 of this subchapter.

(ii) The viatical or life settlement company making the appointment shall transfer all records pertaining to its viatical or life settlements to the appointed viatical or life settlement company; obtain written confirmation from the appointed viatical or life settlement company that the records for all transferred viatical or life settlements have been received; file the report required by §3.1705 of this subchapter; and provide the viator or life settlor and owner with the appointed company´s name, address, telephone number, and contact person.

(iii) Copies of the written agreements, confirmations, and reports required by clauses (i) and (ii) of this subparagraph shall be filed with the department no later than the date of expiration or surrender.

(2) A viatical or life settlement broker who elects to surrender, or not renew, the current certificate of registration, shall file the reports required by §3.1705 of this subchapter. A broker appointed by a viatical or life settlement company to provide tracking services who is nonrenewing or surrendering his/her certificate of registration shall:

(A) notify the viatical or life settlement company for which tracking services are being performed of the date the certificate of registration will expire or be surrendered; and

(B) transfer to the viatical or life settlement company all records utilized to track the viator or life settlor not later than the date the certificate of registration will expire or be surrendered.

(f) In the event that a viatical or life settlement company or broker taking one of the actions required by subsection (e)(1) or (e)(2) of this section is not able to fully complete one of the actions before its certificate of registration expires, the viatical or life settlement company or broker shall pay its full two-year renewal fee, and comply fully with subsection (e)(1) or (e)(2), as applicable, and thereafter surrender its certificate of registration to the department. Upon return of the certificate of registration, the viatical or life settlement company or broker shall be eligible for a pro rata, monthly-based refund of its renewal fee.

(g) The surrender of any viatical or life settlement company´s or broker´s certificate of registration to the department shall not operate to negate any offense committed prior to the effective date of the surrender. In addition, transmitting to the department any or all viatical or life settlement certificates of registration shall in no way affect any disciplinary proceedings by the department or by the commissioner of insurance in respect to any viatical or life settlement company or broker.

(h) Nothing in this section shall require the department to issue a renewal of a certificate of registration to any person.

§3.1705. Reporting Requirements.

(a) On or before March 1 of each year, each viatical or life settlement broker shall submit to the department, for the previous calendar year, a complete and accurate annual report containing the name and address of each viatical or life settlement company and any other brokers with whom the broker transacted the business of viatical or life settlements in Texas, and the number of transactions for each viatical or life settlement company or other broker. A viatical or life settlement broker who is non-renewing or surrendering the certificate of registration, shall file, upon nonrenewal or surrender, a complete and accurate report containing the information required by this subsection for the period from the latter of the last reporting period or the date of initial registration through the date of nonrenewal or surrender. The report shall be submitted as a hard copy and in electronic format as a text file in a comma-delimited format, unless prior to filing the report, the viatical or life settlement broker submits a written request and receives approval from the department to file only a hard copy. The report and/or written request to file only a hard copy shall be submitted to the department´s Filings Intake Division at the address specified in §3.1703(f) of this subchapter (relating to Application for Certificate of Registration for Viatical or Life Settlement Companies or Brokers; Fees). [ If a viatical settlement company has applied for a certificate of registration on or before March 1, 1997, it shall submit to the department quarterly reports, in the format prescribed by the form included as Figure 3 in §3.1718 of this title (relating to Application and Reporting Forms) (Form VIAT-CO.RPT), as such reports become due pursuant to the timetable specified on the first page of Figure 3. The report will consist of data relating to events or transactions that occurred during the three-month period preceding the report. Beginning March 1, 1997, viatical settlement companies shall submit reports to the department annually, as set forth in subsection (b) of this section.]

(b) On or before March 1 of each year,[ beginning on March 1, 1997,] each viatical or life settlement company registered to conduct business in this state[ companies] shall submit to the department for the previous calendar year, a complete and accurate[ an] annual report of all viatical or life settlement transactions in Texas, and a separate complete and accurate annual report of all viatical or life settlement transactions for all states in the aggregate. A viatical or life settlement company that is nonrenewing or surrendering its certificate of registration, upon nonrenewal or surrender shall file a complete and accurate report containing the information required by subsection (c) of this section for the period from the latter of the last reporting period or the date of initial registration through the date of nonrenewal or surrender[ , consisting of data relating to viatical settlement transactions with viators during the previous calendar year, as specified in Figure 3 and 7 in §3.1718 of this title (relating to Application and Reporting Forms) (Form VIAT-CO.RPT)].

(c) The viatical or life settlement company´s reports required by this section shall be submitted as a hard copy and in electronic format as a text file in a comma-delimited format, unless prior to filing the report, the viatical or life settlement company submits a written request and receives approval from the department to file only a hard copy. The reports and/or written request to file only a hard copy shall be submitted to the department´s Filings Intake Division at the address specified in §3.1703(f) of this subchapter. The reports shall contain the information set forth in paragraphs (1) - (7) of this subsection as follows:

(1) For each viatical or life settlement contracted during the reporting period:

(A) a unique identifying number or other consistent identifier that corresponds to each viator, life settlor, or owner in the report, as a means of identifying the viator, life settlor, or owner, in a manner that does not reveal any confidential information;

(B) date (month and year) the settlement contract was signed by all necessary parties;

(C) insurance carrier´s name and, if available, A.M. Best or other rating;

(D) age and mean life expectancy (in months) of the viator or life settlor at the time of contract;

(E) viator´s or life settlor´s and owner´s state of residence at the time of contract;

(F) face amount of policy purchased;

(G) net death benefit purchased;

(H) estimated total premiums to keep policy in force for mean life expectancy, and/or WP-Waiver of Premium in effect, or NA-not applicable because policy is paid up or no premiums are due;

(I) net amount paid to the owner (less any outstanding debts or liens);

(J) source of policy (B-Broker; D-Direct Purchase; SM-Secondary Market, i.e., previously purchased by another person);

(K) type of policy (I-Individual or G-Group);

(L) age of the policy at the time the viatical or life settlement contract was effected;

(M) primary ICD Diagnosis Code, in numeric format, as defined by the International Classification of Diseases, as published by the U.S. Department of Health and Human Services (for life settlors with no diagnosis code, use N/A); and

(N) type of funding (I-Institutional - e.g. a bank, corporation, company, non-individual entity; P-Private - e.g. an individual);

(O) status as of ending date (The allowable status codes are: Death, if applicable; N/A, if the date of death has not been determined or verified; Sold, if the settlement contract has been sold; or Appoint, if the settlement contract has been appointed to another registered settlement company.)

(2) For each viatical or life settlement where death has occurred during the reporting period:

(A) a unique identifying number or other consistent identifier that corresponds to each viator, life settlor, or owner in the report, as a means of identifying the viator, life settlor, or owner, in a manner that does not reveal any confidential information;

(B) date (month and year) the settlement contract was signed by all necessary parties;

(C) age and mean life expectancy (in months) of the viator or life settlor at time of contract;

(D) viator´s or life settlor´s and owner´s state of residence at the time of contract;

(E) net death benefit collected under the policy;

(F) amount of total premiums paid, and/or WP-Waiver of Premium in effect, or NA-not applicable because policy is paid up or no premiums are due;

(G) net amount paid to the owner (less any outstanding debts or liens);

(H) primary ICD Diagnosis Code, in numeric format, as defined by the International Classification of Diseases, as published by the U.S. Department of Health and Human Services (for life settlors with no diagnosis code, use N/A);

(I) date of death;

(J) amount of time (in months) between the date the viatical or life settlement contract was signed by all necessary parties, and the date of death;

(K) difference between the actual number of months the viator or life settlor lived after the date the contract was signed by all necessary parties, and the mean life expectancy used by the reporting viatical or life settlement company.

(3) the name and address of each viatical or life settlement company or broker from which the reporting company was referred a policy;

(4) the name and address of each viatical or life settlement company or broker to whom the reporting company referred a policy;

(5) the number of policies reviewed and rejected;

(6) the number of policies purchased in the secondary market as a percentage of total policies purchased;

(7) the name and address of any person whom the company utilizes to perform medical evaluations of any kind relating to viators or life settlors; and

(8) the name and address of any person whom the viatical or life settlement company utilizes or employs to monitor or track a viator´s or life settlor´s health status after a settlement contract has been signed by all necessary parties, and payment has been made to the owner.

