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You are here: Home . rules . 2006 . 1003b-059

SUBCHAPTER R. VIATICAL AND LIFE SETTLEMENTS

28 TAC §3.1703

1. INTRODUCTION. The Commissioner of Insurance adopts an amendment to §3.1703(q), concerning the fingerprint requirement for viatical and life settlement registration certificate applicants. The amendment is adopted without changes to the proposed text published in the August 4, 2006 issue of the Texas Register (31 TexReg 6173).

2. REASONED JUSTIFICATION. The adopted amendment is necessary to conform the existing fingerprint requirement for individuals applying for a viatical and life settlement registration certificate, including viatical and life settlement providers, provider representatives, and brokers, with the new fingerprint submission requirement that the Department is adopting in amended §1.501 and new §§1.503 - 1.509, which are also published in this edition of the Texas Register.

In the proposal the Department solicited comments as to whether having the amendment become effective no earlier than 90 days following the date the amendment is adopted by the Commissioner was a viable effective date. The Department received no comments concerning the effective date and thus considers that the 90 day time period for implementation is adequate. The Department also considers a date certain to be the most effective means for determining when individuals will be required to comply with the new fingerprint requirements, and therefore, the Department has determined that this amendment shall be effective January 1, 2007, the same date on which the new fingerprint requirements adopted in amended §1.501 and new §§1.503 - 1.509 become effective.

3. HOW THE SECTION WILL FUNCTION. The adopted amendment requires individuals applying for a viatical and life settlement registration certificate, including viatical and life settlement providers, provider representatives, and brokers, to comply with the new fingerprint submission requirement that the Department is adopting in amended §1.501 and new §§1.503 - 1.509, which are also published in this edition of the Texas Register.

4. SUMMARY OF COMMENTS. The Department did not receive any comments on the proposed amendment.

5. STATUTORY AUTHORITY. The amendment is adopted under the Occupations Code Chapter 53; Government Code Chapter 411; and Insurance Code Chapters 801, 1111, and 36. Occupations Code Chapter 53 states the general procedure a licensing authority must employ when considering the consequences of a criminal record on granting or continuing a person's license, registration or authorization. Occupations Code §53.025 authorizes a licensing authority to issue guidelines relating to its practice under Chapter 53. Government Code §411.106 authorizes the Department to receive criminal history information from the DPS regarding insurance company principals and officers and applicants for any license, permit, or other authorization issued by the Department to engage in a regulated activity under the Insurance Code. Government Code §§411.083 and 411.087 authorize the Department to obtain, through the DPS, criminal history information from the FBI on those individuals described in Government Code §411.106. Insurance Code §801.056 authorizes the Department to request that applicants, including the applicant's corporate officers, provide a complete set of fingerprints for a certificate of registration issued by the Department. Section 1111.003 authorizes the Commissioner to adopt reasonable rules governing the registration of persons engaged in the business of viatical and life settlements. Section 36.001 provides that the Commissioner of Insurance may adopt any rules necessary and appropriate to implement the powers and duties of the Texas Department of Insurance under the Insurance Code and other laws of this state.

7. TEXT.

§ 3.1703. Application for Certificate of Registration for Viatical or Life Settlement Providers, Provider Representatives, or Brokers; Fees.

(a) Any person engaging in the business of viatical or life settlements in this state must hold a certificate of registration issued by the department as required by this subchapter unless:

(1) the person's involvement in a viatical or life settlement transaction is limited solely to that of a referral agent; and

(2) any fee received by such person for making the referral consists of a nominal, fixed, one-time fee, that is not contingent upon the purchase or sale of the product for which the referral is made.

(b) A viatical or life settlement provider, provider representative, 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 provider, provider representative, or broker doing viatical or life settlement business subject to the provisions of this subchapter shall have the viatical or life settlement provider's, provider representative's, or broker's certificate of registration issued in the provider's, provider representative'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 or life settlement broker or provider representative, 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 business as a viatical or life settlement broker or provider representative in this state.

(2) a viatical or life settlement provider, 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 business as a viatical or life settlement provider in this state.

(d) Any registered viatical or life settlement provider, provider representative, 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 provider, provider representative, or broker shall furnish the department with a list identifying any and all offices from which the viatical or life settlement provider, provider representative, or broker will conduct viatical or life settlement business, and show any and all assumed names which the viatical or life settlement provider, provider representative, 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 provider, provider representative, 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 provider, provider representative, or broker.

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

(e) The legal name, including an assumed name, used by a viatical or life settlement provider, provider representative, or broker 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 provider, provider representative, or broker who conducts business under a single assumed name and registers that name with the department on the viatical or life settlement provider's, provider representative'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 provider, provider representative, 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.

(g) Each completed application for certificate of registration, when filed with the department, shall be accompanied by a two-year registration fee in the amount of $500 if the applicant is a viatical or life settlement provider, and $250 if the applicant is a viatical or life settlement provider representative or broker. All registration fees are non-refundable and non-transferable, except as otherwise provided in §3.1704(f) of this subchapter (relating to Renewal; Fees).

(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 provider representative 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 provider on whose behalf the applicant, as a provider representative, will solicit business. The notice shall include a certification from the viatical or life settlement provider stating that the viatical or life settlement provider desires to designate the applicant as its provider representative.

(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 provider. 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 domiciliary 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 provider, provider representative, 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 current copy of its certificate of existence as a registered partnership from the Texas Secretary of State.

(m) A corporation may file an application for certificate of registration to engage in business as a viatical or life settlement provider, provider representative, or broker provided that the corporation submits with its application for certificate of registration, a current copy of its certificate of existence as a registered corporation from the Texas Secretary of State.

(n) If an applicant for a certificate of registration to operate as a viatical or life settlement provider, provider representative, or broker has complied with all application procedures in this section, and the department is satisfied that the applicant meets all legal requirements, the department shall issue the applicant a certificate of registration to engage in business as a viatical or life settlement provider, provider representative, or broker 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, 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).

(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 provider, provider representative, 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 provider's, provider representative's, or broker's last known addresses for purposes of notice to the viatical or life settlement provider, provider representative, or broker by the department.

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

(p) A viatical or life settlement provider, provider representative, 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 provider's, provider representative's, or broker's right to transact business in another state;

(2) receipt of an order to show why the viatical or life settlement provider's, provider representative'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 provider, provider representative, 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 1, Subchapter D of this title (relating to Effect of Criminal Conduct).

(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.



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