PART 1. TEXAS DEPARTMENT OF INSURANCE
CHAPTER 4. LIFE AND ANNUITY
The commissioner of insurance adopts the repeal of 28 TAC §4.1117. The commissioner of insurance adopts the amendments to 28 TAC §§4.201 - 4.206, 4.601 - 4.608, 4.611, 4.613 - 4.628, 4.1001, 4.1002, 4.1004, 4.1005, 4.1008, 4.1010, 4.1011, 4.1101 - 4.1104, 4.1106 - 4.1116, 4.1201, 4.1502 - 4.1509, 4.1602 - 4.1606, 4.1609 - 4.1613, 4.1703, 4.1705 - 4.1707, 4.2102 - 4.2106, 4.2302, 4.2304, 4.2306 - 4.2312, 4.2322, 4.2701, 4.2702, 4.2705, 4.2706, 4.2712 - 4.2716, 4.2721 - 4.2726, 4.2731 - 4.2734, 4.2801 - 4.2808, 4.2811, 4.2821 - 4.2823, 4.2825 - 4.2827, 4.2829, and 4.2831 - 4.2836 without changes to the proposed text published in the September 22, 2023, issue of the Texas Register (48 TexReg 5466). These sections will not be republished.
Sections 4.1510, 4.1702, 4.1704, and 4.2824 are adopted with nonsubstantive changes to the proposed text. In §4.1510, the Texas Department of Insurance (TDI) has removed an unnecessary reference to "Subchapter O" in a citation; in §4.1702 and §4.1704, TDI has revised an incorrect date in the title of two mortality tables by replacing "1908" with "1980"; and in §4.2824, TDI has corrected punctuation. In addition, TDI has revised the Subchapter BB, Division 2 title to replace "pursuant to" with "under." These sections will be republished.
REASONED JUSTIFICATION. On July 28, 2023, the Texas Register published notice (48 TexReg 4127) of the administrative transfer of certain subchapters concerning life insurance and annuity products from Chapter 3 to new Chapter 4 in Title 28 of the Texas Administrative Code.
The administrative transfer revised each subchapter and section designation included in the transfer to reflect its new location in Chapter 4, but no rule text was amended during the transfer. This adoption order updates internal section and figure citations made obsolete by the administrative transfer.
As part of the administrative transfer notice, a comparison table illustrating the new organization and designations of subchapters, divisions, and sections in Chapter 4 was published in the Texas Register. The transfer table is available on TDI's website at www.tdi.texas.gov/rules/2023/index.html.
In addition to amendments that correct citations, nonsubstantive changes include:
- adding or amending Insurance Code section titles and citations for accessibility and consistency with agency rule drafting style preferences;
- updating TDI contact information, including mailing, physical, and website addresses; and
- correcting punctuation, capitalization, and grammar to reflect current agency drafting style and plain language preferences, as appropriate.
Specifically, amendments to multiple sections include the deletion of "shall" or replacement of "shall" with "must" or another context-appropriate word. The purpose of changing the word "shall" is to provide plain language clarification of the rule text, consistent with current agency style and guidance on the TDI website. Resources TDI uses for plain language guidance include plainlanguage.gov, which provides federal plain language guidelines, and the National Archives guidelines for clear legal documents. Both sources advise using alternatives to the word "shall" to provide clarity for readers.
The adoption replaces "pursuant to" with "under" or "in accordance with," as appropriate; replaces "subchapter" or "chapter" with "title" in citations to other sections in Title 28 of the Texas Administrative Code; and removes "the" when not needed before "Insurance Code." These amendments, along with other nonsubstantive amendments discussed in the following paragraphs, reflect current agency drafting style, adhere to plain language practices, and promote consistency in TDI rule text.
In addition, the administrative transfer and adopted amendments (1) enhance accessibility through thoughtful reorganization, (2) promote readability through nonsubstantive plain language amendments, (3) preserve the capacity of Chapter 4 with deliberate organization, and (4) restore the capacity of Chapter 3 for future rulemaking projects.
This adoption also includes nonsubstantive amendments to provisions related to the National Association of Insurance Commissioners (NAIC) rules, regulations, directives, or standards. Because the rules relate to NAIC rules, regulations, directives, or standards, Insurance Code §36.004 requires TDI to consider whether authority exists to enforce or adopt the provisions. TDI has determined that §36.004 does not prohibit the amendments because they are nonsubstantive updates that do not change or expand previously adopted requirements.
The adopted repeal and amendments to the sections are described in detail in the following paragraphs, organized by subchapter.
Subchapter C. Consumer Notices for Life Insurance Policy and Annuity Contract Replacements.
Section 4.201. Purpose. The amendments add the title to the Insurance Code §1114.006 citation and remove "the" before "Insurance Code."
Section 4.202. Definitions. The amendments add the title to the Insurance Code Chapter 4054 citation and remove the word "shall."
Section 4.203. Consumer Notice Content and Format Requirements. The amendments update section and figure citations made obsolete after the administrative transfer. The amendments also update the TDI mailing address where persons may request forms specified in the subchapter, amend punctuation, and replace "pursuant to" with "under."
Section 4.204. Consumer Notice Regarding Replacement for Insurers Using Agents. The amendments update figure citations made obsolete after the administrative transfer and replace "shall" with "must." No amendments are adopted to the content of the figure.
Section 4.205. Direct Response Consumer Notices. The amendments update figure citations made obsolete after the administrative transfer and replace "shall" with "must." No amendments are adopted to the contents of the figures.
Section 4.206. Filing Procedures for Substantially Similar Consumer Notices. The amendments remove previous §4.206(a), which provided the filing procedure for an insurer subject to Insurance Code Chapter 1114 beginning on December 27, 2007, and ending January 31, 2008, because it is obsolete. The adopted amendments redesignate the remaining subsections and remove the other effective dates in the section.
The amendments also update figure citations made obsolete after the administrative transfer and add or correct titles to the Insurance Code Chapter 1114 and §1701.054 citations. The adoption also replaces multiple citations to filing requirements found in 28 TAC Chapter 3, Subchapter A, with a general citation to 28 TAC Chapter 3, Subchapter A. The amendments also replace "shall" with "must" and "prior to" with "before" and correct grammar by adding "been" to §4.206(a)(1).
Subchapter F. Individual Life Insurance Policy Form Checklist and Affirmative Requirements.
Section 4.601. Payment of Premiums. The amendments replace "which" with "that," "shall" with "will," "thereof to" with "at," and "his" with "the."
Section 4.602. Grace Period. The amendment replaces "shall" with "must."
Section 4.603. Entire Contract. The amendments remove the word "shall" and replace "which" with "that."
Section 4.604. Incontestable Clause. The amendments add the title to the Insurance Code §1101.006 citation, replace the citation and title of §3.118(e) with §4.621(e), replace "which" with "that," and remove "whatsoever."
Section 4.605. Statements of the Insured. The amendments add the title to the Insurance Code §705.004 citation and replace "which" with "that."
Section 4.606. Misstatement of Age. The amendments replace "shall be such as" with "is the amount that" and amend punctuation.
Section 4.607. Policy Loans. The amendments add the title to the Insurance Code Chapter 1110 citation; amend punctuation; remove "of," "herein," and one instance of "thereon"; replace "which" with "that," "thereto" with "to the policy," "therefor" with "for the loan," and "thereon" with "on the loan"; and add "of the policy" and "in this subchapter" to clarify the sentence given the removal of "thereon" and "herein" from the subsection.
Section 4.608. Automatic Nonforfeiture Benefits. The amendment adds the title to the Insurance Code Chapter 1105 citation.
Section 4.611. Reinstatement. The amendments replace "which" with "that," "shall" with "must," "shall be" with "is," and "shall not have" with "has not."
Section 4.613. Family Group Special Requirements. The amendments replace "shall" with "must" and "which" with "that."
Section 4.614. Dependent Child Riders and Family Term Riders. The amendments add the corresponding titles to the Insurance Code §1101.006 and §1105.007 citations, amend punctuation, and replace "prior to" with "before."
Section 4.615. Requirements for a Package Consisting of a Deferred Life Policy with an Accidental Death Rider Attached. The amendments add the title to the Insurance Code Chapter 1701 citation and replace "which" with "that."
Section 4.616. Substitute or Change of Insured Riders. The amendments add the word "and" at the end of §4.616(d)(3) to clarify that all elements in §4.616(d) must be clearly described. The adoption also replaces the word "shall" with "must" and amends punctuation.
Section 4.617. Preliminary Term Life Insurance. The amendments add "and" after §4.617(1) to clarify that both requirements apply to a contract of life insurance containing a preliminary term insurance rider. The amendments also correct the spelling of "contestability."
Section 4.618. Conversion Provision. The amendments add "and" after §4.618(3) to clarify that a conversion provision in a policy must comply with the requirements in the section. The adoption also replaces "shall" with "must."
Section 4.619. Limitations of Lawsuits. The amendment replaces "shall accrue" with "accrues."
Section 4.620. Backdating Policies. The amendments replace "which" with "that," "that which" with "what," "his" with "their," and "prior to" with "before" and remove "thereby."
Section 4.621. Settlement at Maturity. The amendments remove "either of" to reflect that §4.621(c) contains more than two paragraphs, amend punctuation, and replace "which would" with "that."
Section 4.622. Tontine Provisions. The amendments replace "which" with "that."
Section 4.623. Assignment Provisions. The amendments replace "which" with "that."
Section 4.624. Provisions Relating to Dividends, Coupon Benefits, or Other Guaranteed Returns. The amendments add the title to the Insurance Code §841.253 citation and replace "which" with "that."
Section 4.625. Premiums Paid in Advance. The amendments amend punctuation and replace "which" with "that" and "therein" with "in the policy."
Section 4.626. Annuity Contracts. The amendments update section citations made obsolete after the administrative transfer by replacing "Sections 3.101 - 3.128" with "All sections in Subchapter F" and replacing the word "title" with "chapter." The adoption also replaces "which" with "that."