[ (c) If a viatical settlement broker has applied for a certificate of registration on or before March 1, 1997, it shall submit to the department quarterly reports relating to viatical settlement transactions with viators in Texas, in the format prescribed by Figure 4 in §3.1718 of this title (relating to Application and Reporting Forms) (Form VIAT-BR.RPT), as such reports become due pursuant to the timetable specified on the first page of Figure 4. The report will consist of data relating to events or transactions that occurred during the three-month period preceding the report. Beginning March 1, 1997, viatical settlement brokers shall submit reports to the department annually, as set forth in subsection (d) of this section.]

(d) In addition to the information required in this section, the department may request any other information the department deems necessary to conduct a complete review of the viatical or life settlement company´s or broker´s conduct of business related to the assignment, negotiation, purchase, sale, or other business related to viatical and life settlements. [ On or before March 1 of each year, beginning on March 1, 1997, viatical settlement brokers registered in this state must submit to the department data relating to viatical settlement transactions with viators and in Texas that occurred during the previous calendar year, as specified in Figure 4 in §3.1718 of this title (relating to Application and Reporting Forms)] (Form VIAT-BR.RPT).]

(e) In complying with the reporting requirements of this section, a viatical or life settlement company[ companies] or broker[ brokers] shall not include any confidential information [ the name of the viator], or in any other way compromise the anonymity of any[ the] viator , life settlor, or owner, or the viator's , life settlor´s, or owner´s family members, spouse , or significant other.

(f) Any viatical or life settlement company or broker that fails or refuses to submit any information required by this section is subject to disciplinary action under §3.1716 of this subchapter (relating to Denial, Suspension, or Revocation of Certificate of Registration; Enforcement).

§3.1706. Form Filing Requirements and Approval, Disapproval, or Withdrawal of Forms.

(a) Upon issuance by the department of a viatical or life settlement certificate of registration, a viatical or life settlement company or broker shall file, for review or approval, any form it uses, or intends to use, to effect a viatical or life settlement contract in this state, prior to any use, issuance, or delivery of the form. A company or broker registered to conduct both viatical and life settlement business in this state may file a form for use in both the viatical and life settlement markets in accordance with subsection (g) of this section.

(b) Forms which must be filed include, but are not limited to, the following:

(1) settlement applications;

(2) settlement contracts, and any amendments thereto;

(3) disclosures, except as provided in subsection (f)(8) and (9) of this section;

(4) escrow or trust agreements;

(5) documents used to obtain or release confidential information, including documents used by the viatical or life settlement company or broker which in any way refer to, affect, request, or relate to a viatical or life settlement company´s or broker´s obtaining or releasing confidential information;

(6) acknowledgment forms, except as provided in subsection (f)(8) of this section; and

(7) any other form used by a viatical or life settlement company or broker to effect a viatical or life settlement contract in this state.

(c) All forms filed pursuant to this section shall be accompanied by a transmittal checklist, a copy of which is available from the department at the address specified in §3.1703(f) of this subchapter (relating to Application for Certificate of Registration for Viatical or Life Settlement Companies or Brokers; Fees). The transmittal checklist shall be completed and signed by a duly authorized representative or attorney of the viatical or life settlement company or broker, and shall include the following information:

(1) the name of the submitting viatical or life settlement company or broker and its registration number;

(2) a designated contact person for the filing, including the individual´s name, address, phone number, and if available, fax number and e-mail address. If the form filing is submitted by anyone other than the viatical or life settlement company or broker, the filing shall be accompanied by an attachment executed by an officer of the viatical or life settlement company or broker, designating the person submitting the filing as the contact for that filing;

(3) a statement indicating the type(s) of settlement for which the form is used (i.e. viatical, life, or both);

(4) a list of all submitted forms, and an explanation of the purpose and use of each form including, if applicable, a designation of any prototype form(s) used;

(5) if applicable, a list of the form numbers and approval dates of all previously approved forms with which the submitted form will be used, and a statement explaining when the submitted form will be used;

(6) a designation indicating whether the form is file and use or review and approval prior to use as those categories are described in subsection (d) of this section;

(7) a designation indicating whether the form is new, informational, substantially similar to a previously approved form, exact copy, substitution of a previously approved form, correction to a pending form, or a resubmission of a previously disapproved form, as those types are described in subsection (e) of this section; and

(8) any applicable information, attachments, and certifications specified in this section.

(d) Categories for viatical or life settlement form filings are file and use or review and approval prior to use, as follows:

(1) File and Use. A form filed under this category may be immediately used and delivered in this state until a request for corrections has been made, or the form has been disapproved by the department. A filing under this category shall include the information and certifications specified in subsection (f)(1) and (2) of this section. Any form that has been previously disapproved by the department pursuant to subsection (k) of this section is not eligible for filing under this category.

(2) Review and approval prior to use. A form filed under this category must be filed with the department not less than 60 days prior to the viatical or life settlement company´s or broker's intended use or delivery of such form. A filing under this category prohibits the viatical or life settlement company or broker from using or delivering such form prior to the end of 60 days from the date the form is received by the department, unless the department approves the form during the 60-day period. If the form has not been approved by the 60th day after the date the form is received by the department, the viatical or life settlement company or broker may use the form:

(A) when the form is approved by the department; or

(B) if the form has not been previously disapproved, or corrections have not been requested by the department at any time, and the viatical or life settlement company or broker submits to the department the certifications specified in subsection (f)(3) of this section.

(e) The types of viatical or life settlement form filings are new, informational, substantially similar to a previously approved form, exact copy, substitution of a previously approved form, corrections to a pending form, and resubmission of a previously disapproved form, as follows:

(1) New. A form which has not been previously reviewed or approved by the department under Insurance Code Article 3.50-6A and this subchapter, except for a form withdrawn by a viatical or life settlement company or broker pursuant to paragraph (6) of this subsection.

(2) Informational. A form which is submitted for informational purposes only.

(3) Substantially similar to a previously approved form. A form which is substantially similar to a form that was approved by the department after December 1, 2000. This type of form filing requires the information and certification specified in subsection (f)(1) and (4) of this section.

(4) Exact copy. A form which, except for the viatical or life settlement company´s or broker´s name, address, phone number, or other similar viatical or life settlement company´s or broker´s identification information, is an exact copy of a form approved by the department on or after December 1, 2000. This type of form filing requires the information and certifications specified in subsection (f)(1) and (4)(A) and (C) of this section, and will be approved as of the date of receipt by the department.

(5) Substitution of a previously approved form. A form which substitutes a form previously approved by the department on or after December 1, 2000, for the same viatical or life settlement company or broker wherein the previously approved form has not been issued, or otherwise used in Texas, and will not be used in Texas at any time. This type of form filing requires the information and certifications specified in subsection (f)(1) and (4) of this section.

(6) Correction to a pending form. A form containing corrections to a pending form submitted subsequent to the viatical or life settlement company receiving notification of the form´s deficiencies from the department. This type of form filing requires the information and certifications specified in subsection (f)(1) and (5) of this section, and shall be received by the department no later than 30 days following the date the viatical or life settlement company or broker receives oral or written notification from the department of the form´s deficiencies. If a corrected form is not received by the department within the 30 days following the date the viatical or life settlement company or broker receives notification of the form´s deficiencies, the form shall be considered withdrawn by the viatical or life settlement company or broker, and will receive no further consideration until it is refiled as a new form filing.

(7) Resubmission of a previously disapproved form. A form containing corrections to a form subsequent to the viatical or life settlement company receiving a disapproval letter from the department. This type of form filing requires the information and certifications specified in subsection (f)(1) and (7) of this section.

(f) A viatical or life settlement company or broker shall include the certification(s), attachments(s), and other information referred to in this section as follows:

(1) A viatical or life settlement company or broker, or its duly authorized representative or attorney filing any form with the department shall certify on the transmittal checklist that it has reviewed, and is familiar with, all applicable statutes and regulations of this state and of the United States, has reviewed the form filing, and to the best of their knowledge and belief, states that the filed form complies in all respects with the applicable statutes and regulations of this state and of the United States.

(2) A viatical or life settlement company or broker filing a form under subsection (d)(1) of this section shall, in addition to providing the certification specified in paragraph (1) of this subsection, certify to the following:

(A) that no corrections to the form have been requested by the department; and

(B) that the form has not been previously disapproved by the department.

