The text as introduced · 3,112 words
89R4400 SCR-F
By: Hull
H.B. No. 2221
A BILL TO BE ENTITLED
AN ACT
relating to certain trade practices related to life insurance,
annuity contracts, and accident and health coverage.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. The heading to Title 9, Insurance Code, is
amended to read as follows:
TITLE 9. PROVISIONS APPLICABLE TO LIFE INSURANCE, ANNUITY
CONTRACTS, AND ACCIDENT AND HEALTH COVERAGES
SECTION 2. Title 9, Insurance Code, is amended by adding
Chapter 1702 to read as follows:
CHAPTER 1702. REGULATION OF CERTAIN TRADE PRACTICES
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 1702.001. PURPOSE. The purpose of this chapter is to:
(1) set forth uniform standards of prohibited acts and
practices for life insurance, annuity contracts, accident and
health insurance, and health care plans; and
(2) provide for more uniformity in well-recognized
exceptions to existing rebate and discrimination laws for certain
value-added services, acts, or practices recognized in existing law
or contained in uniform model laws developed and recommended by the
National Association of Insurance Commissioners.
Sec. 1702.002. DEFINITIONS. In this chapter:
(1) "Agent" means a person authorized to act as an
insurance agent as defined by Section 4001.003.
(2) "Consumer" means a policyholder or potential
policyholder, a certificate holder or potential certificate
holder, an insured or potential insured, a contract holder or
potential contract holder, an enrollee or potential enrollee, or an
applicant for insurance, an annuity, or health care plan coverage.
(3) "Enrollee" and "health care plan" have the
meanings assigned by Section 843.002.
(4) "Insurer" means an insurance company, including a
reciprocal or interinsurance exchange, mutual insurance company,
capital stock company, Lloyd's plan, fraternal benefit society,
group hospital service corporation, or other legal entity
authorized to engage in the business of life, accident, or health
insurance or annuities in this state.
(5) "Loss-control or value-added product or service"
means a product or service offered or provided by an insurer, health
maintenance organization, or agent, by or through an employee,
affiliate, or third-party representative, to an insured,
annuitant, or enrollee at no or reduced cost when such products or
services are not specified in the insurance policy, annuity
contract, or health care plan contract and that:
(A) relates to the insurance, annuity, or health
care plan coverage; and
(B) is primarily designed to do one or more of the
following:
(i) provide loss mitigation or loss
control;
(ii) reduce claim costs or claim settlement
costs;
(iii) provide education about liability
risks or risk of loss to persons or property;
(iv) monitor or assess risk, identify
sources of risk, or develop strategies for eliminating or reducing
risk;
(v) enhance health;
(vi) enhance financial wellness through
items such as education or financial planning services;
(vii) provide post-loss services;
(viii) provide incentives for behavioral
changes to improve the health or reduce the risk of death or
disability of an insured, annuitant, or enrollee; or
(ix) assist in the administration of
employee or retiree benefit insurance, annuity, or health care plan
coverage.
Sec. 1702.003. APPLICABILITY OF CHAPTER: LIFE INSURANCE AND
ANNUITIES. Except as otherwise provided by this chapter, this
chapter applies to an insurance company writing life insurance and
annuities in this state, including:
(1) a stock life insurance company;
(2) a mutual life insurance company, including a
mutual life assessment company;
(3) a stipulated premium life insurance company; and
(4) a fraternal benefit society authorized under
Chapter 885.
Sec. 1702.004. APPLICABILITY OF CHAPTER: ACCIDENT AND
HEALTH. Except as otherwise provided by this chapter, this chapter
applies to:
(1) an insurer authorized to engage in the business of
accident and health insurance in this state, including:
(A) a life, health, and accident stock insurance
company;
(B) a mutual insurance company, including:
(i) a mutual life insurance company; and
(ii) a mutual assessment life insurance
company;
(C) a local mutual aid association;
(D) a mutual or natural premium life or casualty
insurance company;
(E) a general casualty company;
(F) a nonprofit hospital, medical, or dental
service corporation, including a corporation operating under
Chapter 842;
(G) a Lloyd's plan operating under Chapter 941;
(H) a reciprocal or interinsurance exchange
operating under Chapter 942; and
(I) any other type of insurer required by law to
be authorized by the department to issue accident and health
insurance policies; and
(2) a health maintenance organization operating under
Chapter 843.