Section 4.627. Certain Prohibited Provisions. The amendments replace "which" with "that."
Section 4.628. Renewal Premium on Term Policies. The amendment replaces "shall" with "must."
Subchapter J. Life - Indeterminate Premium Reduction Policies.
The adoption adds "Life -" to the title of Subchapter J to clarify the applicability of the subchapter.
Section 4.1001. Purpose and Scope. The amendments add the title to the Insurance Code Chapter 541 citation and replace "which" with "that" and "subsequent to" with "after." The adoption also adds "and" after §4.1001(a)(1) to clarify that the subchapter applies to life insurance policies that have both characteristics in §4.1001(a).
Section 4.1002. Policy Form Submission. The amendments replace "its" with "the insurer's" to clarify the subject of §4.1002(a)(1), amend punctuation, and replace "which" with "that."
Section 4.1004. Summary of Provisions. The amendments replace "which" with "that" and "subsequent to" with "after."
Section 4.1005. Relation of Initial to Later Premium Charge. The amendment replaces "which" with "that."
Section 4.1008. Minimum Nonforfeiture Values. The amendments add the title to the Insurance Code Chapter 1105 citation and replace "code" with "Insurance Code." The adoption also removes "wherein" and "are required" and adds "which requires" for clarity.
Section 4.1010. Artificial Maximum Premiums Prohibited. The amendments add the titles to the Insurance Code Chapters 1105 and 425, Subchapter B, citations. The adoption also replaces "subsequent to" with "after" and amends punctuation.
Section 4.1011. General Enforcement. The amendment adds the title to the Insurance Code Chapter 541 citation.
Subchapter K. Life - Standards for Acceleration-of-Life-Insurance Benefits for Individual and Group Policies and Riders.
The adoption adds "Life -" to the title of Subchapter K to clarify the applicability of the subchapter.
Section 4.1101. Purpose; Severability. The amendments remove the capitalization of the first word of paragraphs (1) through (5) of §4.1101(a) to reflect the punctuation of the subsection. The adoption also amends punctuation, removes "shall," and replaces "shall remain" with "remains."
Section 4.1102. Acceleration-of-Life-Insurance: Scope of Benefits. The amendments update section citations made obsolete after the administrative transfer, amend punctuation, and remove "shall" and "either." The adoption also replaces "which" with "that," "Acceleration-of-life-insurance" with "Acceleration-of-Life-Insurance," "that" with "That," and "shall" with "must" or "will."
Section 4.1103. Required Policy Definitions; Evidence of Total and Permanent Disability. The amendments update a section citation made obsolete after the administrative transfer and add the titles to the Insurance Code §1111.052 and §1201.003 citations. The adoption also removes "the" before "Insurance Code" and replaces "shall" with "must." The adoption also clarifies §4.1103(a) by removing "either" and amending punctuation throughout the section.
Section 4.1104. Standards for Medical Diagnoses. The amendments replace "shall" with "must."
Section 4.1106. Methods for Determining Benefits and Allowable Charges and Fees. The amendments replace the capitalized catchlines with lowercased catchlines and amend punctuation. The adoption also replaces "shall" with "must" or "may," "which" with "that," "annum" with "year," "one percent" with "1%," "90 day" with "90-day," "Commissioner" with "commissioner," and "regards" with "regard."
Section 4.1107. Limitations on Reduction of Cash Values. The amendments update a section citation made obsolete after the administrative transfer and replace "Lien Method " with "lien method" and "shall" with "may." The adoption also removes "the" before "Insurance Code," amends punctuation, and adds the title to the Insurance Code Chapter 1105 citation.
Section 4.1108. Pro Rata Reduction of Loan upon Acceleration of Benefits. The amendments update a section citation made obsolete after the administrative transfer and replace "Lien Method" with "lien method."
Section 4.1109. Effect of Acceleration of Benefits on Nonforfeiture Calculations. The amendments add the title to the Insurance Code Chapter 1105 citation, replace "shall" with "must," and remove "the" before "Insurance Code."
Section 4.1110. Calculation of Reserves. The amendments update a section citation made obsolete after the administrative transfer, remove "the" before "Insurance Code," and add titles to the citations for Insurance Code Chapter 425, §425.058, and §425.069. The adoption also replaces "shall" with "must," "which" with "that," and "Lien Method" with "lien method."
Section 4.1111. Unfair, Discriminatory, or Deceptive Practices Prohibited. The amendments add a comma after "Discriminatory" in the section title and add commas in §4.1111(b) for consistency with the amendment to the section title.
The adoption also removes the parentheses around the title to Insurance Code Chapter 541, removes "the" before "Insurance Code," and replaces "shall" with "may."
Section 4.1112. Notice and Disclosure Requirements for Life Insurance Contracts Containing Acceleration-of-Life-Insurance Benefits. The amendments capitalize "Acceleration-of-Life-Insurance" in the section title and update section citations made obsolete after the administrative transfer.
The adoption also corrects punctuational errors and replaces "shall" with "must," "which" with "that," "section" with "subsection," and "shall be" with "is."
Section 4.1113. Notice and Disclosure Requirements for Marketing Materials. The amendments update section citations made obsolete after the administrative transfer, amend punctuation, and replace "shall" with "must" and "which" with "that." The adoption also adds an "and" at the end of §4.1113(a)(2) to clarify that a disclosure required under the section must include information in §4.1113(a)(1) - (3).
Section 4.1114. Requirements for Acceleration-of-Life-Insurance Benefits That Fund Long-Term Care Expenses. The amendments update section citations made obsolete after the administrative transfer, capitalize "Acceleration-of-Life-Insurance" in the section title, clarify that the citation to Subchapter Y is found in Chapter 3 of Title 28, and correct the title for Chapter 3, Subchapter Y.
The amendments also replace "To" with "to" in the title citation to §4.1115 and "chapter" with "title" and correct capitalization throughout the section for consistency with the punctuation used.
Section 4.1115. Requirements for Benefits Represented to Be Qualified for Favorable Federal Tax Treatment. The amendments update section citations made obsolete after the administrative transfer and correct cited section titles in the rule text. The adoption also replaces "To" with "to" in the title of §4.1115; replaces "his or her" with "their," "shall" with "must" or "may," "long term" with "long-term," "prior to" with "before," and "which" with "that"; removes "shall"; adds "of this paragraph" in §4.1115(b)(2)(B); and amends punctuation.
Section 4.1116. Disclosure Related to Tax Qualification of Benefits and Benefits' Effect on Public Assistance. The amendments update section citations made obsolete after the administrative transfer and remove redundant citations to a section title previously cited in §4.1116. The adoption removes the phrase "a life insurance contract" in §4.1116(b) because it is redundant and amends punctuation throughout the section.
The amendments also replace "back-slashes" with "slashes," "acceleration-of-life insurance" with "acceleration-of-life-insurance," and "regards" with "regard."
Section 4.1117. Effective Date. Section 4.1117 is repealed because the section states the amendments become effective 20 days after the date the adopted rule is filed with the Office of the Secretary of State. This is standard practice for rules under Government Code §2001.036(a) and, as a result, the section is unnecessary.
Subchapter L. Life - Insurance Sold in Connection with Prepaid Funeral Contracts.
The adoption adds "Life -" to the title of Subchapter L to clarify the applicability of the subchapter.
Section 4.1201. Introduction to Joint Memorandum of Understanding. The amendments add the title to the Occupations Code §651.159 citation and update a section citation made obsolete after the administrative transfer.
Subchapter O. Life - Variable Life Insurance.
The adoption adds "Life -" to the title of Subchapter O to clarify the applicability of the subchapter.
Section 4.1502. Definitions. The amendments add a title to the Insurance Code Chapter 1152 citation, add "with" in §4.1502(10), amend punctuation, and replace "which" with "that" and "pursuant to" with "under."
Section 4.1503. Qualifications of Insurer to Issue Variable Life Insurance. The amendments update section citations made obsolete after the administrative transfer, add a title to the Insurance Code Chapter 1152 citation, and correct a title and citation to Chapter 21, Subchapter B, Division 1.
The amendments also remove "concerning notice and hearing" because that citation is outdated and remove "a" before the phrase "life insurance business in this state" to correct the grammar of the sentence. The amendments amend punctuation and replace "subsection" with "section," "which" with "that," "prior to" with "before," "pursuant to" with "under," and "contractholder" with "contract holder."
Section 4.1504. Insurance Contract and Filing Requirements. The amendments add titles to the citations for Insurance Code Chapters 1105 and 1110 and "Chapter 3" to a citation in §4.1504(1)(A). The amendments also replace "chapter" with "title" in relation to the citation to Chapter 3, Subchapter A, and remove a redundant reference to the title of §4.1509.
The amendments also add "and" at the end of §4.1504(3)(P)(v) and §4.1504(4)(A)(iii) to reflect that all the elements listed in those paragraphs must be included under §4.1504(3)(P) and §4.1504(4)(A), and add "or" at the end of §4.1504(5)(C)(iv) to reflect that contracts may offer the dividend options in §4.1504(5)(C)(i) - (v).
The amendments also update section citations made obsolete after the administrative transfer and replace multiple outdated words or terms with language that conforms to current agency drafting style and plain language preferences. These changes remove "of" and "therefor"; amend punctuation; and replace "which" with "that," "contractholder" with "contract holder," "his or her" with "the insured's," "which result" with "that results," "pursuant to" with "under," "prior to" with "before," "thereof" with "of those provisions," "thereon" with "on the contract," and "subsequent to" with "after."
Section 4.1505. Reserve Liabilities for Variable Life Insurance. The amendments add a title to the Insurance Code Chapter 425, Subchapter B, citation and replace "paid up" with "paid-up" and "which" with "that."
Section 4.1506. Separate Accounts. The amendments add titles to the Insurance Code Chapters 1105 and 1152 citations, update section citations made obsolete after the administrative transfer, and correct a reference to the title of a cited administrative code citation.