(3) A viatical or life settlement company or broker filing a form under subsection (d)(2) of this section shall, in addition to providing the certification specified in paragraph (1) of this subsection, certify that the form will not be used until the form is approved by the department. If, following the 60th day from the date the form is received by the department, the viatical or life settlement company or broker elects to use, issue, or deliver such form prior to receiving approval from the department, the viatical or life settlement company shall provide the certifications specified in paragraphs (1) and (2) of this subsection.

(4) A viatical or life settlement company or broker submitting a form under subsection (e)(3), (4) or (5) of this section, shall provide the certification specified in paragraph (1) of this subsection, and shall provide the following information and certification(s):

(A) the form number and approval date of the previously approved form, including the company´s or broker´s name if different from the submitting company or broker;

(B) a summary of the difference(s) between the previously approved form and the submitted form, including a description of any deleted text. The submitted form shall clearly identify all changes. New or modified text shall be underlined; and

(C) a certification that no changes have been made to the form other than those identified.

(5) A viatical or life settlement company or broker submitting a form pursuant to subsection (e)(6) of this section shall provide the certification specified in paragraph (1) of this subsection, and shall provide the following information and certification(s):

(A) the form number of the pending form;

(B) the name of the department´s form review specialist who reviewed the form;

(C) the date of notification of any form deficiencies;

(D) the tracking number of the pending form as assigned by the department;

(E) a summary of the difference(s) between the previously reviewed form and the corrected form, including a description of any deleted text. The corrected form shall clearly identify all changes. New or modified text shall be underlined; and

(F) a certification that no changes have been made to the form other than those identified.

(6) A viatical or life settlement company or broker submitting a form pursuant to subsection (e)(5) of this section shall provide the certification specified in paragraph (1) of this subsection, and a certification that the original version of the form has not been issued in Texas, or otherwise used in Texas, and will not be used in Texas at any time.

(7) A viatical or life settlement company or broker submitting a form pursuant to subsection (e)(7) of this section shall provide the certification specified in paragraph (1) of this subsection, and shall provide the following information and certification(s):

(A) the form number of the disapproved form;

(B) the date of disapproval by the department; and

(C) the information and certification(s) specified in paragraph (5)(B),(D),(E), and (F) of this subsection.

(8) A viatical or life settlement company or broker utilizing either the prototype viatical or life settlement disclosure described in §3.1708(c) of this subchapter (relating to Required Disclosure), or the prototype viatical or life settlement acknowledgment form described in §3.1709(d) of this subchapter (relating to Application and Contract Forms: Required Provisions and Escrow/Trust Agreements), is not required to file the form under this section if the viatical or life settlement company or broker certifies on the transmittal checklist that no changes have been, or will be made, to the department´s language.

(9) A viatical or life settlement company or broker shall certify on the transmittal checklist either that the English/Spanish application disclosure:

(A) appearing on the submitted application is an exact copy of the language specified in §3.1709(a) of this subchapter and that no changes have been or will be made to the application disclosure; or

(B) will be attached as a supplement to the front of the submitted application and that no changes have been or will be made to the English/Spanish application disclosure. A viatical or life settlement company or broker making this certification is not required to file the supplement with the department.

(g) A company or broker registered to conduct both viatical and life settlement business in this state, and who submits a form for use in both the viatical and life settlement business shall certify that:

(A) the company or broker is lawfully registered in this state to conduct both viatical and life settlement business; and

(B) the company or broker will, when issuing the form to viators, life settlors, or owners, clearly delineate on the form itself, whether the form is being used to effectuate a viatical settlement or whether the form is being used to effectuate a life settlement.

(h) Any form filed pursuant to this section shall be:

(1) filled in with specimen language and specimen fill-in material, and shall not contain the confidential information of any viator, life settlor, or owner;

(2) submitted on 8 1/2 by 11-inch paper. Bound forms will not be accepted;

(3) submitted in typewritten, computer generated, or printer's proof format and be clearly legible. Handwritten forms or handwritten corrections will not be accepted;

(4) designated by a unique form number sufficient to distinguish it from all other forms used by the viatical or life settlement company or broker. The form number shall be located in the lower left-hand corner of the cover page or on the first page of the form, if visible with the cover closed.

(i) A form filed under this section may contain variable language, provided that the variable language is:

(1) bracketed; and

(2) accompanied by a clear explanation of how the material will vary and how it will be used.

(j) Form filings that are not accompanied by a completed transmittal checklist, or which do not contain all required information and/or certifications, will not be accepted for review by the department, and will be returned to the viatical or life settlement company or broker as incomplete.

(k) The department may disapprove any form filed pursuant to this section, or withdraw previous approval of any form, if:

(1) the form fails to comply with any applicable statutes or regulations of this state or the United States; or

(2) the content of the form is unjust, encourages misrepresentation, or is in any way deceptive.

(l) The department may request that corrections be made to a form to bring the form into compliance with the provisions of this subchapter, Article 3.50-6, or any law of this state or the United States.

(m) When the department makes a request for corrections, disapproves a form, or withdraws approval of a form pursuant to subsection (k), (l), or (q) of this section, the department may request that the viatical or life settlement company or broker replace the form previously used, issued, or delivered, with a corrected form, or correct the form by amendment. The department may also request that the viatical or life settlement company or broker discontinue using the form, if, prior to receiving approval from the department, any form has been used, issued , or delivered.

(n) The department shall send written notification of any approval or disapproval of any form filed under this section.

(o) The department may request any additional information necessary for a comprehensive review of any form.

(p) The viatical or life settlement company or broker may make a written request for hearing to the department's Chief Clerk at the address specified in §3.1703(f) of this subchapter upon receiving notification under subsection (k) of this section of any disapproval of a form by the department.

(q) The commissioner may, after notice and opportunity for hearing, withdraw any previous approval of a form, if any form violates or does not comply with Insurance Code Article 3.50-6A, this subchapter, or any law of this state or the United States. The commissioner may require the viatical or life settlement company or broker to either replace the form previously used or delivered with a corrected form, or correct the form by amendment.

§3.1707. Advertising, Sales and Solicitation Materials; Filing Prior to Use [ Required Filings for Informational Purposes].

(a) [ Each viatical company shall file with the department a copy of the written informational material required by §3.1708 of this title (relating to the Required Informational Materials), on or before the date the brochure is disseminated to viators.]

[ (b)] Upon issuance of a certificate of registration, each [ Each] viatical or life settlement company or broker shall file with the department all advertising or other solicitation materials used to market viatical or life settlements or the viatical or life settlement company´s [ company] or broker's services [ to viators or prospective viators] in this state, on or before the date such materials are [ published or] disseminated. [ Advertising submitted with the application for registration should be submitted to the address specified in §3.1706(e)(2) of this title (relating to Approval of Forms Relating to Viatical Settlements).] Advertising [ Subsequent] filings [ of advertising] should be filed with[ sent directly to] the department´s Advertising Unit [ of the Consumer Protection Division, Texas Department of Insurance, MC 111-2A,] at the address specified in §3.1703(f) of this subchapter (relating to Application for Registration for Viatical or Life Settlement Companies or Brokers; Fees) [ P.O. Box 149104, Austin, Texas 78714-9104 or 333 Guadalupe, Austin, Texas 78701].

[ (c) If a viator represented by an attorney requests any substantive revision in a contract effecting a viatical settlement, the viatical settlement company must file the contract, as revised, with the department, redacting all information made confidential by §3.1714 of this title (relating to Confidentiality). Provided that this submission is accompanied by a written certification from the individual stating that the viator has requested the substantive revision after consultation with the viator´s attorney the submission of the revised contract will be for informational purposes, rather than for prior approval.]

(b)[ (d)] The filings required by this section are for informational purposes only. Viatical and life settlement companies or brokers may use or disseminate the materials referenced in [ subsection (a)-(c) of] this section without the prior review [ approval] of the department.

§3.1708. Required Disclosure [ Informational Materials].

(a) With each application for a viatical or life settlement, the viatical or life settlement company or broker shall deliver to the viator or life settlor and owner [ applicant] written disclosures required by this section[ informational materials setting forth the company's full name and home office address].

