Part 1.
TEXAS DEPARTMENT OF INSURANCE
Chapter 3.
LIFE, ACCIDENT AND HEALTH INSURANCE AND ANNUITIES
Subchapter Z. EXEMPTION FROM REVIEW AND APPROVAL OF CERTAIN LIFE, ACCIDENT, HEALTH AND ANNUITY FORMS AND EXPEDITION OF REVIEW
28 TAC §3.4003
The Commissioner of Insurance adopts the repeal of §3.4003,
concerning the list of forms in use for exemption of certain life, accident,
health and annuity forms from review and approval requirements. The repeal
is adopted without changes to the proposal as published in the October 15,
1999 issue of the
Texas Register
(24 TexReg
8903).
The repeal is necessary because the department already has authority in
the Insurance Code, §38.001 (former Article 1.24), to request the information
subject to §3.4003, as it is needed, rather than require companies to
routinely submit it. Simultaneous to this repeal, adoption of amendments to §§3.4004,
3.4008 and 3.4020 are published elsewhere in this issue of the Texas Register.
The repeal of this section will reduce the amount of administrative time
staff utilizes to review forms routinely submitted by companies, since the
information can be requested on an as-needed basis pursuant to the provisions
of the Insurance Code, §38.001 (former Article 1.24).
No comments were received regarding adoption of the repeal.
Repeal of §3.4003 is adopted pursuant to the Insurance Code
Article 3.42 and §36.001 (former Article 1.03A). Article 3.42 provides
that the department may adopt reasonable rules necessary to establish guidelines,
procedures, methods, standards and criteria by which various and different
types of forms and documents submitted to the department may receive expeditious
treatment in the policy form review process. 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.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on December
20, 1999.
TRD-9908891
Lynda Nesenholtz
General Counsel and Chief Clerk
Texas Department of Insurance
Effective date: January 9, 2000
Proposal publication date: October 15, 1999
For further information, please call: (512) 463-6327
28 TAC §§3.4004, 3.4008, 3.4020
The Commissioner of Insurance adopts amendments to §§3.4004,
3.4008, and 3.4020 relating to the exemption of certain life, accident, health
and annuity forms from review and approval requirements. Section 3.4004 is
adopted with changes to the proposed text as published in the October 15,
1999 issue of the
Texas Register
(24 TexReg
8903). Sections 3.4008 and 3.4020 are adopted without changes and will not
be republished. Simultaneous to this adoption of the amendments, the commissioner
is repealing §3.4003. Notice of the adopted repeal is published elsewhere
in this issue of the Texas Register.
These amendments revise and update the categories of described forms for
which the department has determined that the review and official action provisions
of the Insurance Code, Article 3.42, are not required or necessary for the
protection of the public, thereby enhancing the streamlining of the overall
filing, review, and official action process for certain life, accident, health,
and annuity forms. The amendments allow the department to maximize use of
its resources and provide for a more judicious allocation of department resources.
The amendment to §3.4004 provides additions to the various categories
of forms for which exemption from review applies, and also provides for exceptions
to those exemptions. The amendments to §3.4008 add two new provisions
which place the responsibility on companies to take corrective action and
bring their forms previously filed as "exempt" into compliance when they discover
any subsequent non-compliance of their forms whether such non-compliance is
based upon a violation of a law of this state or of the United States, or
whether the company subsequently realizes it filed a form as "exempt" which
did not qualify for an exemption under §3.4004. The amendment to §3.4020
amends the reference to the "Small Employer Health Insurance Availability
Act" in Figure 1, "TEXAS POLICY FORM CERTIFICATIONS" as revised by the 75th
Legislative Session, to the "Health Insurance Portability and Availability
Act."
The department has made changes to §3.4004 based upon public comments,
as well as for clarification, punctuation, and consistency. The following
revisions to the referenced sections were made: A change was made to §3.4004(c)(3)
and (c)(4) to reinstate language that was proposed to be deleted in the proposed
amendment to these sections. The sentence structure of subsection (c)(4) was
also rearranged for clarity. The words "or the United States" were added to §3.4004(e)
for consistency with subsections (a) and (c) of §3.4004.