The adoption adds "and" at the end of §4.1506(7)(F) to clarify that the insurer must disclose in writing all charges that may be made against the separate account including, but not limited to, the elements in §4.1506(7). The adoption also adds "and" at the end of §4.1506(10)(C)(iii) to clarify the information to be included under §4.1506(10)(C). The adoption also removes an "or" at the end of §4.1506(1)(B)(i) because it is redundant. These amendments clarify the rule requirements but are nonsubstantive in nature and do not change the requirements under the rule.
The adoption also amends punctuation and replaces "pursuant to" with "under," "prior to" with "before," "which" with "that," "thereunder" with "under the contract" or "adopted under that section," "which evidences" with "evidencing," and "contractholders" with "contract holders."
Section 4.1507. Information Furnished to Applicants. The amendments update a section citation made obsolete after the administrative transfer and amend punctuation. The adoption also replaces "which" with "that," "contractholder" with "contract holder," "the manner in which" with "how," "prior to" with "before," and "shall" with "must," "may," or "will."
Section 4.1508. Application. The amendments add "and" after §4.1508(2) to clarify that the application for a variable life contract must contain all the elements in the section and replace "shall" with "must" and "which" with "that."
Section 4.1509. Reports to Contract Holders. The amendments update a section citation made obsolete after the administrative transfer and add an "and" at the end of §4.1509(2)(D) to clarify that a statement or statements provided annually to contract holders must contain the elements listed in the paragraph.
The adoption also replaces "contractholder" with "contract holder" in the section title and in rule text and replaces "shall" with "must," "pursuant to" with "under," "of" with "or," which" with "that," "prior to" with "before," "therein" with "in the statement" and "his or her" with "their."
Section 4.1510. Separability. The amendments replace the range of section citations with the corresponding citation to Subchapter O and change "title" to chapter." The adoption also removes "thereby," amends the title of Subchapter O for consistency with adopted changes to the subchapter's title, and replaces "thereof" with "of such provisions" and "shall" with "will."
The text as proposed has been changed to correct an error in §4.1510 by removing "of Subchapter O" in a citation because it is unnecessary.
Subchapter P. Life - Required Reinstatement Relating to Mental Incapacity of the Insured for Individual Life Policies Without Nonforfeiture Benefits.
The adoption adds "Life -" to the title of Subchapter P to clarify the applicability of the subchapter.
Section 4.1602. Applicability. The amendments update a section citation made obsolete after the administrative transfer, remove punctuation, and replace "which" with "that."
Section 4.1603. Severability. The amendment removes "shall."
Section 4.1604. Definitions. The amendments remove "shall"; amend punctuation; and replace "Incapacity" with "incapacity" and "Commissioner of Insurance" with "commissioner of insurance."
Section 4.1605. Eligibility Requirements. The amendments remove the language "set forth in paragraphs (1) - (4) of this subsection" at the end of the first sentence in §4.1605 to simplify and clarify the provision. The section is not broken into subsections and there are only four paragraphs in the section, so it is not necessary to list each paragraph. The amendments add the word "following" to clarify the sentence given the removal and replace "shall" with "must" and "prior to" with "before."
Section 4.1606. Payment of Past Due Premiums. The amendment replaces "annum" with "year."
Section 4.1609. Notification and Disclosure Requirements. The amendments update section citations made obsolete after the administrative transfer, remove a cited section title that is redundant, amend punctuation, and replace "thereto" with "to the policy" and "which" with "that."
Section 4.1610. Reinstatement Procedures. The amendment replaces "shall" with "must."
Section 4.1611. Reduced Benefits. The amendments replace "shall" with "must."
Section 4.1612. Form Filing Procedures. The amendments update section citations made obsolete after the administrative transfer and remove two redundant section title citations. The amendments also add "Chapter 3" to the citation in §4.1612(c) and amend the title of Subchapter A in §4.1612(c).
Section 4.1613. Notice and Disclosure Form. The amendments update section and figure citations made obsolete after the administrative transfer. The amendments also remove a redundant title citation and replace "shall" with "must." No amendments are adopted to the contents in the figures.
Subchapter Q. Life - Nonforfeiture Standards for Individual Life Insurance in Employer Pension Plans.
The adoption adds "Life -" to the title of Subchapter Q to clarify the applicability of the subchapter.
Section 4.1702. Definitions. The amendments remove "shall," correct punctuation, and replace "National Association of Insurance Commissioners" with "NAIC" for consistency. The amendments also correct the case law citation in §4.1702(8) by italicizing the names of the parties for consistency with §4.1703.
The text as proposed has been changed to correct an error in §4.1702(3) by replacing "1908 CET Table (M)" with "1980 CET Table (M)."
Section 4.1703. Standard. The amendments change the Norris case law citation in §4.1703(d) to reflect the same case law citation used in §4.1702(8) for consistency. The amendments also remove an unnecessary reference to a list of insurance code sections, update the TDI mailing address; add the titles to the citations for Insurance Code Chapter 425, Subchapter B, and Chapter 1105, Subchapter B; remove "herein"; and replace "paid up" with "paid-up" and "which" with "that."
Section 4.1704. Alternate Rule. The amendments update a section citation made obsolete after the administrative transfer, remove an unnecessary reference to a list of insurance code sections, and add titles to the citations for Insurance Code Chapter 425, Subchapter B, and Chapter 1105, Subchapter B. The amendments also update the TDI mailing address and replace "which" with "that."
The text as proposed has been changed to correct an error in §4.1704(a)(1) by replacing "1908 CSO Table" with "1980 CSO Table."
Section 4.1705. Unfair Discrimination. The amendment adds a title to the Insurance Code §541.057 citation.
Section 4.1706. Severability. The amendments remove "thereby" and replace "shall" with "will" and "thereof" with "of these provisions."
Section 4.1707. 2001 CSO Mortality Table. The amendments replace the sections cited with a citation to "Subchapter AA, Division 3" and replace "shall" with "must," "pursuant to" with "under," and "title" with "chapter."
Subchapter U. Variable Annuities.
Section 4.2102. Definitions. The amendments add a title to the Insurance Code Chapter 1152 citation, amend punctuation, and replace "which" with "that," "pursuant to" with "under," and "contractholder" with "contract holder."
Section 4.2103. Qualifications of Insurer to Issue Variable Annuities. The amendments replace "To" with "to" in the section title and update a section citation made obsolete after the administrative transfer.
The amendments also amend punctuation and replace "he or she" with "the commissioner"; "State Board of Insurance" with "Department of Insurance"; "which" with "that"; and "shall" with "must," "may," or "will."
Section 4.2104. Separate Accounts. The amendments add a title to the Insurance Code Chapter 1152 citation and update section citations made obsolete after the administrative transfer. The amendments also remove redundant instances of "or" at the end of §4.2104(a)(2)(A) and §4.2104(j)(1) and add "and" at the end of §4.2104(j)(3)(C) to clarify that the insurer must include all the information in paragraph (3), if applicable.
The amendments also replace "To" with "to" in a title citation, amend punctuation, and replace "which" with "that," "contractholders" with "contract holders," "prior to" with "before," "pursuant to" with "under," and "thereunder" with "adopted under that section" or "under the contract," as appropriate.
Section 4.2105. Contract Requirements. The amendments replace outdated Insurance Article citations with current Insurance Code citations and their corresponding titles. The amendments also replace a citation and title to "Board Order 40701" with "Chapter 3, Subchapter A" and its corresponding title citation.
The amendments also amend punctuation throughout, remove "thereunder" and "the" before "Internal Revenue Code," and replace "which," "as of which," or "of which" with "that"; "him or her" or "his or her" with "the commissioner" or "the contract holder," as appropriate; "chapter" with "title"; "prior to" with "before"; "contractholder" with "contract holder"; "pursuant to" with "under"; "shall have" with "has"; "previous to" with "before"; "subparagraph" with "subparagraphs"; and "shall" with "must," "may," "will," or "do."
Section 4.2106. Separability. The amendments remove "thereby" and replace "thereof" with "of these sections" and "shall" with "will."
Subchapter W. Annuity Disclosures.
Division 1. Annuity Contract Disclosures.
Section 4.2302. Applicability and Scope. The amendments remove "the" before Insurance Code and Finance Code for consistency, add titles to the Insurance Chapter 102 citation and the Finance Code Chapter 154 citation, and amend punctuation.
Section 4.2304. Definitions. The amendments update a section citation made obsolete after the administrative transfer and add titles to the Insurance Code Chapter 102 and 4054 citations. The amendments also remove "the" before Insurance Code and "shall" throughout the section and replace "subchapter" with "title."
Section 4.2306. Guaranteed and Non-Guaranteed Elements. The amendments update section citations made obsolete after the administrative transfer, replace "Non-guaranteed" with "Non-Guaranteed" in the section title, and replace "subchapter" with "title."
Section 4.2307. Effect on Other Law. The amendments replace "pursuant to" with "under."
Section 4.2308. Required Consumer Notices. The amendments update section citations made obsolete after the administrative transfer and add the title to the Insurance Code §1152.110 citation. The amendments remove "the" before Insurance Code, amend punctuation, and replace "subchapter" with "title," "Internet" with "internet," "which" with "and," "prior to" with "before," and "shall" with "must" or "will."
Section 4.2309. Disclosure Document. The amendment replaces "shall" with "must."
Section 4.2310. Buyer's Guide. The amendments correct punctuation and replace "NAIC" with "National Association of Insurance Commissioners (NAIC)" and "SEC's" with "Securities and Exchange Commission (SEC)."
Section 4.2311. Free Look Period. The amendments replace "shall" with "must" and "shall mean" with "means."
Section 4.2312. Report to Contract Owners. The amendment replaces "shall" with "must."
Division 2. Annuity Suitability Disclosures.
Section 4.2322. Required Forms. The amendments add "(NAIC)" at the end of the first use of "National Association of Insurance Commissioners" and then replace all instances of "National Association of Insurance Commissioners" with "NAIC." The adoption also removes "Texas" before "Insurance Code" for consistency with current agency rule drafting style.