(b) The written disclosures shall[ informational materials must include the following statements]:

(1) prominently display the viatical or life settlement company´s or broker´s full name, home office address, and telephone number; and

(2) disclose the following information:

(A) [ (1)] that individuals wishing to sell their policies[ "Persons with catastrophic or life-threatening illnesses or conditions] may have alternatives to viatical or life settlements . These alternatives may include[ , including] accelerated benefits offered by the issuer of the policy, loans secured by the policy , and surrender of the policy for cash value.[ "]

(B) [ (2)] that an individual [ A viator] may incur tax consequences by [ from] entering into a viatical or life settlement. [ "Persons interested in entering into a viatical settlement should consult their tax advisor."]

(C) [ (3)] that a[ A] viatical or life settlement may affect an individual´s [ a viator's] ability to receive supplemental social security income, public assistance and public medical services , including Medicaid. [ "Persons interested in entering into a viatical settlement should consult an attorney, financial advisor or social services agency regarding these potential consequences."]

(D) [ (4)] that the[ "The] proceeds of a viatical or life settlement [ payable to the viator] may not be exempt from [ the viator's] creditors, personal representatives, trustees in bankruptcy , and receivers in state or federal court.[ Persons interested in entering into a viatical settlement should consult an attorney or financial advisor regarding these potential consequences."]

(E) that all confidential information solicited or obtained by a viatical or life settlement company or broker about a viator, life settlor, or owner, including the viator´s, life settlor´s, or owner´s identity or the identity of family members, a spouse or significant other, if obtained in accordance with §3.1710(c)(2) of this subchapter (relating to Prohibited Practices Relating to Advertising and Solicitation; Applications and Contracts), is confidential, and shall not be disclosed in any form to any person, unless disclosure has been given by prior written consent from the viator, life settlor, or owner on a form which specifically identifies the person to whom the confidential information will be released, and the purpose for releasing the confidential information to that person.

[ (c) The written informational materials must explain:]

(F) [ (1)] how[ How] viatical or life settlements operate .[ ;]

(G) [ (2)] the owner´s[ The viator's] right to rescind a viatical or life settlement contract at any time prior to receipt of the settlement proceeds, but not later than the 15th day after the date [ either that the viator] the owner receives the viatical or life settlement proceeds . If the viator or life settlor dies during the 15-day rescission period, the viatical or life settlement contract shall be deemed to have been rescinded. The viatical or life settlement company shall refund the death benefit to the owner or beneficiaries designated by the owner in the viatical or life settlement contract for this purpose, and the death benefit returned to such beneficiary or beneficiaries shall be subject to the deduction of all viatical or life settlement proceeds previously paid, and if applicable, any premiums paid by the viatical or life settlement company.[, or the proceeds are placed in escrow, as allowed by §3.1709 of this title (relating to Application and Contract Forms: Required Provisions and Prohibited Practices]);]

(H) [ (3)] the [ The] viator's , life settlor´s, or owner´s right to know, upon request, the identity of any person who will receive or has received a commission or other form of compensation from the viatical or life settlement company or broker with respect to their [ the] viatical or life settlement and the amount and terms of such compensation .[ ;]

(I) [ (4)] the [ The] limits and options regarding contacts for determination of health status set forth in §3.1709(c)(5) and (6) of this subchapter (relating to Application and Contract Forms: Required Provisions and Escrow/Trust Agreements). [ §3.1709(b)(4) of this title, (relating to Application and Contract Forms: Required Provisions and Prohibited Practices) and §3.1712 of this title (relating to Contacting the Viator for Health Status Inquiries: Limits and Prohibited Practices);]

[ (5) Every viator's right to confidentiality under §3.1714 of this title (relating to Confidentiality);]

(J) [ (6)] that [ That] if the policy which[ that] is the subject of a viatical or life settlement is a joint policy, [ contains a provision for double or additional indemnity for accidental death,] or contains riders or other provisions insuring the lives of a spouse [ spouses], dependents, [ family members] or anyone else other than the viator or life settlor[ person with the catastrophic or life-threatening illness], there may be a possible loss of coverage [ the viatical settlement contract will affect those provisions or riders and may cause spouses, family members or others to lose the additional benefits afforded by those provisions or riders].

(K) that if the policy which is the subject of the viatical or life settlement contains a rider to, or a provision of, the policy providing an additional death benefit for accidental death, or a future increase in the death benefit, such death benefit remains payable by the insurance company to the beneficiary last named by the viator, life settlor, or owner, not including the viatical or life settlement company, or in the absence of a beneficiary, to the estate of the viator, life settlor, or owner.

(L) that entering into a viatical or life settlement contract will have an effect on payment of premiums and dispositions of proceeds, cash values, and dividends, and may cause other rights or benefits, including conversion rights and waiver of premium benefits that may exist under the policy, to be forfeited by the individual.

(M) that the individual may wish to contact an attorney, accountant, estate planner, financial planning advisor, their insurer, insurance agent, tax advisor, or social services agency regarding potential consequences resulting from entering into a viatical or life settlement.

(N) that the individual may wish to inquire if the viatical or life settlement broker is a captive broker, and explain that a captive broker does not actively market the viator´s, life settlor´s, or owner´s policy to various viatical or life settlement companies to find the best competitive offer, but instead only refers viators, life settlors, or owners to the viatical or life settlement company with whom the viatical or life settlement broker is employed or contracted.

(O) that the viator, life settlor, or owner may file a complaint by contacting the Texas Department of Insurance, Consumer Protection Division, Mail Code 111-1A, P. O. Box 149104, Austin, Texas 78714-9104 or 333 Guadalupe, Austin, Texas 78701, or by calling the department´s Consumer Help Line between 8 a.m. and 5 p.m., Central Time, Monday-Friday at 1-800-252-3439; by faxing a complaint to the department at 1-512-475-1771; by completing a complaint on-line at www.tdi.state.tx.us; or by e-mailing a complaint to consumerprotection@tdi.state.tx.us ; and

(3) comply with the plain language requirements prescribed in §3.602(b)(1)(A)-(C) of this title (relating to Plain Language Requirements), and shall contain the appropriate text required by this section, but shall not contain any material of an advertising nature, except for the viatical or life settlement company´s or broker´s logo-type.

(c) A viatical or life settlement company or broker may either develop and file for approval its own disclosure or utilize the applicable disclosure available from the department which may be obtained by making a request to the Life/Health Division at the address specified in §3.1703(f) of this subchapter (relating to Application for Certificate of Registration for Viatical or Life Settlement Companies or Brokers; Fees).

§3.1709. Application and Contract Forms: Required Provisions and Escrow/Trust Agreements[ and Prohibited Practices].

(a) With each [ All] application [ forms used to effect] for a viatical or life settlement, the viatical or life settlement company or broker shall deliver to the viator or life settlor and owner, [ settlements shall contain] the following information in English and in Spanish, which either must be displayed prominently and in bold print on the front page of the application, or on a supplement attached to the front of the application:

(1) In English: "Receipt of a ( INSERT: viatical* or life,** as applicable) [ viatical] settlement may affect your eligibility for public assistance programs such as medical assistance (Medicaid), Aid to Families with Dependent Children (AFDC), supplementary social security income (SSI), and drug assistance programs. The money you receive for your life insurance policy also may be taxable. Before completing a ( INSERT: viatical or life, as applicable) settlement contract, you are urged to consult with an attorney, accountant, estate planner, financial planning advisor, your insurer or insurance agent,[ a qualified] tax advisor , or a [ and with] social service agency [ agencies] concerning how receipt of a payment will affect you, your family, and your spouse´s eligibility for public assistance. For more information about ( INSERT: viatical or life, as applicable) settlements generally, contact the Texas Department of Insurance[ ,] at 1-800-252-3439."

(Insert either or both, as applicable:

* Viatical settlement -- A transaction whereby a written agreement is solicited, negotiated, offered, entered into, delivered, or issued for delivery in this state, under which a viatical settlement company acquires, through assignment, sale, or transfer of a policy insuring the life of an individual who has a catastrophic or life-threatening illness or condition, by paying the owner or certificate holder compensation or anything of value that is less than the net death benefit of the policy.

** Life settlement -- A transaction whereby a written agreement is solicited, negotiated, offered, entered into, delivered, or issued for delivery in this state, under which a life settlement company acquires, through assignment, sale, or transfer of a policy insuring the life of an individual who does not have a catastrophic or life-threatening illness or condition, by paying the owner or certificate holder compensation or anything of value that is less than the net death benefit of the policy.)