The department's review of §3.4004(c)(4) revealed certain language
found in the proposed amendments was inadvertently proposed for deletion and
thus made the language misleading and inaccurate. The proposed deleted language
in §3.4004(c)(4) would have allowed group annuities which contain persistency
bonuses of any type, waiver of surrender charges, two-tier values, or a market
value adjustment provision to be filed as exempt. This was not the department's
intent. The department's intent was to exempt from review and approval those
group annuities that may be classified as guaranteed investment contracts
(GICs), synthetic GICs, funding plans and unallocated group annuities funding
pension plans regardless of whether these products contained persistency bonuses
of any type, waiver of surrender charges, two-tier values, or a market value
adjustment provision. The proposed deleted language in §3.4004(c)(4)
has been reinstated so that other group annuities which contain persistency
bonuses of any type, waiver of surrender charges, two-tier values, or a market
value adjustment provision must still be filed and reviewed for approval.
The reinstated language pertaining to "wavier of surrender charges" in subsection
(c)(4) was also changed to include the modifying language, "(except for death,
disability or confinement in a hospital or nursing home)," to make it consistent
with subsection (c)(3). Subparagraphs (A) and (B) of subsection (c)(3) were
amended to reinstate language referencing subsection (c)(4) which was originally
proposed for deletion.
The department anticipates there could be questions related to the language,
"additional interest credits," in the amendments to subsections (b)(10) and
(c)(3) of §3.4004. The department added the word "interest" to subsection
(b)(10) to make it consistent with subsection (c)(3). Although the department
did not make any other changes, this language should be interpreted to include
additional increases in interest or other policy enhancements for an initial
specified period of time, such as a 2% increase in interest or an additional
specified amount credited for the first year only.
§3.4004(a): A commenter requested clarification of this section as
to whether a company that has filed a form for approval in another state also
must file the form for approval in Texas, even if the particular form is listed
as exempt from the filing requirements under this section.
Agency response: In 1996, when the department proposed amendments to §3.4004(c)(3),
the department received comments suggesting that there be a statement in the
rules indicating that a company may, in particular instances, obtain review
and approval of a policy form which otherwise is considered exempt. The specific
example raised was that §3.4004 does not clarify that forms otherwise
considered to be exempt from the review and approval process must nonetheless
be reviewed and approved if they are going to be marketed by a Texas domestic
company in a state other than Texas with laws that require such policies and
forms to have received domiciliary approval before being marketed in that
state. The department responded by revising subsections (a), (c), and (e)
of §3.4004 to include language referring to the laws of another state
requiring specific approval. As such, subsections (a), (c), and (e) allow,
in lieu of exemption, approval in Texas if the laws of another state require
a Texas domiciled company that wishes to market a product in that state to
obtain specific approval in Texas before filing or marketing a product in
that state.
Neither for nor Against: Manufacturer's Life Insurance Company (USA).
The amendments to the sections are adopted pursuant to the Insurance
Code Article 3.42 and §36.001 (former Article 1.03A). Article 3.42(h)
provides that the department may, by written order, exempt from the requirements
of the article certain documents or forms and may adopt reasonable rules necessary
to establish guidelines, procedures, methods, standards and criteria by which
various and different types of forms and documents submitted to the department
may receive expeditious treatment in the policy form review process. Section
36.001 authorizes the commissioner of insurance to promulgate and adopt rules
and regulations for the conduct and execution of the duties and functions
by the department.
§3.4004.Exempt Forms.
