The purpose of this Bulletin is to notify all regulated entities and other interested parties of the adoption by the Commissioner of Insurance of 28 TAC §§3.1701 - 3.1717, relating to viatical and life settlements. The rules implement the provisions of House Bill 792 (Texas Insurance Code Article 3.50-6A) passed during the 76 th Legislative Session.
The rules became effective February 22, 2001, and may be accessed from Texas Department of Insurance (TDI) website at http://www.tdi.state.tx.us by clicking on Rules: Proposed/Adopted under the Quick Access heading. TDI has taken into consideration that providers, brokers, and provider representatives may need time to review the new rules and make necessary modifications to be in compliance with the new rules as follows:
Application for Registration - All applications for registration, renewal, or change of information postmarked March 1, 2001 and later must be submitted using application form number VSLSAPP: 02/2001. Applications postmarked on or after that date which are submitted using forms VSLSAPP:0200, VIAT-CO.APP or VIAT-BR.APP will be returned with a notice indicating the incorrect application form was used and that the applicant must complete and return application form number VSLSAPP: 02/2001. Applications being reviewed by TDI will be reviewed and processed as submitted.
The new rules recognize "provider representative" as a new type of registration required for those persons who represent only one viatical and life settlement provider. Under the new rules, brokers are those persons who represent the viator, life settlor or owner and who seek offers from several providers. Registered brokers that fall under the definition of "provider representative" must submit application form number VSLSAPP:02/2001 along with a completed Notice of Exclusive Representation (located on page 9 of the application) to indicate a change of registration from a broker to a "provider representative".
Forms - All forms used to effect viatical and life settlements, including but not limited to disclosures, contracts, applications, release forms, and escrow or trust agreements, must be brought into compliance with the new viatical and life settlement rules. Viatical and life settlement providers, provider representatives, and brokers have until April 30, 2001 to bring their forms into compliance. All forms used on or after May 1, 2001 must be in compliance with the new rules. Additionally, as required by 28 TAC §3.1706(c), all forms filed with TDI on or after May 1, 2001 shall be accompanied by Form VLS Transmittal Checklist: 02/2001.
Viatical and life settlement providers, provider representatives, and brokers must review all their forms, including those forms previously approved by TDI, for compliance with the newly adopted rules. Any form found to be non-compliant must be corrected and refiled with TDI. To assist viatical and life settlement providers, provider representatives, and brokers, TDI has developed certain prototype forms which are not required to be filed if the viatical and life settlement provider, provider representative, or broker certifies that the prototype form(s) will be used. The prototype forms are: Life Settlement Consumer Disclosure form - LS APPL DISC: 02/2001; Viatical Settlement Consumer Disclosure form - VS APPL DISC: 02/2001; Life Settlement Consumer Acknowledgement form - LS-ACK FORM: 02/2001 and Viatical Settlement Consumer Acknowledgement form - VS-ACK FORM: 02/2001.
Reports - Reports containing 2000 data to be filed with TDI in March 2001 must be in the format outlined in the newly adopted rules, although it is recognized that all data elements were not collected. All data collected for viatical and life settlements on or after May 1, 2001 must comply with the requirements of 28 TAC §3.1705.
All forms referenced above are available by making a request to the Texas Department of Insurance, P. O. Box 149104, Austin, TX 78714-9104 or 333 Guadalupe, Austin, Texas, 78701, by calling 512-322-4245, or by accessing the TDI website at www.tdi.state.tx.us.
Ana Smith-Daley
Deputy Commissioner
Life and Health Division