(2) In Spanish: "El aceptar una liquidación tipo ( INSERT: viáticos* or pago en vida**) podría afectar que usted pueda inscribirse en los programas de asistencia pública, tales como los de Asistencia Médica de Medicaid, Ayuda para Familias con Hijos Menores (AFDC), Ingreso Suplementario del Seguro Social (SSI) y otros programas de ayuda para la compra de medicamentos. Es posible que también tenga que pagar impuestos por el dinero que usted reciba por su seguro de vida. Antes de firmar cualquier acuerdo tipo ( INSERT: viáticos or pago en vida) lo exhortamos que consulte con un abogado, contador, planeador de patrimonios, consejero económico, su aseguradora o agente de seguros, consejero (perito) en materia de impuestos o con (y con) una agencia (las agencias) de servicios sociales para que se informe cómo el recibo de dichos pagos podría afectar su capacidad, la de su familia y la de su cónyuge para recibir asistencia pública. Para más información en general respecto a los acuerdos tipo ( INSERT: viáticos or pago en vida) llame al Departamento de Seguros de Texas al 1-800-252-3439."

["Aceptar un acuerdo *viático puede perjudicar su elegibilidad para programas de asistencia pública, tal como asistencia medica (Medicaid), ayuda a familias con hijos menores (AFDC), ingreso de suplemento de seguro social (SSI), y programas de ayuda para medicinas. El dinero que usted recibe por su póliza de seguro de vida puede llevar impuestos. Antes de aceptar un contrato de acuerdo viático se le recomienda úrgidamente que consulte con un asesor de impuestos competente. Asi mismo con agencias de servicio social, acerca de como recibir dichos pagos pueden afectar a su familia, y la elegibilidad de su cónyuge para asistencia publica. Para mas información sobre acuerdos de viático llame al Texas Department of Insurance al 1-800-252-3439."]

[ *viático - pagos por adelantado de sus beneficios en una póliza de vida. Un acuerdo donde se le paga parte de sus beneficios por su póliza antes de morir.]

(Insert either or both, as applicable)

*Pago Tipo Viáticos - Una transacción en la cual por medio de un contrato por escrito a cumplir en este estado se solicita, negocia, ofrece, compromete, establece o expide, que bajo dicho contrato una compañía de liquidación tipo viáticos adquiera, por medio de asignación, venta o transferencia, la póliza de seguro de vida de un individuo que padece de una enfermedad o padecimiento catastrófico o que amenaza la vida, al pagar al propietario o tenedor de la póliza una compensación o cualquier cosa de valor de menos cuantía que la suma neta del beneficio de muerte que estipula la póliza.

or

**Pago en Vida - Una transacción en la cual por medio de un contrato por escrito a cumplir en este estado se solicita, negocia, ofrece, compromete, establece o expide, que bajo dicho contrato una compañía de liquidación tipo pago en vida adquiera, por medio de asignación, venta o transferencia, la póliza de seguro de vida de un individuo que no padece de una enfermedad o padecimiento catastrófico o que amenaza la vida, al pagar al propietario o tenedor de la póliza una compensación o cualquier cosa de valor de menos cuantía que la suma neta del beneficio de muerte que estipula la póliza.

(b) All application and medical release forms signed by the viator, life settlor, or owner at the time of application shall contain the name, address, and phone number of the viatical or life settlement company or broker to whom the application is being made, and copies of the forms, including the Spanish/English disclosure, shall be given to the viator, life settlor, or owner at the time of application.

(c) All contracts [ forms of contract] used to effect viatical or life settlements shall contain the following:

(1) a provision that the viatical or life settlement contract together with the application, including any amendments and attached papers, if any, constitutes the entire viatical or life settlement contract between the parties to the contract, and no change to the viatical or life settlement contract shall be valid until approved by an executive officer of the viatical or life settlement company, and unless such approval be endorsed thereon or attached to the viatical or life settlement contract. The provision shall also state that no person, other than an executive officer of the company, has the authority to change the viatical or life settlement contract, or to waive any of its provisions, and that in the absence of fraud, all statements made by the viator or life settlor and owner shall be deemed representations and not warranties.

(2) a provision that the owner[ viator] may rescind the viatical or life settlement contract at any time, but not later than the 15th day after [ either] the date that the owner [ viator] receives the proceeds of the viatical or life settlement .[ ,] If the viator or life settlor dies during the rescission period, the viatical or life settlement contract shall be deemed to have been rescinded, and the viatical or life settlement company shall refund the death benefit to the owner or beneficiaries designated in the viatical or life settlement contract for this purpose. A refund of the death benefit to a beneficiary or beneficiaries under this paragraph is subject to repayment of all viatical or life settlement proceeds, and if applicable, any premium paid by the viatical or life settlement company [ or, at the option of the viatical settlement company, the date the proceeds are placed in escrow as provided by paragraph (2)(B) of this subsection].

(3) a provision that, at the option of the viatical or life settlement company, the proceeds may be placed into an escrow or trust account to effect payment to the owner.

(4) [ (2)] a provision that , within three business days, upon receipt from the owner [ viator] of documents to effect the transfer of the policy, the viatical or life settlement company may at its option either:

(A) make unconditional payment to the owner [ viator immediately], either in a lump sum or in installment payments in a manner not prohibited by §3.1710(c)(7) of [ subsection (c)(5) of] this subchapter (relating to Prohibited Practices Relating to Advertising and Solicitation; Applications, and Contracts)[ section]; or

(B) place [ pay] the proceeds of the settlement with a trustee or escrow agent, to be placed into [ to] an escrow or trust account [ managed by a trustee or escrow agent] in a financial institution [ national or state bank] that is a member of the Federal Deposit Insurance Corporation (FDIC), where such proceeds shall remain until:

(i) the proceeds are disbursed to the owner within three business days,[ viator] upon acknowledgment of the transfer of the policy by the issuer of the policy[ , or the expiration of the rescission period without rescission by the viator , whichever occurs later];

(ii) the proceeds are transferred to purchase an instrument used to effect installment payments in a manner not prohibited by §3.1710(c)(7) [ subsection (c)(6)] of this subchapter[ section]; or

(iii) the proceeds and premium paid by the viatical or life settlement company are returned to the viatical or life settlement company by the escrow agent or trustee upon notice of the owner´s [ viator's] rescission , including rescission due to the death of the viator, life settlor, or owner within the rescission period .[ ;]

[ (3) a provision that the forms used to effect the viatical settlement, together with the application, constitute the entire contract between the viatical settlement company and the viator;]

(5)[ (4)] a provision that the viator or life settlor may designate any [ adult] individual of legal age, in regular contact with the viator or life settlor, as the contact for all inquiries about the viator's or life settlor´s health status upon written notice providing the name, address and telephone number of the individual. The provision shall include:[ , and, if such designation is made, a viatical settlement company cannot make such an inquiry to the viator, unless the company is unable, after diligent effort, to contact the designee for more than 30 days. The viator or life settlor may change this designation at any time, upon written notice to the viatical or life settlement company;]

(A) the limitations on inquiry set forth in §3.1712 of this subchapter (relating to Contacting the Viator, Life Settlor, or Owner for Health Status Inquiries: Limits and Prohibited Practices); and

(B) a statement that the viator or life settlor may change this designation at any time upon written notice to the viatical or life settlement company.

(6) A provision that the viatical or life settlement company shall provide to the viator or life settlor and owner, the name, address, and telephone number of the viatical or life settlement company or broker that will contact the viator or life settlor or his or her designee as provided in §3.1712 of this subchapter, and shall notify the viator or life settlor and owner of any change in such information.