(a)
Group and Individual Life Forms. The group and individual
life insurance forms specified in this subsection are exempt from the review
and approval requirements of the Insurance Code, Article 3.42, unless the
forms are required by the laws of Texas, another state, or the United States,
to be specifically approved or are otherwise excepted in subsection (b) of
this section:
(1)
group life insurance master policies, contracts, certificates,
applications, enrollment forms, riders, amendments and endorsements applicable
thereto, issued under authority of the Insurance Code Article 3.50, §1(1),
(2), (3), (4), (5), (6)(b), (7), (7A), (8), (9), and (10), listed in subparagraphs
(A) and (B) of this paragraph:
(A)
term policies and riders; and
(B)
cash value and endowment policies with no more than five
death benefit and/or premium changes;
(2)
any alternate face pages filed subsequent to
the original approval of a policy for use with multiple employer trusteed
arrangements as defined in Insurance Code, Article 3.50, §1(5);
(3)
individual, joint life, and last survivor insurance
forms, including applications, listed in subparagraphs (A)-(Q) of this paragraph:
(A)
ordinary life;
(B)
limited pay life with no more than five death benefit and/or
premium changes;
(C)
life paid up at specified ages with no more than five death
benefit and/or premium changes;
(D)
single premium life with no more than five death benefit
changes;
(E)
modified premium level death benefit life with no more
than five premium changes;
(F)
level premium life with no more than five death benefit
changes;
(G)
retirement income policies;
(H)
level or decreasing term policies and riders;
(I)
increasing term policies and riders;
(J)
family plans;
(K)
family income;
(L)
family plan riders, including but not limited to children's
term riders, dependent term riders, and spouse term riders;
(M)
limited pay endowment with no more than five death benefit
and/or premium changes;
(N)
level premium endowment with no more than five death benefit
changes;
(O)
single premium endowment with no more than five death benefit
changes;
(P)
indeterminate premium policies with no more than five death
benefit changes; and
(Q)
variable life policies with a separate account only;
(4)
rider forms listed in subparagraphs (A)-(K) of
this paragraph:
(A)
accidental death benefit riders;
(B)
waiver of premium riders;
(C)
guaranteed insurability riders;
(D)
individual retirement accounts (IRA) (to include Roth and
Simple IRA) riders;
(E)
preliminary term riders;
(F)
conversion riders;
(G)
exchange riders;
(H)
waiver of cost riders, including waiver of cost and monthly
expense charge, and waiver of cost and premium payment;
(I)
dividend option riders;
(J)
additional insured riders; and
(K)
additional insurance on base insured riders;
(5)
endorsement forms listed in subparagraphs (A)-(K)
of this paragraph:
(A)
ORP endorsements;
(B)
nontransferability endorsements;
(C)
H.R. 10 endorsements;
(D)
tax sheltered annuity endorsements;
(E)
nonassignability endorsements;
(F)
settlement option endorsements;
(G)
individual retirement account endorsements (to include
Roth and Simple IRA endorsements);
(H)
unisex endorsements;
(I)
loan endorsements;
(J)
waiver of surrender charges on disability or confinement
in a hospital or nursing home endorsements; and
(K)
step-up or roll-up death benefit endorsements;
(6)
limited refilings for life insurance which indicate
only a change in the mortality table or interest rates for new issues under
the policy form, or changes to the separate account for variable products.
(b)
Exceptions. The provisions of subsection (a)(1) and (2)
of this section shall not apply to any group or individual life insurance
forms providing the types of coverages set out in paragraphs (1) - (12) of
this subsection:
(1)
universal life;
(2)
universal related life;
(3)
adjustable life;
(4)
variable life with a fixed account;
(5)
business value;
(6)
any forms containing a market value adjustment;
(7)
deposit term;
(8)
forms subject to the Insurance Code article 3.53;
(9)
any life insurance product used to fund prepaid funeral
contracts;
(10)
any form containing a persistency bonus provision,
no-lapse premium provision, or other additional interest credit to the policy
value provision (guaranteed or non-guaranteed), equity indexed provision,
residual death benefit provision, accelerated death benefit provision, long-term
care or other accident and health related benefit provision;
(11)
applications for use with variable life or equity
indexed life, or forms that contain a market value adjustment provision, a
long-term care or other accident and health related benefit provision; or
(12)
group life master policies, contracts, certificates,
applications, enrollment forms, riders, amendments and endorsements applicable
thereto, issued under the authority of Article 3.50, §1(6)(a), relating
to discretionary groups.