Sec. 1702.005. CONSTRUCTION. Nothing in this chapter may
be construed to:
(1) permit conduct that is an unfair method of
competition or a false, misleading, or deceptive act or practice
under Section 17.46, Business & Commerce Code, or Chapter 541 of
this code; or
(2) prohibit an insurer, health maintenance
organization, or agent from offering or giving to a consumer, for
free or at a discounted price in a manner that is not unfairly
discriminatory to consumers of the same class and of essentially
the same hazard, a loss-control or value-added product or service
relating to the risks covered under the relevant policy or
contract, subject to Sections 1702.051 and 1702.053.
Sec. 1702.006. RULES. The commissioner may adopt
reasonable rules necessary to implement this chapter.
SUBCHAPTER B. ANCILLARY PRODUCTS OR SERVICES AND PROHIBITED
INDUCEMENTS
Sec. 1702.051. LOSS-CONTROL OR VALUE-ADDED PRODUCTS AND
SERVICES. (a) The cost to an insurer, health maintenance
organization, or agent for a loss-control or value-added product or
service provided to an insured, annuitant, or enrollee must be
reasonable in comparison to that insured's, annuitant's, or
enrollee's premiums or coverage for the class of the insured's,
annuitant's, or enrollee's policy or contract.
(b) If an insurer, health maintenance organization, or
agent provides a loss-control or value-added product or service to
an insured, annuitant, or enrollee, the insurer, health maintenance
organization, or agent must ensure that the insured, annuitant, or
enrollee is provided with contact information to assist the
insured, annuitant, or enrollee with questions regarding the
product or service.
(c) An insurer, health maintenance organization, or agent
must:
(1) base the availability of the loss-control or
value-added product or service on documented objective criteria;
(2) offer the product or service in a manner that is
not unfairly discriminatory; and
(3) maintain the documented criteria and produce the
criteria on request by the department.
Sec. 1702.052. PROHIBITED INDUCEMENTS. Except as provided
by this chapter, an insurer, health maintenance organization, or
agent may not:
(1) offer or provide insurance, annuity, or health
care plan coverage as an inducement to the purchase of another
policy or contract; or
(2) otherwise use "free," "no cost," or words of
similar meaning in an advertisement.
Sec. 1702.053. NON-CASH GIFTS, CHARITABLE DONATIONS,
RAFFLES, OR OTHER ITEMS AND SERVICES. (a) An insurer, health
maintenance organization, or agent may offer or provide non-cash
gifts, items, or services, including meals, to or charitable
donations on behalf of a consumer, in connection with the
marketing, sale, purchase, or retention of policies or contracts of
insurance, annuity, or health care plan coverage, provided:
(1) the cost does not exceed an amount determined to be
reasonable by the commissioner per policy or contract year per
term;
(2) the offer is made in a manner that is not unfairly
discriminatory; and
(3) the consumer is not required to purchase, continue
to purchase, or renew a policy or contract in exchange for the gift,
item, or service.
(b) An insurer, health maintenance organization, or agent
may conduct raffles or drawings to the extent permitted by the laws
of this state, provided:
(1) there is no financial cost to participate;
(2) the raffle or drawing does not obligate
participants to purchase, continue to purchase, or renew a policy
or contract;
(3) the prizes are not valued in excess of a reasonable
amount determined by the commissioner and the raffle or drawing is
open to the public; and
(4) the raffle or drawing is offered in a manner that
is not unfairly discriminatory.
SUBCHAPTER C. PRACTICES RELATED TO LIFE AND ANNUITY COVERAGE
Sec. 1702.101. APPLICABILITY OF SUBCHAPTER. This
subchapter applies only to an insurer described by Section
1702.003.
Sec. 1702.102. PROHIBITED REBATES AND INDUCEMENTS. (a)
Except as provided by this subchapter, an insurer or agent may not,
with respect to business written in this state:
(1) knowingly permit the making of, offer to make, or
make a life insurance policy or annuity contract or an agreement
regarding the policy or contract, other than as plainly expressed
in the issued policy or contract;
(2) directly or indirectly pay, give, or allow or
offer to pay, give, or allow as inducement to enter into a life
insurance policy or annuity contract either:
(A) a rebate of premiums payable on the policy or
contract; or
(B) a special favor or advantage in the dividends
or other benefits of the policy or contract or a valuable
consideration or inducement not specified in the policy or
contract; or
(3) give, sell, or purchase or offer to give, sell, or
purchase in connection with a life insurance policy or annuity
contract or as inducement to enter into the policy or contract:
(A) stocks, bonds, or other securities of an
insurer or other corporation, association, or partnership;
(B) dividends or profits accrued from the stocks,
bonds, or securities; or
(C) anything of value not specified in the
contract.