(7)[ (5)] a provision disclosing that the viatical or life settlement company has the right to assign,[ could] sell , or otherwise transfer the policy that is the subject of the viatical or life settlement to a person unknown to the viator, life settlor, or owner, without the viator's , life settlor´s, or owner´s consent , and if the viatical or life settlement company does assign, sell, or otherwise transfer said policy, the viatical or life settlement company will disclose to the viator, life settlor, or owner within 10 business days of the date of the assignment, sale, or transfer, the identity of the person or persons to whom the viatical or life settlement company has assigned, sold, or otherwise transferred said policy.[ ;]

[ (6) if the viatical settlement company intends to, sell, or otherwise transfer the policy that is the subject of the viatical settlement to a particular person or persons, a provision disclosing the company's intent to sell or otherwise transfer the policy, and the identity of the person or persons to whom the initial company proposes to sell or otherwise transfer the policy;]

[ (7) an acknowledgment page, which a prospective viator must sign before a notary, stating that the prospective viator acknowledges that he or she:]

[ (A) has a life-threatening illness;]

[ (B) has received and read the written informational materials required by §3.1708 of this title (relating to Required Informational Materials);]

[ (C) has received and read]all of the documents used to effect the viatical settlement;]

[ (D) is entering into the viatical settlement knowingly and voluntarily;]

(8) a provision defining how any notice required or permitted under the contract shall be given and delivered.

(9) a provision disclosing [ full disclosure regarding] what effect the viatical or life settlement will have on payment of premiums and disposition of proceeds, cash values and dividends . [ ,]

(10) a provision disclosing that if the policy that is the subject of the viatical or life settlement is a joint policy, [ contains a provision for double or additional indemnity for accidental death,] or contains riders or other provisions insuring the lives of a spouse [ spouses], dependents,[ family members] or anyone else other than the viator or life settlor, there may be a possible loss of coverage, and the viator or life settlor should contact their insurance company or their agent to determine if the coverage may be converted in order to avoid losing the coverage[ person with the life-threatening illness].

(11) an acknowledgment form, which a viator or life settlor and owner shall sign before a notary, stating that:

(A) either the viator has a catastrophic or life-threatening illness, or the life settlor does not have a catastrophic or life-threatening illness;

(B) the written disclosures required by §3.1708 of this subchapter (relating to Required Disclosure) have been received and read;

(C) all of the documents used to effect the viatical or life settlement have been received and read; and

(D) the viatical or life settlement contract is being entered into knowingly and voluntarily.

(d) A viatical or life settlement company may develop and file its own acknowledgement form required by subsection (c)(11) of this section, or may utilize the acknowledgment form available from the department, which may be obtained by making a request to the Life/Health Division at the address specified in §3.1703(f) of this subchapter (relating to Application for Certificate of Registration for Viatical or Life Settlement Companies or Brokers; Fees).

(e) If a viatical or life settlement company enters into a viatical or life settlement which allows the owner to retain an interest in the policy or the policy contains a provision, whether in the policy or attached by rider, providing an additional death benefit for accidental death or future increases in the death benefit, the viatical or life settlement contract or amendment shall contain a provision:

(1) that the viatical or life settlement company will effect the transfer of the amount of the net death benefit only to the extent or portion of the amount sold. Benefits in excess of the amount that is sold will be paid by the insurance company directly to the beneficiaries in accordance with the terms of the policy;

(2) that the additional death benefit for accidental death or future increases in the death benefit shall remain payable to the beneficiary last named by the viator, life settlor, or owner, not including the viatical or life settlement company or in the absence of a beneficiary, to the estate of the viator, life settlor, or owner;

(3) that the viatical or life settlement company will, upon acknowledgment of the perfection of the transfer, either:

(A) advise the owner, in writing, that the insurance company has confirmed the owner´s remaining interest in the policy; or

(B) send the owner a copy of the document sent from the insurance company that acknowledges the owner´s remaining interest in the policy;

(4) that defines the apportionment of premiums to be paid by the viatical or life settlement company and the owner. It is permissible for the viatical or life settlement contract, or amendment, to specify that all premiums will be paid by the viatical or life settlement company. The contract, or amendment, may also require the owner to reimburse the viatical or life settlement company for the premiums attributable to the remaining interest, including any premiums for the accidental death benefit or any increase in the death benefit subsequent to the viatical or life settlement contract.

(f) All viatical or life settlement contracts, in addition to meeting the other requirements of this section, shall contain:

(1) consistent terminology;

(2) a section defining key terms used in the viatical or life settlement contract;

(3) the name of the owner and insured;

(4) the number of the policy which serves as the basis for the viatical or life settlement contract;

(5) the name of the insurance company underwriting the policy;

(6) the amount of the net death benefit of the policy; and

(7) a signature line for the viatical or life settlement company´s representative, and the owner and insured, as applicable.

(g) A viatical or life settlement company that places the proceeds of the viatical or life settlement into an escrow or trust account pursuant to subsection (c)(3) or (c)(4)(B) of this section, shall comply with the following:

(1) the viatical or life settlement company shall establish no more than one escrow or trust account;

(2) the name of the registered viatical or life settlement company shall be included within the name of the escrow or trust account;

(3) the escrow agent shall not be any person under common control with a viatical or life settlement company or broker;

(4) the escrow or trust agreement shall contain:

(A) the name of the owner and insured:

(B) the number of the policy which serves as the basis for the viatical or life settlement contract;

(C) the name of the insurance company underwriting the policy;

(D) the name of the viatical or life settlement company purchasing the policy;

(E) the name, address, and telephone number of the escrow agent or trustee;

(F) the amount of proceeds placed into the escrow or trust account;

(G) all terms and conditions of the escrow or trust agreement;

(H) the name and address of the financial institution where the funds to be paid to the owner will be deposited;

(I) a description of the purpose of the escrow or trust account;

(J) the circumstances that will trigger disbursement of the funds from the escrow or trust account;

(K) the name of the person to whom the funds will be disbursed;

(L) the time restrictions or limitations for accepting assignment of the policy regarding the insurance company´s acceptance of the assignment or failure of the insurance company to acknowledge the assignment;

(M) if applicable, the process for required notices for communication if the viator or life settlor rescinds the viatical or life settlement contract pursuant to subsection (c)(2) of this section, or if the insurance company does not accept the policy assignment;

(N) the duties of the escrow agent or trustee;

(O) the designation of the escrow agent or trustee;

(P) the limits of liability for the escrow agent or trustee;

(Q) the process by which any dispute arising between the owner and the viatical or life settlement company and the escrow agent or trustee concerning the interpretation of the escrow or trust agreement is to be resolved; and

(R) a signature line for the viatical or life settlement company´s representative, the owner and insured, and the escrow agent or trustee.

(h) The viatical or life settlement company or broker shall provide, to the viator or life settlor and owner, a copy of the viatical or life settlement contract and all materials used to effect the viatical or life settlement, including, but not limited to, the application, a copy of the escrow or trust agreement, and any consent forms or any other document that the viatical or life settlement company or broker, as applicable, required the viator or life settlor and owner, or his or her representative, to sign in order to effect the viatical or life settlement. The viatical or life settlement contract and all other materials used to effect the viatical or life settlement shall be provided at no charge to the viator or life settlor and owner.

[ (c) Prohibited practices relating to applications and contracts. A viatical settlement company or broker shall not:]

[(1) condition the consideration of an application on exclusive dealing between the viator and the viatical settlement company or broker.]

[ (2) discriminate in the availability or terms of viatical settlements on the basis of race, color, national origin, creed, religion, occupation, geographic location, marital or family status, sexual orientation, age, gender, disability or partial disability (except when any such factor affects the life expectancy of the viator);]

[ (3) discriminate between viators with dependents and those without dependents;]

[ (4) enter into any viatical settlement that provides a payment to the viator that is unjust (In determining whether a payment is unjust, the commissioner may consider, among other factors, the life expectancy of the viator, the applicable rating of the insurance company that issued the subject policy by a rating service generally recognized by the insurance industry, regulators and consumer groups, and the prevailing discount rates in the viatical settlement market in Texas, or if insufficient data is available for Texas, the prevailing rates nationally or in other states that maintain such data.); or]

[ (5) enter into a viatical settlement in which payments of proceeds are made in installments, unless the settlement is effected through an annuity purchased from an insurance company licensed by this state or any other state in the United States, or through an escrow or trust account which provides for installment refunds and which is established by a bank licensed by this state or any other state in the United States.]

§3.1710. [ Advertising and Other Solicitation: ] Prohibited Practices Relating to Advertising and Solicitation; Applications and Contracts.

(a) No viatical or life settlement company or broker shall advertise or in any other way solicit business in a manner that is untruthful or misleading by fact or implication. In considering whether or not the advertising or other solicitation is untruthful or misleading, the department shall [ commissioner may] use the standards set forth in this subchapter, Insurance Code Article 21.21, [ Insurance Code,] and Chapter 21, Subchapter B of this title (relating to Insurance Advertising, Certain Trade Practices, and Solicitation) , or any other applicable law.