Subchapter AA. Mortality Tables.
Division 1. Annuity Mortality Tables.
Section 4.2701. Purpose. The amendments update section and figure citations made obsolete after the administrative transfer. No amendments are adopted to the contents in the figures.
Section 4.2702. Definitions. The amendments update a section citation made obsolete after the administrative transfer, replace "Actuaries'" with "Actuaries" and "table" with "Table," and amend punctuation. The amendments also add "(NAIC)" at the end of the first use of "National Association of Insurance Commissioners" and then replace all instances of "National Association of Insurance Commissioners" with "NAIC."
Section 4.2705. Application of the 1994 GAR Table. The amendments update a figure citation made obsolete after the administrative transfer. No amendments are adopted to the content in the figure.
Section 4.2706. Application of the 2012 IAR Mortality Table. The amendments update figure citations made obsolete after the administrative transfer. Amendments to figure citations are adopted in both the rule text and the text of Figure: 28 TAC §4.2706.
Division 2. Smoker-Nonsmoker Composite Mortality Tables.
Section 4.2712. Definitions. The amendments update punctuation and remove "shall."
Section 4.2713. Alternate Tables. The amendments update section citations made obsolete after the administrative transfer, remove an unnecessary reference to a list of insurance code sections in two places, and add the title to the Insurance Code, Chapter 1105, Subchapter B, citation. The amendments also remove a redundant title to a section cited earlier in §4.2713, amend punctuation, update a TDI mailing address, remove "herein," and replace "paid up" with "paid-up."
Section 4.2714. Conditions. The amendment adds the title to the Insurance Code §425.068 citation.
Section 4.2715. Severability. The amendments remove "thereby" and replace "thereof" with "of these sections" and "shall" with "will."
Section 4.2716. 2001 CSO Mortality Table. The amendments update section citations made obsolete after the administrative transfer and replace "shall" with "must," "pursuant to" with "under," and "title" with "chapter."
Division 3. 2001 CSO Mortality Table.
Section 4.2721. Purpose. The amendments update a section citation made obsolete after the administrative transfer and add titles to the citations for Insurance Code Chapter 425, Subchapter B; §425.058; and §1105.055.
Section 4.2722. Definitions. The amendments update punctuation, remove "shall," and capitalize "Mortality."
Section 4.2723. 2001 CSO Mortality Table. The amendments update section citations made obsolete after the administrative transfer and add titles to the citations for Insurance Code Chapter 425, Subchapter B; §425.058; and §1105.055. The adoption also corrects a citation from Insurance Code "§1055.055(h)" to "§1105.055(h)" in §4.2723(b).
The amendments also remove a redundant title to a section cited earlier in §4.2723; replace "Commissioner of Insurance" with "commissioner," "title" with "chapter," and "pursuant to" with "under"; and update a TDI mailing address and the TDI website where the 2001 CSO Mortality Table may be accessed.
Section 4.2724. Conditions. The amendments update section citations made obsolete after the administrative transfer and add the title to the Insurance Code §425.068 citation. The amendments also replace "Chapter 3, Subchapter EE" with "Chapter 4, Subchapter BB, Division 3" in a title citation and correct inconsistent capitalization in §4.2724(a)(1) - (3) to reflect the punctuation used in the section.
Section 4.2725. Applicability of the 2001 CSO Mortality Table to Chapter 4, Subchapter BB, Division 3 of this Title. The amendments update section citations made obsolete after the administrative transfer and replace "Chapter 3, Subchapter EE" with "Chapter 4, Subchapter BB, Division 3" in the section title and rule text. The amendments also amend punctuation, replace "shall be" with "is" and "shall" with "may," and remove "shall," as appropriate.
Section 4.2726. Gender-Blended Tables. The amendments add titles to the citations for Insurance Code Chapter 541 and Chapter 425, Subchapter B; and update the TDI mailing address and the TDI website where the blended tables developed by the American Academy of Actuaries CSO Task Force may be accessed.
Division 4. Preferred Mortality Tables.
Section 4.2731. Purpose. The amendments update a section citation made obsolete after the administrative transfer and add titles to the Insurance Code Chapter 425, Subchapter B and §425.058 citations.
Section 4.2732. Definitions. The amendments remove "shall" and amend punctuation.
Section 4.2733. 2001 CSO Preferred Class Structure Table. The amendments update section citations made obsolete after the administrative transfer and add the title to the Insurance Code Chapter 425, Subchapter B citation. The amendments also replace "pursuant to" with "under" and "prior to" with "before" and update the TDI mailing address and the TDI website where the 2001 CSO Preferred Class Structure Mortality Table may be accessed.
Section 4.2734. Conditions. The amendments update punctuation and replace "NAIC" with "National Association of Insurance Commissioners (NAIC)," "prior to" with "before," and "shall" with "must" or "will."
Subchapter BB. Life and Annuity Reserves.
Division 1. Actuarial Opinion and Memorandum Regulation.
Section 4.2801. Purpose. The amendments remove the language "described in paragraphs (1) - (3) of this section" at the end of the first sentence in §4.2801 to simplify and clarify the provision. The section is not broken into subsections and there are only three paragraphs in the section, so it is not necessary to list out each paragraph. The amendments also add the word "following" to clarify the sentence given the removal and add the title to the Insurance Code §425.054 citation.
Section 4.2802. Scope and Applicability. The amendments update section citations made obsolete after the administrative transfer and add the title to the Insurance Code Chapter 425, Subchapter B citation. The amendments also replace "thereof" with "of the statement of opinion," "shall apply" with "applies," "shall have" with "has," "shall be" with "is," "which" with "that," "his or her" with "their," and "shall" with "must."
Section 4.2803. Commissioner Discretion. The amendments update section citations made obsolete after the administrative transfer and replace "which" with "that."
Section 4.2804. Definitions. The amendments update section citations made obsolete after the administrative transfer and add titles to the Insurance Code §884.307 and §884.402 citations. The adoption also amends punctuation; removes "shall"; and replaces "pursuant to" with "under," "his or her" with "their," and "which includes" with "including."
Section 4.2805. General Requirements. The amendments update a section citation made obsolete after the administrative transfer and add titles to the Insurance Code §§425.054, 425.064, 425.065, 425.068, and 425.069 citations.
Section 4.2806. Statement of Actuarial Opinion Based on an Asset Adequacy Analysis. The amendments update figure and section citations made obsolete after the administrative transfer and add the title to the Insurance Code Chapter 425, Subchapter B citation. The adoption also updates section citations in Figure: 28 TAC §4.2806(b)(2). No other amendments were proposed or are adopted to the contents in the figures.
The amendments replace "be at least" with "include the following" in §4.2806(f)(1)(C)(ii) for clarity and amend punctuation. The adoption also capitalizes the words beginning each paragraph in §4.2806(f)(1) to reflect the amended punctuation and replaces "subsequent to" with "before" and "being" with "may be" in §4.2806(f)(1)(B) to clarify that before an alternative statement may be issued, the company must file certain requirements.
The amendments also correct a reference to the title of 28 TAC §7.18 and replaces "NAIC" with "National Association of Insurance Commissioners," "that which" with "what," "which" with "that," and "he or she" or "his or her" with "the appointed actuary" or "their."
Section 4.2807. Description of Actuarial Memorandum Including an Asset Adequacy Analysis and Regulatory Asset Adequacy Issues Summary. The amendments update section citations made obsolete after the administrative transfer and add titles to the citations for Insurance Code Chapters 401 and 425, Subchapter B. The adoption replaces citations to Insurance Code §§425.054 - 425.057 with Chapter 425, Subchapter B.
The amendments replace a colon at the end of a statement with "the following" and a period and correct capitalization for consistency with the subsection's organization.
The adoption also updates a TDI mailing address; removes "the" before Insurance Code; amends punctuation; and replaces "which" with "that," "his or her" with "the appointed actuary's," and "their" with "the other actuaries.'"
Section 4.2808. Asset Adequacy Analysis Exemption. The amendments update section citations made obsolete after the administrative transfer, capitalize "Commissioner" as it appears in the title for §4.2803, and replace "pursuant to" with "under" and "shall" with "must."
Division 2. Strengthened Reserves Under Insurance Code §425.067. The text as proposed has been changed by replacing "Pursuant to" with "Under."
Section 4.2811. Strengthened Reserves Under Insurance Code §425.067. The amendments add titles to the Insurance Code §425.053 and §425.067 citations and replace "pursuant to" with "under" in the section title.
Division 3. Valuation of Life Insurance Policies.
Section 4.2821. Purpose. The amendments revise capitalization to reflect current agency drafting style.
Section 4.2822. Adoption of Tables of Select Mortality Factors. The amendments update a figure citation made obsolete after the administrative transfer and replace "age last birthday" with "age-last-birthday," "age nearest birthday" with "age-nearest-birthday," and "which" with "that." No amendments are adopted to the content in the figure.
Section 4.2823. Applicability. The amendments update section citations made obsolete after the administrative transfer and add the title to the Insurance Code Chapter 425, Subchapter B citation. The adoption also amends punctuation and replaces "Nonlevel" with "nonlevel" and "shall" with "does" or "must."
Section 4.2824. Definitions. The amendments update section and figure citations made obsolete after the administrative transfer; remove a redundant title already cited; update punctuation; and replace "subchapter" with "title," "shall" with "must" or "may," and "one percent" with "1%." These amendments are made in the rule text and in the text of Figure: 28 TAC §4.2824(2).
Amendments also add or correct titles to the citations for Insurance Code Chapter 425, Subchapter B and §§425.061, 425.064, and 425.068; remove "shall" and instances of "the" before Insurance Code; replace "one year" with "one-year"; and correct capitalization throughout the section. These nonsubstantive amendments are meant to align the section with other similar sections.
The text of §4.2824(9)(B) as proposed has been changed to insert a missing closing parenthesis.