(c)
Group and Individual Annuity Forms. The group and individual
annuity forms, including applications, specified in paragraphs (1)-(7) of
this subsection are exempt from the review and approval requirements of the
Insurance Code, Article 3.42, unless the forms are required by the laws of
Texas, another state, or of the United States to be specifically approved
or are otherwise excepted in subsection (d) of this section:
(1)
single premium immediate annuities (including variable
immediate annuities);
(2)
deferred annuities used as structured settlement options;
(3)
individual deferred annuities that do not include
persistency bonuses or additional interest credits of any type, waiver of
surrender charges (except for death, disability or confinement in a hospital
or nursing home); two-tier values; or a market value adjustment:
(A)
for purposes of this paragraph, and paragraph (4) of this
subsection, "waiver of surrender charges" means a waiver of surrender charges
which is applied to any amount greater than 10% of the surrender value;
(B)
for purposes of this paragraph, and paragraph (4) of this
subsection, "two tier values" means values on an annuity available at the
maturity date of the contract which are different, depending on whether the
value is taken from the contract in a lump sum or left with the issuer for
periodic payments, regardless of whether the different values are available
at issue or later;
(4)
group annuities that do not include persistency
bonuses or additional interest credits of any type, waiver of surrender charges
(except for death, disability or confinement in a hospital or nursing home),
two-tier values, or a market value adjustment; group annuities that are guaranteed
investment contracts (GICs), synthetic GICs, funding agreements, and unallocated
group annuities funding pension plans;
(5)
limited refilings for annuity products which indicate
only a change in the mortality table or interest rates for new issues under
the policy form, or changes to the separate account for variable products;
(6)
variable annuities with a separate account only, which
do not include a provision for guaranteed living benefits; and
(7)
reversionary annuities.
(d)
Exceptions. The provisions of subsection (c) of this section
shall not include any of the following annuity forms:
(1)
annuities used to fund prepaid funeral contracts;
(2)
variable annuities that contain guaranteed living
benefit provisions;
(3)
annuities that contain an equity indexed provision,
long-term care or other accident and health related benefit provision;
(4)
applications for use with variable annuities, equity
indexed annuities, annuities that contain a market value adjustment provision,
long-term care or other accident and health related provision;
(5)
group annuity master policies, contracts, certificates,
applications, enrollment forms, riders, amendments and endorsements applicable
thereto, issued under the authority of Article 3.50, §1(6)(a), relating
to discretionary groups.
(e)
Group and Individual Accident and Health Forms. The group
and individual accident and health insurance forms specified in paragraphs
(1)-(3) of this subsection are exempt from the review and approval requirements
of the Insurance Code, Article 3.42, unless the forms are required by the
laws of Texas, another state, or the United States, to be specifically approved
or are otherwise excepted in subsection (f) of this section:
(1)
the group and blanket accident and health forms set out
in subparagraphs (A)-(D) of this paragraph:
(A)
any group accident and health master policies, contracts,
certificates, applications, enrollment forms, riders, amendments, and endorsements
applicable thereto issued under authority of the Insurance Code, Article 3.51-6, §1(a)(1)
and (2); provided the forms issued under authority of the Insurance Code,
Article 3.51-6, §1(a)(2), are exempt only if delivered or issued for
delivery to a labor union or organization of labor unions;
(B)
any blanket accident and health master policies, contracts,
certificates, applications, enrollment forms, riders, amendments, and endorsements
applicable thereto, issued under authority of the Insurance Code Article 3.51-6, §2(a)(1)-(8);
(C)
any group master policies, contracts, certificates, applications,
enrollment forms, riders, amendments, and endorsements applicable thereto,
issued under the authority of the Insurance Code, Article 3.51-6, §1(a)(1),
(2), or (3) providing Medicare Supplement coverage to an employer, multiple
employer arrangement, or a labor union;
(D)
any group master policies, contracts, certificates, applications,
enrollment forms, riders, amendments, and endorsements applicable thereto,
issued under the authority of the Insurance Code, Article 3.51-6, §1(a)(1)
or (2) providing long term care coverage to a single employer or a labor union
through a policy which is delivered or issued for delivery outside of Texas;
(2)
group and individual accident and/or health policies,
contracts, certificates, applications, enrollment forms, riders, amendments,
endorsements, and related forms (including but not limited to outlines of
coverage, notices, rates, and conditional receipts) applicable thereto, providing
coverages set forth in subparagraphs (A)-(K) of this paragraph:
(A)
accident only (including occupational accident and other
specified accident);
(B)
accidental death and dismemberment;
(C)
dental;
(D)
in-patient confinement and basic hospital expense coverages
(including policies with coverage on an indemnity or expense-incurred basis)
(E)
vision;
(F)
specified disease (including cancer, heart attack, stroke,
and other specifically named diseases);
(G)
disability coverages (including but not limited to income
replacement, key-man, buy/sell, and overhead expense);
(H)
policies designed to provide conversion coverages;
(I)
other permitted coverages which are designed to supplement
other in-force health insurance, including Champus supplements;
(J)
group stop loss/excess loss policies containing an attachment
point of $5,000 or more; and
(K)
prescription drug policies; and
(3)
any alternate face pages filed subsequent to
the original approval of a policy for use with multiple employer trusteed
arrangements as defined in Insurance Code, Article 3.51-6, §1(a)(3).