(b) No viatical or life settlement company or broker shall state or imply any advantage, right, or preference which, if granted or performed, would be a violation of any law of this state or the United States.

(c) No viatical or life settlement company or broker shall:

(1) condition the consideration of an application for a viatical or life settlement on the exclusive dealing between the viator or life settlor and owner and the viatical or life settlement company or broker;

(2) require any owner, viator, or life settlor to provide the identity of his or her parents, or any other information about his or her family members, including a spouse or significant other, as a prerequisite to considering an application or contract for a viatical or life settlement or for any other purpose, unless the owner, viator, or life settlor has designated a member of his or her family, a spouse, or a significant other as the contact person for health status information as provided in §3.1712 of this title (relating to Contacting the Viator, Life Settlor, or Owner for Health Status Inquiries; Limits and Prohibited Practices);

(3) discriminate in the availability or terms of viatical or life settlements on the basis of race, color, national origin, creed, religion, occupation, geographic location, marital or family status, sexual orientation, age, gender, disability or partial disability, unless it can be demonstrated that any such factor affects the life expectancy of the viator or life settlor;

(4) discriminate between viators or life settlors with dependents and those without dependents;

(5) enter into any viatical or life settlement contract without:

(A) obtaining the written consent of both the viator or life settlor and owner, if the two are separate individuals under the policy which is the subject of the viatical or life settlement; and

(B) making the disclosures required by §3.1708 of this subchapter (relating to Required Disclosure) to both the viator or life settlor and the owner;

(6) enter into any viatical or life settlement contract that provides a payment to the owner that is unjust. In determining whether a payment is unjust, the department may consider, among other factors, the life expectancy of the viator or life settlor, the applicable rating of the insurance company that insures the life of the viator or life settlor by a rating service generally recognized by the insurance industry, regulators and consumer groups, and the prevailing discount rates in the viatical or life settlement market in Texas, or if insufficient data is available for Texas, the prevailing rates nationally or in other states that maintain such data;

(7) enter into a viatical or life settlement contract in which payments of proceeds are made in installments, unless the settlement is effected through an annuity purchased from an insurance company licensed by this state or licensed by the state in which the annuity is purchased or through an escrow or trust account which provides for installment payments and which is established by a financial institution licensed by this state or any other state in the United States, and is also a member of the FDIC;

(8) enter into any viatical or life settlement in this state in which any form used to effect the settlement, including the escrow or trust agreement, contains a provision that either requires or limits a viator, life settlor, or owner to resolve a legal dispute with the viatical or life settlement company or broker in any state other than Texas, or makes any other state´s laws as the law applicable to the form;

(9) enter into any viatical or life settlement in which any form used to effect the settlement, including the escrow or trust agreement, contains a provision that requires the owner, viator, or life settlor to pay for policy premiums that cover any period of time after the date in which the ownership of the policy is transferred, except as provided in §3.1709(e)(4) of this subchapter (relating to Application and Contract Forms: Required Provisions and Escrow/Trust Agreements);

(10) retain any portion of the proceeds from the viatical or life settlement contract;

(11) intentionally misstate the life expectancy of any viator or life settlor for the purpose of evading the tax laws of the United States, or for any other purpose; or

(12) require any viator, life settlor, or owner to give the viatical or life settlement broker, company, or any person, a power-of-attorney, or designate the broker, company, or any person as his or her attorney-in-fact.

(d) No viatical or life settlement company or broker shall purchase benefits of a policy or rider which provides for additional death benefits for accidental death or future increases in the death benefit. Such additional death benefits shall remain payable to the beneficiary last named by the viator, life settlor, or owner, not including the viatical or life settlement company, or in the absence of a beneficiary, to the estate of the viator, life settlor, or owner.

§3.1711. Payment of Commissions or Other Forms of Compensation: Disclosure and Prohibited Practices.

(a) Upon request of the viator , life settlor, or owner [ or at or before the time a viatical settlement is executed], the viatical or life settlement company or broker, [ viatical settlement broker,] or both, shall disclose in writing to the viator , life settlor, or owner:

(1) the identity of any person who will receive a commission or other form of compensation from the viatical or life settlement company or broker with respect to the viatical or life settlement; and

(2) the amount and terms of the compensation.

(b) A viatical or life settlement company or broker shall not pay or offer to pay any referral or finder's fee, commission, or other compensation to a viator's or life settlor´s physician, attorney, accountant, social worker, case manager, individual acting under power-of-attorney, or other person providing medical, social, [ legal or] financial planning or other counseling services to the viator , life settlor, or owner.[ ;]

(c) Notwithstanding the manner in which the viatical or life settlement broker is compensated, a viatical or life settlement broker, except for a captive broker, is deemed to represent only the viator or life settlor and owner and owes a fiduciary duty to the viator or life settlor and owner to act according to the viator´s or life settlor´s and owner´s instructions and in the best interest of the viator or life settlor and owner.

§3.1712. Contacting the Viator , Life Settlor, or Owner for Health Status Inquiries: Limits and Prohibited Practices.

(a) If a viator or life settlor makes a designation of an individual as provided in §3.1709(c)(5) of this subchapter (relating to Application and Contract Forms: Required Provisions and Escrow/Trust Agreements), a viatical or life settlement company or broker shall not contact the viator, life settlor, or owner for health status information about the viator or life settlor, unless the viatical or life settlement company or broker is unable, after diligent effort, to contact the designee for more than 30 calendar days, subject to the restrictions set forth in subsection (b) of this section.[ No person shall contact a viator or the viator's designee as provided for in §3.1709(b)(4) of this title (relating to Application and Contract Forms: Required Provisions and Prohibited Practices), for determining the viator's health status, unless that person is registered as a viatical settlement company or broker in this state.]

(b) Once a viator , life settlor, or owner has entered into a [ viatical] settlement with a viatical or life settlement company, no viatical or life settlement company or broker shall contact the viator, life settlor, or owner, or the viator's or life settlor´s designee, to determine the viator's or life settlor´s health status more frequently than once every 30 days for viators or life settlors with a life expectancy of one year or less, and no more than once every three months for viators or life settlors with a life expectancy of more than one year, as determined at the time of viatical or life settlement contract. No person shall contact the viator, life settlor, owner, or designee for determining the health status of a viator or life settlor as provided in §3.1709(c)(5) and (6) of this subchapter, unless that person is registered as a viatical or life settlement company or broker in this state.

§3.1713. Assignment , Sale, or Transfer [ or Resale] of Policies: Disclosure [ and Prohibited Practices].

(a) Any [ As to viatical settlements executed after the effective date of this subchapter, any] viatical or life settlement company that assigns, sells , or otherwise transfers its interest in any policy that is the subject of a viatical or life settlement without providing [ making] the disclosures to the viator , life settlor, or owner as required by §3.1709(c)(7) [ §3.1709(b)(5) or (6)] of this subchapter[ title] (relating to Application and Contract Forms: Required Provisions and Escrow/Trust Agreements [ Prohibited Practices]) is subject to discipline by the commissioner under §3.1716 of this subchapter[ title] (relating to Denial, Suspension, or Revocation of Certificate of Registration; Enforcement).

(b) At the time a viatical or life settlement company assigns, sells , or otherwise transfers its interest in any policy that is the subject of a viatical or life settlement contract to any person not registered pursuant to this subchapter, the viatical or life settlement company[ purchaser or transferee] must appoint, in writing, another [ either the] viatical or life settlement company [ that entered into the viatical settlement] or broker registered in this state, [ or a broker who received commissions from the viatical settlement] to make all inquiries to the viator , life settlor, or owner, or the viator's or life settlor´s designee, regarding the health status of the viator or life settlor or any other matters. A viatical or life settlement company that assigns, sells , or otherwise transfers such a policy to a non-registered viatical or life settlement company or broker and fails to [ purchaser or transferee who does not] make such an appointment commits a violation of this section, and is subject to discipline by the commissioner under §3.1716 of this subchapter [ title (relating to Enforcement)].

§3.1714. Confidentiality.