Section 4.2825. General Calculation Requirements for Basic Reserves and Premium Deficiency Reserves. The amendments update section citations made obsolete after the administrative transfer; correct a title citing to Insurance Code Chapter 425, Subchapter B; and remove a redundant title already cited.
The amendments correct capitalization and add "or" at the end of §4.2825(b)(3)(G)(iii) to reflect that, if select mortality factors are elected, it may be those found in §4.2825(b).
The amendments also remove "the" before "Insurance Code"; amend punctuation; and replace "shall" with "must, "percent" with "%," "prior to" with "before," and "subchapter" or "chapter" with "title."
Section 4.2826. Calculation of Minimum Valuation Standard for Policies with Guaranteed Nonlevel Gross Premiums of Guaranteed Nonlevel Benefits (Other than Universal Life Policies). The amendments update section citations made obsolete after the administrative transfer; add the title to the Insurance Code Chapter 425, Subchapter B citation; and remove a redundant title already cited. The amendments also update punctuation and replace "prior to" with "before," "subsequent to" with "after," "twenty-four" with "24," and "twenty-five" with "25."
Section 4.2827. Calculation of Minimum Valuation Standard for Flexible Premium and Fixed Premium Universal Life Insurance Policies That Contain Provisions Resulting in the Ability of a Policyholder to Keep a Policy in Force Over a Secondary Guarantee Period. The amendments update section citations made obsolete after the administrative transfer; correct capitalization in §4.2827(d) to reflect the subsection organization; amend punctuation; and replace "one year" with "one-year," "which" with "that," and "shall" with "must."
Section 4.2829. 2001 CSO Mortality Table. The amendments update section citations made obsolete after the administrative transfer by replacing "§§3.9101 - 3.9106" with "Subchapter AA, Division 3" and replace "shall" with "must," "title" with "chapter," and "pursuant to" with "under."
Division 4. Preneed Life Insurance Minimum Mortality Standards for Determining Reserve Liabilities and Nonforfeiture Values.
Section 4.2831. Purpose and Applicability. The amendments update a section citation made obsolete after the administrative transfer and replace "of the Insurance Code" with titles to the Insurance Code §425.058 and §1105.055 citations. The amendments also replace "chapter" with "title" and add "Insurance Code" before the Insurance Code citations.
Section 4.2832. Definitions. The amendments add titles to the Finance Code Chapter 541 and §541.002 citations, remove "shall" and "the" before Finance Code, amend punctuation, and replace "which" with "that."
Section 4.2833. Minimum Valuation Mortality Standards. The amendments update a section citation made obsolete after the administrative transfer and replace "subchapter" with "title" and "shall be" with "is."
Section 4.2834. Minimum Valuation Interest Rate Standards. The amendments correct the title for the Insurance Code Chapter 425, Subchapter B and Chapter 1105 citations; remove "the" before Insurance Code; and replace "shall be" with "are."
Section 4.2835. Minimum Valuation Method Standards. The amendments update the titles for the Insurance Code Chapter 425, Subchapter B and Chapter 1105 citations; update punctuations; replace "shall be" with "is"; and remove "the" before "Insurance Code."
Section 4.2836. Transitional Use of the 2001 CSO Mortality Table. The amendments update section citations made obsolete after the administrative transfer by replacing "§§3.9101 - 3.9106" with "Subchapter AA, Division 3." The adoption also replaces "shall" with "must."
SUMMARY OF COMMENTS. TDI did not receive any comments on the proposed repeal and amendments.
SUBCHAPTER C. CONSUMER NOTICES FOR LIFE INSURANCE POLICY AND ANNUITY CONTRACT REPLACEMENTS
STATUTORY AUTHORITY. The commissioner adopts amendments to §§4.201 - 4.206 under Insurance Code §§1114.006, 1114.007, and 36.001.
Insurance Code §1114.006 provides that the commissioner by rule adopt or approve model documents to be used for consumer notices under Insurance Code Chapter 1114.
Insurance Code §1114.007 authorizes the commissioner to adopt reasonable rules in the manner prescribed by Insurance Code Chapter 36, Subchapter A, to accomplish and enforce the purposes of Insurance Code Chapter 1114.
Insurance Code §36.001 provides that the commissioner may adopt any rules necessary and appropriate to implement the powers and duties of TDI under the Insurance Code and other laws of this state.
The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on January 4, 2024.
TRD-202400038
Jessica Barta
General Counsel
Texas Department of Insurance
Effective date: January 24, 2024
Proposal publication date: September 22, 2023
For further information, please call: (512) 676-6555
28 TAC §§4.601 - 4.608, 4.611, 4.613 - 4.628
STATUTORY AUTHORITY. The commissioner adopts amendments to §§4.601 - 4.608, 4.611, and 4.613 - 4.628 under Insurance Code §§541.401, 543.001(c), 1701.060 and 36.001.
Insurance Code §541.401 provides that the commissioner may adopt and enforce reasonable rules necessary to accomplish the purposes of Insurance Code Chapter 541.
Insurance Code §543.001(c) provides that the commissioner may adopt and enforce rules as provided by Insurance Code Chapter 541, Subchapter I to accomplish the purposes of §543.001(b)(1), prohibiting misrepresentation, as those purposes relate to life insurance companies.
Insurance Code §1701.060 authorizes the commissioner to adopt reasonable rule necessary to implement the purposes of Insurance Code Chapter 1701.
Insurance Code §36.001 provides that the commissioner may adopt any rules necessary and appropriate to implement the powers and duties of TDI under the Insurance Code and other laws of this state.
The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on January 4, 2024.
TRD-202400039
Jessica Barta
General Counsel
Texas Department of Insurance
Effective date: January 24, 2024
Proposal publication date: September 22, 2023
For further information, please call: (512) 676-6555
28 TAC §§4.1001, 4.1002, 4.1004, 4.1005, 4.1008, 4.1010, 4.1011
STATUTORY AUTHORITY. The commissioner adopts amendments to §§4.1001, 4.1002, 4.1004, 4.1005, 4.1008, 4.1010, and 4.1011 under Insurance Code §§543.001(c), 1701.060, and 36.001.
Insurance Code §543.001(c) provides that the commissioner may adopt and enforce reasonable rules as provided by Insurance Code Chapter 541, Subchapter I to accomplish the purposes of §543.001(b)(1), prohibiting misrepresentation, as those purposes relate to life insurance companies.
Insurance Code §1701.060 specifies that the commissioner may adopt rules necessary to implement the purpose of Insurance Code Chapter 1701.
Insurance Code §36.001 provides that the commissioner may adopt any rules necessary and appropriate to implement the powers and duties of TDI under the Insurance Code and other laws of this state.
The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on January 4, 2024.
TRD-202400040
Jessica Barta
General Counsel
Texas Department of Insurance
Effective date: January 24, 2024
Proposal publication date: September 22, 2023
For further information, please call: (512) 676-6555
28 TAC §§4.1101 - 4.1104, 4.1106 - 4.1116
STATUTORY AUTHORITY. The commissioner adopts amendments to §§4.1101 - 4.1104 and 4.1106 - 4.1116 under Insurance Code §§1111.053, 1701.060, and 36.001.
Insurance Code §1111.053 provides that the commissioner may adopt rules to implement Insurance Code Chapter 1111, Subchapter B.
Insurance Code §1701.060 specifies that the commissioner may adopt rules necessary to implement the purpose of Insurance Code Chapter 1701.
Insurance Code §36.001 provides that the commissioner may adopt any rules necessary and appropriate to implement the powers and duties of TDI under the Insurance Code and other laws of this state.
The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on January 4, 2024.
TRD-202400041
Jessica Barta
General Counsel
Texas Department of Insurance
Effective date: January 24, 2024
Proposal publication date: September 22, 2023
For further information, please call: (512) 676-6555
STATUTORY AUTHORITY. The commissioner adopts the repeal of §4.1117 under Insurance Code §§1111.053, 1701.060, and 36.001.
Insurance Code §1111.053 provides that the commissioner may adopt rules to implement Insurance Code Chapter 1111, Subchapter B.
Insurance Code §1701.060 specifies that the commissioner may adopt rules necessary to implement the purpose of Insurance Code Chapter 1701.
Insurance Code §36.001 provides that the commissioner may adopt any rules necessary and appropriate to implement the powers and duties of TDI under the Insurance Code and other laws of this state.
The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on January 4, 2024.
TRD-202400037
Jessica Barta
General Counsel
Texas Department of Insurance
Effective date: January 24, 2024
Proposal publication date: September 22, 2023
For further information, please call: (512) 676-6555
STATUTORY AUTHORITY. The commissioner adopts amendments to §4.1201 under Occupations Code §651.159 and Insurance Code §36.001.
Occupations Code §651.159 provides the commissioner adopt a memorandum of understanding with the Texas Funeral Service Commission and the Texas Department of Banking.
Insurance Code §36.001 provides that the commissioner may adopt any rules necessary and appropriate to implement the powers and duties of TDI under the Insurance Code and other laws of this state.
The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on January 4, 2024.
TRD-202400042
Jessica Barta
General Counsel
Texas Department of Insurance
Effective date: January 24, 2024
Proposal publication date: September 22, 2023
For further information, please call: (512) 676-6555
STATUTORY AUTHORITY. The commissioner adopts amendments to §§4.1502 - 4.1510 under Insurance Code §1152.002 and §36.001.
Insurance Code §1152.002 authorizes the commissioner to adopt rules that are fair, reasonable, and appropriate to augment and implement Insurance Code Chapter 1152, including rules establishing requirements for agent licensing, standard policy provisions, and disclosure.
Insurance Code §36.001 provides that the commissioner may adopt any rules necessary and appropriate to implement the powers and duties of TDI under the Insurance Code and other laws of this state.
§4.1510.Separability.
If any provision of this chapter (relating to Life - Variable Life Insurance) or the application of such provisions to any person or circumstance is for any reason held to be invalid, the remainder of the sections and the application of such provision to other persons or circumstances will not be affected.
The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on January 4, 2024.