(f)
Exceptions. The provisions of subsection (e) of this section
shall not apply to any of the insurance forms set out in paragraphs (1)-(6)
of this section.
(1)
The provisions of subsection (e)(2) of this section shall
not apply to any group or individual health insurance policy which provides,
on a comprehensive basis for illness and injury, a combination of hospital,
medical, and surgical coverages, including but not limited to any major medical
policies and any limited benefit hospital, medical, and surgical policies
as defined in §3.3079 of this title (relating to Minimum Standards for
Limited Benefit Coverage).
(2)
The provisions of subsection (e)(1) and (2) of this
section shall not apply to any Medicare supplement policies as defined in
the Insurance Code, Article 3.74, except as specifically provided in subsection
(e)(1)(C) of this section.
(3)
The provisions of subsection (e)(1) and (2) of this
section shall not apply to any long term care policies as defined in the Insurance
Code, Article 3.70-12 (including but not limited to any policies providing
nursing home or home health care coverages), except as specifically provided
in subsection (e)(1)(D) of this section.
(4)
The provisions of subsection (e)(1) and (2) of this
section shall not apply to any forms which contain preferred provider benefit
plan provisions as defined in §§3.3701 - 3.3706 of this title (relating
to Preferred Provider Plans).
(5)
The provisions of subsection (e)(1) and (2) of this
section shall not apply to any group forms which are issued under the authority
of Insurance Code, Article 3.51-6, §1(a)(6) (discretionary groups).
(6)
The provisions of subsection (e)(2)(H) of this section
shall not apply to any policy subject to the provisions of Subchapter F of
this chapter (relating to Group Health Insurance Conversion Privilege), except
for policies providing conversion from a policy included as an exempt form
in this section.
(g)
Copies of Previously Approved Forms. Any form not otherwise
exempted under these sections that is an exact copy of a previously approved
form is exempt from the review and approval requirements of the Insurance
Code, Article 3.42. Such forms must be filed in accordance with and accompanied
by the required certification as prescribed in Subchapter A of this chapter
(relating to Filing of Policy Forms, Riders, Amendments and Endorsements for
Life, Accident and Health Insurance and Annuities). The certification form
required to be used in filing the certification is "TEXAS POLICY FORM CERTIFICATIONS,
Multi-Use Form," which also is to be utilized for filing certifications for
file-and-use under Article 3.42(c), as well as for corrections, resubmissions,
substitutions, and filings for forms exempted from review and official action
by these sections. Form "TEXAS POLICY FORM CERTIFICATIONS" is available from
the Life/Health Group, has been filed with the Texas Register Division of
the Secretary of State for public inspection, and is adopted by reference
in these sections. The form also is reproduced in full as Figure 1 in §3.4020
of this title (Relating to Appendix).
(h)
Copies of Previously Approved Forms Subsequently Submitted
in Foreign Language (Non-English). Any form not otherwise exempted under these
sections that is submitted in Braille as an exact copy of a previously approved
form, or any form that has been translated into a foreign language from its
previously approved English version, is exempt from the review and approval
requirements of the Insurance Code Article 3.42. Such forms must be filed
in accordance with and accompanied by the required certification as prescribed
in Subchapter A of this chapter. The certification form required to be used
in filing the certification is the same as that described in subsection (g)
of this section.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on December
20, 1999.
TRD-9908892
Lynda Nesenholtz
General Counsel and Chief Clerk
Texas Department of Insurance
Effective date: January 9, 2000
Proposal publication date: October 15, 1999
For further information, please call: (512) 463-6327
Subchapter J. EXAMINATION EXPENSES AND ASSESSMENTS
Chapter 7.
CORPORATE AND FINANCIAL REGULATION