28 TAC §21.2209
The Texas Department of Insurance proposes amendments to §21.2209
concerning delivery of illustrations and records retention on life insurance
illustrations. The proposal adds a new paragraph (5) to the section to include
language that the department inadvertantly failed to include when the section
was initially proposed. Subchapter N, Life Insurance Illustrations, was based
upon and incorporated nearly all of the Life Insurance Illustrations Model
Regulation adopted by the National Association of Insurance Commissioners
on December 6, 1995. The proposed amendment, like the NAIC model, provides
that if the illustration is sent by mail, an insurance producer, or other
authorized representative, or the insurer itself shall make a diligent effort
to obtain a signed copy of the numeric summary page. The diligent effort requirement
shall be deemed satisfied if a self-addressed prepaid envelope is provided
with the illustration mailing. The proposal requires the insurer to retain
a copy of signed numeric summaries obtained from the insured. In addition,
the proposal makes changes in consistency of terms and phrases utilized as
well as punctuation corrections to the original rule.
Ana M. Smith-Daley, deputy commissioner for the life/health division, has
determined that for each year of the first five years the proposed section
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 section. There will
be no measurable effect on local employment or the local economy as a result
of the proposal.
Ms. Smith-Daley has determined that for each year of the first five years
the section is in effect, the public benefits anticipated as a result of the
proposed section will be a more efficient method for insurance producers,
other authorized representatives, and insurers themselves to show due diligence
in obtaining a signed copy of the numeric summary page on life illustrations.
The probable economic cost to persons required to comply with the section
will be the cost of mailing the self-addressed prepaid envelope with the instructions
for the return of the signed page. The actual cost to each insurer will vary
depending upon the number of illustrations that an insurance producer, other
authorized representative, or insurer provides by direct mail. The cost per
hour of labor will not vary between small, micro, or large businesses, assuming
that small and micro business and large insurers have to obtain the signed
copy of the numeric summary page from approximately the same percentage of
their applicants or policy owners. It is the department's position that the
adoption of the proposal will have no adverse economic effect on small or
micro business. It is neither legal nor feasible to waive the proposal for
small or micro businesses since all insurers should show due diligence in
the compliance with the provisions of the life illustration rules for the
protection of applicants and policy owners and the proposal is a cost efficient
method for an insurance producer, other authorized representative, or insurer
to show compliance.
To be considered, written comments on the proposal must be submitted no
later than 5:00 p.m. on July 17, 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 Ana M. Smith-Daley, Deputy Commissioner of Life/Health
Division, Mail Code 106-1A, Texas Department of Insurance, P.O. Box 149104,
Austin, Texas 78714-9104. Any requests for a public hearing should be submitted
separately to the Office of the Chief Clerk.
The amendment is proposed under the Insurance Code Article 21.21
and §36.001. Article 21.21, §13 authorizes the commissioner to promulgate
reasonable rules as necessary to accomplish the purposes of Article 21.21
in the regulation of trade practices in the business of insurance by defining,
or providing for the determination of all practices in this state which constitute
unfair methods of competition or unfair or deceptive acts or practices. Section
36.001 provides that the Commissioner of Insurance may adopt rules and regulations
to execute the duties and functions of the Texas Department of Insurance only
as authorized by statute.
The following article is affected by this proposal: Insurance Code Article
21.21.
§21.2209.Delivery of Illustration and Record Retention.
(a)
Illustration delivery provisions. An illustration or revised
illustration shall be delivered by the insurer as set out in paragraphs
(1)-(5)
[
(1)-(4)
] of this subsection.
(1)
Basic illustration delivery. If a basic illustration is
used by an insurance producer or other authorized representative of the insurer
in the sale of a life insurance policy, and the policy is applied for as illustrated,
a copy of that illustration signed in accordance with this rule shall be submitted
to the insurer at the time of policy application. A copy also shall be provided
to the applicant.
(2)
Revised illustration delivery. If the policy is issued
other than as applied for, a revised basic illustration conforming to the
policy as issued shall be sent with the policy. The revised illustration shall
conform to the requirements of this subchapter, shall be labeled "Revised
Illustration," and shall be signed and dated by the applicant or policy owner
and
insurance
producer or other authorized representative of the
insurer no later than the time the policy is delivered. A copy shall be provided
to the insurer and the policy owner.
(3)
Certification required where no illustration is used.
If no illustration is used by an insurance producer or other authorized representative
of the insurer
in the sale of a life insurance policy or if the policy
is applied for other than as illustrated, the
insurance
producer
[
or
],
other authorized
representative
of the insurer,
or insurer
shall certify to that effect in writing on a form provided
by the insurer. On the same form the applicant shall acknowledge that no illustration
conforming to the policy applied for was provided and shall further acknowledge
an understanding that an illustration conforming to the policy as issued will
be provided no later than at the time of policy delivery. This form shall
be submitted to the insurer at the time of policy application.
(4)
Illustration to be provided with policy. If the policy
is issued under facts and circumstances described in paragraph (3) of this
subsection, a basic illustration conforming to the policy as issued shall
be sent with the policy. A copy shall be provided to the insurer and the policy
owner.
(5)
Proof of illustration
delivery by mail. If a basic illustration or revised illustration is sent
to the applicant or policy owner by mail from an insurance producer, other
authorized representative of an insurer, or the insurer itself, it shall include
instructions for the applicant or policy owner to sign the duplicate copy
of the numeric summary page of the illustration for the policy issued or applied
for and return the signed copy to the insurer. The insurer's obligation under
this subsection shall be satisfied if the insurer can demonstrate that the
insurance producer, other authorized representative of the insurer, or the
insurer itself has made a diligent effort to secure a signed copy of the numeric
summary page. The requirement to make a diligent effort shall be deemed satisfied
if the insurance producer, other authorized representative of the insurer,
or insurer includes in the mailing a self-addressed postage prepaid envelope
with instructions for the return of the signed numeric summary page.
(b)
Records retention.
As applicable, a
[
A
] copy of the basic illustration [
and
], a revised basic illustration,
[
if any,
]
and/or a signed numeric summary page,
along
with any certification that either no illustration was used or that the policy
was applied for other than as illustrated, shall be retained by the insurer
until three years after the policy is no longer in force. A copy
of such
records
need not be retained if no policy is issued.
This agency hereby certifies that the proposal has been reviewed
by legal counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of
the Secretary of State, on June 5, 2000.
TRD-200003961
Lynda Nesenholtz
General Counsel and Chief Clerk
Texas Department of Insurance
Earliest possible date of adoption: July 16, 2000
For further information, please call: (512) 463-6327