(b) An insurer may not permit an agent, officer, or employee
to issue or deliver as an inducement to enter into a life insurance
policy or annuity contract:
(1) company stock or other capital stock;
(2) a benefit certificate or share in a corporation;
(3) a security; or
(4) a special or advisory board contract or any other
contract promising returns or profits.
(c) This section does not prohibit issuing or delivering a
participating insurance policy or annuity contract otherwise
authorized by law.
Sec. 1702.103. PROHIBITED DISTINCTIONS AND DISCRIMINATION.
Except as provided by Section 1702.104, an insurer may not, with
respect to a life insurance policy or annuity contract, make or
permit a distinction or unfair discrimination between individuals
of the same class and equal life expectancy regarding:
(1) the rate charged;
(2) the dividend or other payable benefit; or
(3) any of the other terms of the policy or contract.
Sec. 1702.104. EXEMPTIONS. The following are not
considered to constitute a rebate, inducement, distinction, or
discrimination prohibited by this subchapter:
(1) for a life insurance policy or annuity contract, a
bonus payment to a policyholder or contract holder or other
abatement in the policyholder's or contract holder's premiums
provided wholly or partly out of surplus accumulated from
nonparticipating policies or contracts if the payment or abatement:
(A) is fair and equitable to policyholders and
contract holders; and
(B) is in the best interests of the insurer and
the insurer's policyholders and contract holders;
(2) for a life insurance policy issued on an
industrial debit plan, an allowance to a policyholder who has
continuously for a specified period made premium payments directly
to the insurer's office that is in an amount that fairly represents
the insurer's savings in collection expenses;
(3) for a group insurance policy, a readjustment in
the rate of premium based on the loss or expense experience under
the policy at the end of a policy year if the adjustment is
retroactive for only that policy year;
(4) for an annuity contract, a waiver of surrender
charges under the contract when the contract holder exchanges that
contract for another annuity contract issued by the same insurer or
an affiliate of the same insurer that is part of the same holding
company group if:
(A) the waiver and the exchange are fully,
fairly, and accurately explained to the contract holder in a manner
that is not deceptive or misleading; and
(B) the contract holder is given credit for the
time that the previous contract was held in determining any
surrender charges under the new contract;
(5) in connection with an offer or sale of a life
insurance policy or annuity contract, a promotional advertising
item, educational item, or traditional courtesy commonly extended
to consumers and that is valued at $25 or less; or
(6) any loss-control or value-added service or product
or other item allowed by Subchapter B.
SUBCHAPTER D. PRACTICES RELATED TO ACCIDENT AND HEALTH COVERAGE
Sec. 1702.151. APPLICABILITY OF SUBCHAPTER. This
subchapter applies only to an insurer or health maintenance
organization described by Section 1702.004.
Sec. 1702.152. PROHIBITED REBATES AND INDUCEMENTS. (a)
Except as provided by this subchapter or another provision in this
code, with respect to accident and health insurance or health care
plan coverage written in this state, an insurer, health maintenance
organization, or agent may not:
(1) knowingly permit the making of or offering of,
offer to make, or make an accident and health insurance policy or
health care plan contract or an agreement regarding the policy or
contract other than as plainly expressed in the issued policy or
contract;
(2) directly or indirectly pay, give, or allow or
offer to pay, give, or allow as an inducement to enter into an
accident and health insurance policy or health care plan contract:
(A) a rebate of premiums payable on the policy or
contract; or
(B) a special favor or advantage in the dividends
or other benefits of the policy or contract or a valuable
consideration or inducement not specified in the policy or
contract; or
(3) give, sell, or purchase or offer to give, sell, or
purchase in connection with an accident and health insurance policy
or health care plan contract or as an inducement to enter into the
policy or contract:
(A) stocks, bonds, or other securities of an
insurer or other corporation, association, or partnership;
(B) dividends or profits accrued from the stocks,
bonds, or securities; or
(C) anything of value not specified in the policy
or contract.
(b) An insurer or health maintenance organization may not
permit an agent, officer, or employee to issue or deliver as an
inducement to entering into an insurance policy or health care plan
contract:
(1) company stock or other capital stock;
(2) a benefit certificate or share in a corporation;
(3) securities; or
(4) a special or advisory board contract or any other
contract promising returns or profits.