TRD-202400043
Jessica Barta
General Counsel
Texas Department of Insurance
Effective date: January 24, 2024
Proposal publication date: September 22, 2023
For further information, please call: (512) 676-6555
28 TAC §§4.1602 - 4.1606, 4.1609 - 4.1613
STATUTORY AUTHORITY. The commissioner adopts amendments to §§4.1602 - 4.1606 and 4.1609 - 4.1613 under Insurance Code §1106.010 and §36.001.
Insurance Code §1106.010 provides the commissioner adopt reasonable rules to implement Insurance Code Chapter 1106.
Insurance Code §36.001 provides that the commissioner may adopt any rules necessary and appropriate to implement the powers and duties of TDI under the Insurance Code and other laws of this state.
The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on January 4, 2024.
TRD-202400044
Jessica Barta
General Counsel
Texas Department of Insurance
Effective date: January 24, 2024
Proposal publication date: September 22, 2023
For further information, please call: (512) 676-6555
STATUTORY AUTHORITY. The commissioner adopts amendments to §§4.1702 - 4.1707 under Insurance Code §§36.004, 541.057, 541.401, 1105.055(h), and 36.001.
Insurance Code §36.004 provides that the commissioner may adopt a rule to require compliance with a rule, regulation, directive, or standard adopted by the National Association of Insurance Commissioners if certain statutory requirements are met.
Insurance Code §541.057 prohibits unfair discrimination in the rates, dividends, or any other contract terms and conditions for individuals of the same class and life expectancy in life insurance and annuity contracts.
Insurance Code §541.401 provides that the commissioner may adopt and enforce reasonable rules necessary to accomplish the purposes of Insurance Code Chapter 541.
Insurance Code §1105.055(h) specifies that the commissioner may adopt by rule any ordinary mortality table adopted after 1980 by the National Association of Insurance Commissioners.
Insurance Code §36.001 provides that the commissioner may adopt any rules necessary and appropriate to implement the powers and duties of TDI under the Insurance Code and other laws of this state.
§4.1702.Definitions.
The following words and terms, when used in this subchapter, have the following meanings unless the context clearly indicates otherwise.
(1) 1980 CET Table--That mortality table consisting of separate rates of mortality for male and female lives, developed by the Society of Actuaries Committee to Recommend New Mortality Tables for Valuation of Standard Individual Ordinary Life Insurance, incorporated in the 1980 National Association of Insurance Commissioners (NAIC) amendments to the Model Standard Valuation Law and Standard Nonforfeiture Law for Life Insurance, and referred to in those models as the Commissioners 1980 Extended Term Insurance Table.
(2) 1980 CET Table (F)--That mortality table consisting of the rates of mortality for female lives from the 1980 CET Table.
(3) 1980 CET Table (M)--That mortality table consisting of the rates of mortality for male lives from the 1980 CET Table.
(4) 1980 CSO Table, with or without Ten-Year Select Mortality Factors--That mortality table, consisting of separate rates of mortality for male and female lives, developed by the Society of Actuaries Committee to Recommend New Mortality for Valuation of Standard Individual Ordinary Life Insurance, incorporated in the 1980 NAIC amendments to the Model Standard Valuation Law and Standard Nonforfeiture Law for Life Insurance, and referred to in those models as the Commissioners 1980 Standard Ordinary Mortality Table, with or without Ten-Year Select Mortality Factors.
(5) 1980 CSO Table (F), with or without Ten-Year Select Mortality Factors--That mortality table consisting of the rates of mortality for female lives from the 1980 CSO Table, with or without Ten-Year Select Mortality Factors.
(6) 1980 CSO Table (M), with or without Ten-Year Select Mortality Factors--That mortality table consisting of the rates of mortality for male lives from the 1980 CSO Table, with or without Ten-Year Select Mortality Factors.
(7) 1980 CSO and 1980 CET smoker and nonsmoker mortality tables--The mortality tables derived from the 1980 CSO and 1980 CET mortality tables by the Society of Actuaries Task Force on Smoker/Nonsmoker Mortality and adopted by the NAIC in December 1983.
(8) Norris decision--The decision of the United States Supreme Court in the case of Arizona Governing Committee for Tax Deferred Annuity and Deferred Compensation Plans v. Norris, 463 U.S. 1073 (1983).
§4.1704.Alternate Rule.
(a) In determining minimum cash surrender value and amounts of paid-up nonforfeiture benefits for any policy of insurance on either a male or a female insured on a form of insurance with separate rates for smokers and nonsmokers delivered or issued for delivery in this state after the operative date of former Insurance Code Article 3.44a, §8 (recodified in Insurance Code Chapter 1105, Subchapter B, concerning Computation of Adjusted Premiums Using Nonforfeiture Net Level Premium Method), and before January 1, 2017, for that policy form, in addition to the mortality tables that may be used according to §4.1703 of this title (relating to Standard), the tables in paragraphs (1) and (2) of this subsection may be used. For policies issued on or after January 1, 2017, the valuation manual, adopted under Insurance Code Chapter 425, Subchapter B, concerning Standard Valuation Law, provides the tables to be used.
(1) A mortality table that is a blend of the male and female rates of mortality according to the 1980 CSO Smoker Mortality Table, in the case of lives classified as smokers, or the 1980 CSO Nonsmoker Mortality Table, in the case of lives classified as nonsmokers, with or without 10-year select mortality factors, may, at the option of the company, be substituted for the 1980 CSO Table, with or without 10-year select mortality factors.
(2) A mortality table that is of the same blend as used in paragraph (1) of this subsection but applied to form a blend of the male and female rates of mortality according to the corresponding 1980 CET Smoker Mortality Table or 1980 CET Nonsmoker Mortality Table or 1980 CET Nonsmoker Mortality Table may, at the option of the company, be substituted for the 1980 CET Table.
(b) The following blended mortality tables are considered as the basis for acceptable tables according to subsection (a) of this section:
(1) 100% male, 0% female for smoker tables to be designated as the 1980 CSO-SA and 1980 CET-SA Tables;
(2) 80% male, 20% female for smoker tables to be designated as the 1980 CSO-SB and 1980 CET-SB Tables;
(3) 60% male, 40% female for smoker tables to be designated as the 1980 CSO-SC and 1980 CET-SC Tables;
(4) 50% male, 50% female for smoker tables to be designated as the 1980 CSO-SD and 1980 CET-SD Tables;
(5) 40% male, 60% female for smoker tables to be designated as the 1980 CSO-SE and 1980 CET-SE Tables;
(6) 20% male, 80% female for smoker tables to be designated as the 1980 CSO-SF and 1980 CET-SF Tables;
(7) 0% male, 100% female for smoker tables to be designated as the 1980 CSO-SG and 1980 CET-SG Tables;
(8) 100% male, 0% female for nonsmoker tables to be designated as the 1980 CSO-NA and 1980 CET-NA Tables;
(9) 80% male, 20% female for nonsmoker tables to be designated as the 1980 CSO-NB and 1980 CET-NB Tables;
(10) 60% male, 40% female for nonsmoker tables to be designated as the 1980 CSO-NC and 1980 CET-NC Tables;
(11) 50% male, 50% female for nonsmoker tables to be designated as the 1980 CSO-ND and CET-ND Tables;
(12) 40% male, 60% female for nonsmoker tables to be designated as the 1980 CSO-NE and 1980 CET-NE Tables;
(13) 20% male, 80% female for nonsmoker tables to be designated as the 1980 CSO-NF and 1980 CET-NF Tables; and
(14) 0% male, 100% female for nonsmoker tables to be designated as the 1980 CSO-NG and 1980 CET-NG Tables.
(c) The Texas Department of Insurance adopts and incorporates into this subchapter by reference the tables to which subsection (b) of this section refers as tables to be used in conjunction with the section adopted under this subchapter. Copies of these tables can be obtained from the Life and Health Division, Life and Health Actuarial, MC: LH-ACT, Texas Department of Insurance, P.O. Box 12030, Austin, Texas 78711-2030.
(d) The tables specified in subsection (b)(1), (7), (8), and (14) of this section may not be used except where the proportion of persons insured is anticipated to be 90% or more of one sex or the other.
(e) Notwithstanding any other provision of this subchapter, an insurer may not use the blended mortality tables in subsection (b) of this section unless the Norris decision is known to apply to the policies involved, or unless there exists a bona fide concern on the part of the insurer that the Norris decision might reasonably be construed to apply by a court having jurisdiction.
The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on January 4, 2024.
TRD-202400045
Jessica Barta
General Counsel
Texas Department of Insurance
Effective date: January 24, 2024
Proposal publication date: September 22, 2023
For further information, please call: (512) 676-6555
STATUTORY AUTHORITY. The commissioner adopts amendments to §§4.2102 - 4.2106 under Insurance Code §§1152.002, 1152.101, and 36.001.
Insurance Code §1152.002 specifies that the commissioner may adopt rules that are fair, reasonable, and appropriate to augment and implement Insurance Code Chapter 1152, including rules establishing requirements for agent licensing, standard policy provisions, and disclosure.
Insurance Code §1152.101 states that the commissioner has sole authority to regulate the issuance and sale of a variable contract under Insurance Code Chapter 1152 and rules adopted under Insurance Code §1152.002.
Insurance Code §36.001 provides that the commissioner may adopt any rules necessary and appropriate to implement the powers and duties of TDI under the Insurance Code and other laws of this state.
The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on January 4, 2024.
TRD-202400046
Jessica Barta
General Counsel
Texas Department of Insurance
Effective date: January 24, 2024
Proposal publication date: September 22, 2023
For further information, please call: (512) 676-6555
DIVISION 1. ANNUITY CONTRACT DISCLOSURES
28 TAC §§4.2302, 4.2304, 4.2306 - 4.2312
STATUTORY AUTHORITY. The commissioner adopts amendments to §§4.2302, 4.2304, and 4.2306 - 4.2312 under Insurance Code §§31.002, 101.051, 1108.002, 1114.007, 1152.002, and 36.001.