(a) All confidential [ medical, financial or personal] information solicited or obtained by a viatical or life settlement company or broker about a viator , life settlor or owner, including the viator's , life settlor´s, or owner´s identity or the identity of family members, a spouse or a significant other, is confidential and shall not be disclosed in any form to any person, unless disclosure:

(1) is provided by prior written consent from the viator, life settlor, or owner on a form which specifically identifies the person to whom the confidential information will be released, and the purpose for releasing the confidential information to that person [ is necessary to effect the viatical settlement between the viator and the viatical settlement company and the viator or life settlor provides prior and knowing written consent to the disclosure or ];

(2) is provided to the department or financing entity in the form of statistical data from which the identity of the viator or life settlor and owner cannot be ascertained; [ traced, in response to the reporting requirements set forth in §3.1705 of this title (relating to Annual Reporting Requirements). and in Figures 3 and 4 contained in §3.1718 of this title (relating to Application and Reporting Forms); or]

(3) is provided to the department in response to a subpoena from the commissioner, pursuant to the enforcement powers made applicable by Insurance Code Article 3.50-6A, and [ set forth in] §3.1716 of this subchapter[ title] (relating to Denial, Suspension, or Revocation of Certificate of Registration; Enforcement ), or in response to a written request for information made pursuant to Insurance Code §38.001; or

(4) is provided to the department during the course of an examination by the department of the business and affairs of the viatical or life settlement company or broker, as provided in §3.1717 of this subchapter (relating to Examinations).

(b) All medical and financial information solicited or obtained by a viatical or life settlement company or broker about a viator, life settlor, or owner must be obtained by written consent. The written consent form may not provide for the confidential release of information for a period greater than 12 months, and shall not be used to track the on-going health status of any viator or life settlor after the owner and the viatical or life settlement company have entered into the viatical or life settlement contract.

(c) A viatical or life settlement company or broker shall not release any viator´s, life settlor´s, or owner´s confidential information to any person without first making a factual determination that:

(1) the releasing of any confidential information to that person is not in violation of any applicable provisions of the laws of this state, or of the United States, relating to the confidentiality of information;

(2) all [ All] persons to whom any [ the] confidential information [ referenced in subsection (a) of this section] is disclosed will [ pursuant to the viator's consent shall] maintain the confidentiality of such information[ ,] and not disclose it to any other person in any form[ ,] without prior and knowing written consent of the viator[ .] or life settlor and owner;

(3) all persons to whom any confidential information is released, have sufficient procedures implemented to prevent the accidental or unauthorized release of any viator´s or life settlor´s and owner´s confidential information; and

(4) the viatical or life settlement company or broker is not violating any law of this state or the United States by engaging in business with persons to whom it is releasing the confidential information of any viator, life settlor, and owner.

(d) In any enforcement action taken by the department for a violation of this section, in accordance with §3.1716 of this subchapter, it shall be the viatical or life settlement company´s or broker´s duty to establish sufficient evidentiary proof that the factual determinations referenced in subsection (c) of this section were made by the company or broker.

(e)[ (c)] Confidential [ The confidentiality of] information obtained by the [ department or the] commissioner pursuant to the subpoena powers set forth in §3.1716 of this subchapter[ title (relating to Enforcement)], is protected by the confidentiality provisions of either Insurance Code Article 1.10D or §§36.151 - 36.159 [ Article 1.19-1, Insurance Code,] depending on which provision [ article] is used to subpoena the information.

(f)[ (d)] All confidential[ medical] information solicited or obtained by a viatical or life settlement company or broker about a viator , life settlor, or owner [ further] shall be further subject to applicable provisions of the laws of this state[ ,] and of the United States[ , relating to the confidentiality of medical information].

§3.1715. Prohibition Against [ Operating as, or] Doing Business with[ ,] an Unregistered or Unlicensed Viatical or Life Settlement Company or Broker , Escrow Agent or Trustee.

(a) No [ person shall act as a viatical settlement company or broker without first obtaining a certificate of registration from the Texas Department of Insurance, except as allowed under the grace period set forth in §3.1703(e) of this title (relating to Registration and Initial Fees).]

[ (b) After expiration of the grace period set forth in §3.1703(e) of this title (relating to Registration and Initial Fees), no] viatical or life settlement company or broker registered pursuant to this subchapter shall participate in a viatical or life settlement, or pay or share commissions, with a person engaging in the business of viatical or life settlements who is required to be [ company or broker not] registered pursuant to this subchapter , but who has not obtained such registration.

(b) A viatical or life settlement company or broker shall not place funds with any escrow agent or trustee wherein any portion of the funds will be forwarded to an insurance company, or used by the escrow agent or trustee, to maintain the premiums on a policy that is the subject of a viatical or life settlement, unless the escrow agent or trustee holds an insurance agent´s license as required by Insurance Code Article 21.02 and Chapter 19 of this title (relating to Agents' Licensing).

(c) Any escrow agent or trustee who accepts funds from a viatical or life settlement company or broker or other person is required to obtain a license as an insurance agent under Insurance Code Article 21.02 and Chapter 19 of this title, if the escrow agent or trustee receives, collects, or transmits any premium of insurance.

§3.1716. Denial, Suspension, or Revocation of Certificate of Registration; Enforcement.

(a) Pursuant to Insurance Code Article 3.50-6A, if the commissioner determines, after notice and opportunity for hearing, that a viatical or life settlement company or broker, individually or through any officer, partner, member or key management personnel, employee, director, affiliate, subcontractor, shareholder or the registrant or applicant, escrow agent, or trustee has violated or fails to meet any provision of Insurance Code Article 3.50-6A, this subchapter, or any other insurance law of this state or another law made applicable to viatical or life settlement companies or brokers, the department may take any of the actions authorized by the insurance laws referenced in Insurance Code Article 3.50-6A, §3.

(b) A viatical or life settlement company or broker whose certificate of registration has been denied, suspended, or revoked under this section or pursuant to Insurance Code Article 3.50-6A shall not file another application for certificate of registration before the first anniversary of the effective date of the denial, suspension, or revocation or, if judicial review of the denial, suspension, or revocation is sought, the first anniversary of the date of the final court order or decree affirming the action. An application filed after that period shall be denied by the department unless the applicant shows good cause why the denial, suspension, or revocation of the previous certificate of registration should not bar the issuance of a new certificate of registration.

(c) Pursuant to Insurance Code Article 3.50-6A, §3, the department shall have all authority and powers in Insurance Code Article 1.10D against a person who violates any penal law while engaging in the business of viatical or life settlements or while attempting to defraud a viatical or life settlement company or broker.

(d) Pursuant to Insurance Code Article 3.50-6A, §3, in order to facilitate enforcement of Article 3.50-6A, other applicable laws and this subchapter, the department may utilize the provisions of Insurance Code Chapters 36 and 38 which apply to investigations of viatical or life settlement companies or brokers (whether registered by the department, applying for a certificate of registration or unlawfully doing business without a certificate of registration), or anyone else engaged in, or conducting transactions relating to the business of viatical or life settlements.

(e) The department may seek information made confidential by §3.1714 of this subchapter (relating to Confidentiality) through use of subpoenas issued pursuant to Insurance Code Article 3.50-6A, §3, Article 1.10D, Chapter 36, or through use of a written request for information made pursuant to Insurance Code §38.001. Confidential information obtained by the department shall remain confidential pursuant to the terms of either Insurance Code Chapter 38 or Article 1.10D, §5.

(f) Pursuant to Insurance Code Article 3.50-6A, §3, Insurance Code §§36.101, 36.205, and Chapter 40 apply to enforcement actions brought pursuant to this subchapter.

§3.1717. Examinations.

(a) The department may examine the business and affairs of any viatical or life settlement company or broker. The department may request any viatical or life settlement company or broker to produce any records, books, files, or other information reasonably necessary to ascertain whether or not the viatical or life settlement company or broker is acting or has acted in violation of the law or otherwise contrary to the interests of the public. The expenses incurred in conducting any examination shall be paid by the viatical or life settlement company or broker.

(b) For purposes of such examination, records of all transactions of viatical and life settlements shall be maintained by the viatical or life settlement company or broker and shall be available to the department for inspection during reasonable business hours. All viatical or life settlement companies and brokers doing business in this state shall maintain records of each viatical or life settlement in which it participates, until three years after the death of the viator or life settlor.



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