(c) This section does not prohibit an insurer or health
maintenance organization from issuing or delivering a
participating insurance policy or health care plan contract
otherwise authorized by law.
Sec. 1702.153. PROHIBITED DISCRIMINATION AND DISTINCTIONS.
Except as provided by Section 1702.154 and other applicable
provisions in this code specific to particular types of accident
and health coverage or health care plan coverage, an insurer or
health maintenance organization may not, with respect to an
accident and health insurance policy or health care plan contract,
make or permit a distinction or an unfair discrimination between
individuals of the same class and equal life expectancy regarding:
(1) the rate charged;
(2) the dividend or other payable benefit; or
(3) any of the other terms of the policy or contract.
Sec. 1702.154. EXEMPTIONS. The following are not
considered a rebate, inducement, or discrimination prohibited by
this subchapter:
(1) for an accident and health policy or a health care
plan contract, a bonus payment to a policyholder or contract holder
or other abatement in the policyholder's or contract holder's
premiums provided wholly or partly out of surplus accumulated from
nonparticipating policies or contracts if the bonus or abatement:
(A) is fair and equitable to policyholders or
contract holders; and
(B) is in the best interests of the insurer or
health maintenance organization and its policyholders or contract
holders;
(2) for a group insurance policy or health care plan
contract, a readjustment in the rate of premium based on the loss or
expense experience under the policy or contract at the end of a
policy or contract year if the adjustment is retroactive for only
that policy or contract year;
(3) in connection with an offer or sale of an accident
and health insurance policy or health care plan contract, a
promotional advertising item, educational item, or traditional
courtesy commonly extended to consumers and that is valued at $25 or
less; or
(4) a loss-control or value-added product or service
or other item allowed by Subchapter B.
Sec. 1702.155. PROGRAMS PROMOTING DISEASE PREVENTION,
WELLNESS, AND HEALTH. (a) An insurer issuing an accident and
health insurance policy or a health maintenance organization
issuing a health care plan contract may establish premium
discounts, rebates, or a reduction in otherwise applicable
copayments, coinsurance, or deductibles, or any combination of
those incentives, for an insured or enrollee who participates in
programs promoting disease prevention, wellness, or health.
(b) A discount, rebate, or reduction established under this
section is not considered a prohibited rebate or inducement or
unfair discrimination.
SECTION 3. Section 81.001(c), Insurance Code, is amended to
read as follows:
(c) This section does not apply to conduct that is:
(1) a violation that is ongoing at the time the
department seeks to impose the sanction, penalty, or fine;
(2) a violation of Subchapter A, Chapter 544, or
Section 1702.103 [ 541.057 ], as those provisions relate to
discrimination on the basis of race or color, regardless of the time
the conduct occurs; or
(3) a violation of Title 5, Labor Code.
SECTION 4. Section 846.007(d), Insurance Code, is amended
to read as follows:
(d) A multiple employer welfare arrangement may establish
premium discounts, rebates, or a reduction in otherwise applicable
copayments or deductibles in return for adherence to programs of
health promotion and disease prevention. A discount, rebate, or
reduction established under this subsection does not violate
Section 1702.152 [ 541.056(a) ].
SECTION 5. Section 1114.057, Insurance Code, is amended to
read as follows:
Sec. 1114.057. DISCLOSURE OF AVAILABILITY OF WAIVER OF
SURRENDER CHARGES. An insurer that offers to waive surrender
charges as described by Section 1702.104(4) [ 541.058(b)(4) ] shall
provide reasonable notice of that offer to the insurer's
prospective or current contract holders. The notice may be
provided by any available means, including a disclosure document or
by display on a link that is prominently placed on the insurer's
Internet website.
SECTION 6. Section 1501.107(b), Insurance Code, is amended
to read as follows:
(b) A discount, rebate, or reduction established under this
section does not violate Section 1702.152 [ 541.056(a) ].
SECTION 7. Sections 541.056, 541.057, 541.058, 543.003, and
1201.013, Insurance Code, are repealed.
SECTION 8. The changes in law made by this Act apply only to
an insurance policy, annuity contract, or health care plan contract
that is delivered, issued for delivery, or renewed on or after
January 1, 2026. A policy or contract delivered, issued for
delivery, or renewed before January 1, 2026, is governed by the law
as it existed immediately before the effective date of this Act, and
that law is continued in effect for that purpose.
SECTION 9. This Act takes effect September 1, 2025.
Monitoring 