Insurance Code §31.002 specifies that in addition to other required duties, TDI will regulate the business of insurance in this state; administer the workers’ compensation system of this state as provided by Labor Code, Title 5; and ensure that the Insurance Code and other laws regarding insurance and insurance companies are executed.
Insurance Code §101.051 specifies that acts that constitute the business of insurance in this state include making or proposing to make, as an insurer, an insurance contract; taking or receiving an insurance application; or issuing or delivering an insurance contract to a resident of this state.
Insurance Code §1108.002 specifies that for the purpose of regulation under the Insurance Code, an annuity contract is considered an insurance policy or contract if the annuity contract is issued by a life, health, or accident insurance company, including a mutual company or fraternal benefit society, or if it is issued under an annuity or benefit plan used by an employer or individual.
Insurance Code §1114.007 authorizes the commissioner to adopt reasonable rules in the manner prescribed by Insurance Code Chapter 36, Subchapter A, to accomplish and enforce the purpose of Insurance Code Chapter 1114.
Insurance Code §1152.002 authorizes the commissioner to adopt rules that are fair, reasonable, and appropriate to augment and implement Insurance Code Chapter 1152, including rules establishing requirements for agent licensing, standard policy provisions, and disclosure.
Insurance Code §36.001 provides that the commissioner may adopt any rules necessary and appropriate to implement the powers and duties of TDI under the Insurance Code and other laws of this state.
The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on January 4, 2024.
TRD-202400047
Jessica Barta
General Counsel
Texas Department of Insurance
Effective date: January 24, 2024
Proposal publication date: September 22, 2023
For further information, please call: (512) 676-6555
STATUTORY AUTHORITY. The commissioner adopts amendments to §4.2322 under Insurance Code §§36.004, 1115.005, 1115.0514, 1115.0516, and 36.001.
Insurance Code §36.004 provides that the commissioner may adopt a rule to require compliance with a rule, regulation, directive, or standard adopted by the National Association of Insurance Commissioners if certain statutory requirements are met.
Insurance Code §1115.005 provides that the commissioner may adopt reasonable rules in the manner prescribed by Insurance Code Chapter 36, Subchapter A, to accomplish and enforce the purpose of Chapter 1115.
Insurance Code §1115.0514 requires that an agent, before the recommendation or sale of an annuity, provide a disclosure to the consumer on a form prescribed by the commissioner by rule.
Insurance Code §1115.0516 requires agent use, at specified times, of disclosure forms prescribed by the commissioner by rule.
Insurance Code §36.001 provides that the commissioner may adopt any rules necessary and appropriate to implement the powers and duties of TDI under the Insurance Code and other laws of this state.
The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on January 4, 2024.
TRD-202400048
Jessica Barta
General Counsel
Texas Department of Insurance
Effective date: January 24, 2024
Proposal publication date: September 22, 2023
For further information, please call: (512) 676-6555
DIVISION 1. ANNUITY MORTALITY TABLES
28 TAC §§4.2701, 4.2702, 4.2705, 4.2706
STATUTORY AUTHORITY. The commissioner adopts amendments to §§4.2701, 4.2702, 4.2705, and 4.2706 under Insurance Code §§36.004, 425.053, 425.059(d), and 36.001.
Insurance Code §36.004 provides that the commissioner may adopt a rule to require compliance with a rule, regulation, directive, or standard adopted by the National Association of Insurance Commissioners if certain statutory requirements are met.
Insurance Code §425.053 authorizes TDI to annually value or cause to be valued the reserves for all outstanding annuity and pure endowment contracts before the operative date of the valuation manual required under Insurance Chapter 425.
Insurance Code §425.059(d) provides that the commissioner may approve by rule a mortality table adopted after 1980 by the National Association of Insurance Commissioners or a modification of one of the tables provided in the section.
Insurance Code §36.001 provides that the commissioner may adopt any rules necessary and appropriate to implement the powers and duties of TDI under the Insurance Code and other laws of this state.
The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on January 4, 2024.
TRD-202400049
Jessica Barta
General Counsel
Texas Department of Insurance
Effective date: January 24, 2024
Proposal publication date: September 22, 2023
For further information, please call: (512) 676-6555
STATUTORY AUTHORITY. The commissioner adopts amendments to §§4.2712 - 4.2716 under Insurance Code §§36.004, 541.057, 541.401, 1105.055(h), and 36.001.
Insurance Code §36.004 provides that the commissioner may adopt a rule to require compliance with a rule, regulation, directive, or standard adopted by the National Association of Insurance Commissioners if certain statutory requirements are met.
Insurance Code §541.057 prohibits unfair discrimination in the rates, dividends, or any other contract terms and conditions for individuals of the same class and life expectancy in life insurance and annuity contracts.
Insurance Code §541.401 provides that the commissioner may adopt and enforce reasonable rules necessary to accomplish the purposes of Insurance Code Chapter 541.
Insurance Code §1105.055(h) specifies that the commissioner may adopt by rule any ordinary mortality table adopted after 1980 by the National Association of Insurance Commissioners.
Insurance Code §36.001 provides that the commissioner may adopt any rules necessary and appropriate to implement the powers and duties of TDI under the Insurance Code and other laws of this state.
The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on January 4, 2024.
TRD-202400050
Jessica Barta
General Counsel
Texas Department of Insurance
Effective date: January 24, 2024
Proposal publication date: September 22, 2023
For further information, please call: (512) 676-6555
STATUTORY AUTHORITY. The commissioner adopts amendments to §§4.2721 - 4.2726 under Insurance Code §§36.004, 425.058(c)(3), 1105.055(h), and 36.001.
Insurance Code §36.004 provides that the commissioner may adopt a rule to require compliance with a rule, regulation, directive, or standard adopted by the National Association of Insurance Commissioners if certain statutory requirements are met.
Insurance Code §425.058(c)(3) specifies that for an ordinary life insurance policy issued on the standard basis, to which Insurance Code Chapter 1105, Subchapter B, applies, the applicable table is any ordinary mortality table adopted after 1980 by the National Association of Insurance Commissioners that is approved by commissioner rule for use in determining the minimum standard values under Insurance Code Chapter 425, Subchapter B.
Insurance Code §1105.055(h) specifies that the commissioner may adopt by rule any ordinary mortality table adopted after 1980 by the National Association of Insurance Commissioners.
Insurance Code §36.001 provides that the commissioner may adopt any rules necessary and appropriate to implement the powers and duties of TDI under the Insurance Code and other laws of this state.
The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on January 4, 2024.
TRD-202400051
Jessica Barta
General Counsel
Texas Department of Insurance
Effective date: January 24, 2024
Proposal publication date: September 22, 2023
For further information, please call: (512) 676-6555
STATUTORY AUTHORITY. The commissioner adopts amendments to §§4.2731 - 4.2734 under Insurance Code §§36.004, 425.058(c)(3), 1105.055(h), and 36.001.
Insurance Code §36.004 provides that the commissioner may adopt a rule to require compliance with a rule, regulation, directive, or standard adopted by the National Association of Insurance Commissioners if certain statutory requirements are met.
Insurance Code §425.058(c)(3) specifies that for an ordinary life insurance policy issued on the standard basis, to which Insurance Code Chapter 1105, Subchapter B, applies, the applicable table is any ordinary mortality table adopted after 1980 by the National Association of Insurance Commissioners that is approved by commissioner rule for use in determining the minimum standard values under Insurance Code Chapter 425, Subchapter B.
Insurance Code §1105.055(h) specifies that the commissioner may adopt by rule any ordinary mortality table adopted after 1980 by the National Association of Insurance Commissioners.
Insurance Code §36.001 provides that the commissioner may adopt any rules necessary and appropriate to implement the powers and duties of TDI under the Insurance Code and other laws of this state.
The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on January 4, 2024.
TRD-202400052
Jessica Barta
General Counsel
Texas Department of Insurance
Effective date: January 24, 2024
Proposal publication date: September 22, 2023
For further information, please call: (512) 676-6555
DIVISION 1. ACTUARIAL OPINION AND MEMORANDUM REGULATION
STATUTORY AUTHORITY. The commissioner adopts amendments to §§4.2801 - 4.2808 under Insurance Code §§36.004, 425.054, and 36.001.
Insurance Code §36.004 provides that the commissioner may adopt a rule to require compliance with a rule, regulation, directive, or standard adopted by the National Association of Insurance Commissioners if certain statutory requirements are met.
Insurance Code §425.054 provides that the commissioner specify by rule the requirements of an actuarial opinion under §425.064(b), including any matters considered necessary to the opinion's scope.
Insurance Code §36.001 provides that the commissioner may adopt any rules necessary and appropriate to implement the powers and duties of TDI under the Insurance Code and other laws of this state.
The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on January 4, 2024.
TRD-202400053
Jessica Barta
General Counsel
Texas Department of Insurance
Effective date: January 24, 2024
Proposal publication date: September 22, 2023
For further information, please call: (512) 676-6555
STATUTORY AUTHORITY. The commissioner adopts amendments to §4.2811 under Insurance Code §425.067 and §36.001.
Insurance Code §425.067 authorizes the commissioner to establish categories of necessary reserves for certain policies, benefits, or contracts issued by life insurance companies.
Insurance Code §36.001 provides that the commissioner may adopt any rules necessary and appropriate to implement the powers and duties of TDI under the Insurance Code and other laws of this state.
The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on January 4, 2024.
TRD-202400054
Jessica Barta
General Counsel
Texas Department of Insurance
Effective date: January 24, 2024
Proposal publication date: September 22, 2023
For further information, please call: (512) 676-6555
28 TAC §§4.2821 - 4.2827, 4.2829
STATUTORY AUTHORITY. The commissioner adopts amendments to §§4.2821 - 4.2827 and 4.2829 under Insurance Code §§36.004, 425.058(c)(3), and 36.001.
Insurance Code §36.004 provides that the commissioner may adopt a rule to require compliance with a rule, regulation, directive, or standard adopted by the National Association of Insurance Commissioners if certain statutory requirements are met.
Insurance Code §425.058(c)(3) specifies that for an ordinary life insurance policy issued on the standard basis, to which Insurance Code Chapter 1105, Subchapter B, applies, the applicable table is any ordinary mortality table adopted after 1980 by the National Association of Insurance Commissioners that is approved by commissioner rule for use in determining the minimum standard values under Insurance Code Chapter 425, Subchapter B.
Insurance Code §36.001 provides that the commissioner may adopt any rules necessary and appropriate to implement the powers and duties of TDI under the Insurance Code and other laws of this state.
§4.2824.Definitions.
The following words and terms, when used in this subchapter, have the following meanings unless the context clearly indicates otherwise.
(1) Basic reserves--Reserves calculated in accordance with the principles of Insurance Code §425.064, concerning Commissioners Reserve Valuation Method for Life Insurance and Endowment Benefits.
(2) Contract segmentation method--The method of dividing the period from issue to mandatory expiration of a policy into successive segments, with the length of each segment being defined as the period from the end of the prior segment (from policy inception, for the first segment) to the end of the latest policy year as determined below. All calculations are made using the 1980 CSO valuation tables, as defined in this section, (or any other valuation mortality table adopted by the NAIC after the effective date of this subchapter and promulgated by regulation by the commissioner for this purpose), and, if elected, the optional minimum mortality standard for deficiency reserves stipulated in §4.2825(b) of this title (relating to General Calculation Requirements for Basic Reserves and Premium Deficiency Reserves).
Figure: 28 TAC §4.2824(2) (.pdf)
(3) Deficiency reserves--The excess, if greater than zero, of the minimum reserves calculated in accordance with the principles of Insurance Code §425.068, concerning Reserve Computation: Gross Premium Charged Less Than Valuation Net Premium, over the basic reserves.
(4) Guaranteed gross premiums--The premiums under a policy of life insurance that are guaranteed and determined at issue.
(5) Maximum valuation interest rates--The interest rates defined in Insurance Code §425.061, concerning Computation of Calendar Year Statutory Valuation Interest Rate: General Rule, that are to be used in determining the minimum standard for the valuation of life insurance policies.
(6) NAIC--National Association of Insurance Commissioners.
(7) 1980 CSO valuation tables--The Commissioners' 1980 Standard Ordinary Mortality Table (1980 CSO Table) without ten-year selection factors, incorporated into the 1980 amendments to the NAIC Standard Valuation Law, and variations of the 1980 CSO Table approved by the NAIC, such as the smoker and nonsmoker versions approved in December 1983.
(8) Scheduled gross premium--The smallest illustrated gross premium at issue for other than universal life insurance policies. For universal life insurance policies, scheduled gross premium means the smallest specified premium described in §4.2827(a)(3) of this title (relating to Calculation of Minimum Valuation Standard for Flexible Premium and Fixed Premium Universal Life Insurance Policies That Contain Provisions Resulting in the Ability of a Policyowner to Keep a Policy in Force Over a Secondary Guarantee Period) if any, or else the minimum premium described in §4.2827(a)(4) of this title.
(9) Segmented reserves--Reserves, calculated using segments produced by the contract segmentation method, equal to the present value of all future guaranteed benefits less the present value of all future net premiums to the mandatory expiration of a policy, where the net premiums within each segment are a uniform percentage of the respective guaranteed gross premiums within the segment. The length of each segment is determined by the "contract segmentation method," as defined in this section. The interest rates used in the present value calculations for any policy may not exceed the maximum valuation interest rate, determined with a guarantee duration equal to the sum of the lengths of all segments of the policy. For both basic reserves and deficiency reserves computed by the segmented method, present values must include future benefits and net premiums in the current segment and in all subsequent segments. The uniform percentage for each segment is such that, at the beginning of the segment, the present value of the net premiums within the segment equals:
(A) the present value of the death benefits and endowment benefits within the segment, plus
(B) the present value of any unusual guaranteed cash value (see §4.2826(d) of this title (relating to Calculation of Minimum Valuation Standard for Policies with Guaranteed Nonlevel Gross Premiums or Guaranteed Nonlevel Benefits (Other than Universal Life Policies))) occurring at the end of the segment, less
(C) any unusual guaranteed cash value occurring at the start of the segment, plus
(D) for the first segment only, the excess of clause (i) of this paragraph over clause (ii) of this paragraph, as follows.
(i) A net level annual premium equal to the present value, at the date of issue, of the benefits provided for in the first segment after the first policy year, divided by the present value, at the date of issue, of an annuity of one per year payable on the first and each subsequent anniversary within the first segment on which a premium falls due. However, the net level annual premium may not exceed the net level annual premium on the nineteen-year premium whole life plan of insurance of the same renewal year equivalent level amount at an age one year higher than the age at issue of the policy.
(ii) A net one-year term premium for the benefits provided for in the first policy year.
(10) Tabular cost of insurance--The net single premium at the beginning of a policy year for one-year term insurance in the amount of the guaranteed death benefit in that policy year.
(11) Ten-year select factors--The select factors in Insurance Code Chapter 425, Subchapter B, concerning Standard Valuation Law.
(12) Unitary reserves--The present value of all future guaranteed benefits less the present value of all future modified net premiums, where:
(A) guaranteed benefits and modified net premiums are considered to the mandatory expiration of the policy; and
(B) modified net premiums are a uniform percentage of the respective guaranteed gross premiums, where the uniform percentage is such that, at issue, the present value of the net premiums equals the present value of all death benefits and pure endowments, plus the excess of clause (i) of this subparagraph over clause (ii) of this subparagraph, as follows.
(i) A net level annual premium equal to the present value, at the date of issue, of the benefits provided for after the first policy year, divided by the present value, at the date of issue, of an annuity of one per year payable on the first and each subsequent anniversary of the policy on which a premium falls due. However, the net level annual premium may not exceed the net level annual premium on the nineteen-year premium whole life plan of insurance of the same renewal year equivalent level amount at an age one year higher than the age at issue of the policy.
(ii) A net one-year term premium for the benefits provided for in the first policy year.
(C) The interest rates used in the present value calculations for any policy may not exceed the maximum valuation interest rate, determined with a guarantee duration equal to the length from issue to the mandatory expiration of the policy.
(13) Universal life insurance policy--Any individual life insurance policy under the provisions of which separately identified interest credits (other than in connection with dividend accumulations, premium deposit funds, or other supplementary accounts) and mortality or expense charges are made to the policy.
The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on January 4, 2024.
TRD-202400055
Jessica Barta
General Counsel
Texas Department of Insurance
Effective date: January 24, 2024
Proposal publication date: September 22, 2023
For further information, please call: (512) 676-6555
STATUTORY AUTHORITY. The commissioner adopts amendments to §§4.2831 - 4.2836 under Insurance Code §§36.004, 425.058(c)(3), 1105.055(h), and 36.001.
Insurance Code §36.004 provides that the commissioner may adopt a rule to require compliance with a rule, regulation, directive, or standard adopted by the National Association of Insurance Commissioners if certain statutory requirements are met.
Insurance Code §425.058(c)(3) specifies that for an ordinary life insurance policy issued on the standard basis, to which Insurance Code Chapter 1105, Subchapter B, applies, the applicable table is any ordinary mortality table adopted after 1980 by the National Association of Insurance Commissioners that is approved by commissioner rule for use in determining the minimum standard values under Insurance Code Chapter 425, Subchapter B.
Insurance Code §1105.055(h) specifies that the commissioner may adopt by rule any ordinary mortality table adopted after 1980 by the National Association of Insurance Commissioners.
Insurance Code §36.001 provides that the commissioner may adopt any rules necessary and appropriate to implement the powers and duties of TDI under the Insurance Code and other laws of this state.
The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on January 4, 2024.
TRD-202400056
Jessica Barta
General Counsel
Texas Department of Insurance
Effective date: January 24, 2024
Proposal publication date: September 22, 2023
For further information, please call: (512) 676-6555
SUBCHAPTER E. TEXAS WINDSTORM INSURANCE ASSOCIATION
DIVISION 4. CONSUMER ASSISTANCE; CLAIM PROCESSES
The commissioner of insurance adopts amendments to 28 TAC §5.4211, concerning the establishment of a time period for the Texas Windstorm Insurance Association (TWIA) appraisal process. The amendments to §5.4211 implement House Bill 3310, 88th Legislature, 2023. The amendments are adopted without changes to the proposed text published in the November 10, 2023, issue of the Texas Register (48 TexReg 6567) and will not be republished.
REASONED JUSTIFICATION. HB 3310 requires the commissioner to adopt rules that establish a time period for an appraisal demanded under Insurance Code §2210.574. Amendments to §5.4211 are necessary to establish the required deadline.
Amendments to subsections (a)(2) and (b)(1) insert the titles of cited Insurance Code sections.
The amendments also add new subsections (e), (f), (j), (k), and (m). The other subsections are redesignated as appropriate to reflect the addition of these new subsections.
New subsection (e) sets a deadline by which appraisers must disclose their projected fees to the parties and agree on an umpire. The deadline helps ensure that appraisers begin their involvement with the appraisal in a timely manner, and it helps claimants evaluate the anticipated cost of the appraisal.
New subsection (f) establishes a deadline by which the appraisers must agree on the amount of loss. One way to complete an appraisal is for the appraisers to agree on the amount of loss, so subsection (f) establishes a deadline to complete that effort. The deadline is longer for commercial claims because losses are frequently larger or more complex than the losses in residential claims.
The amendment to redesignated subsection (i) provides for an umpire to become involved if the appraisers do not agree on the amount of loss by the applicable deadline in adopted subsection (f). The amendment does not prevent an umpire from becoming involved before the deadline.
If the appraisers do not agree on the amount of loss, the way to complete the appraisal is for the appraisal panel to decide on the amount of loss. The appraisal panel consists of the two appraisers and the umpire. Accordingly, new subsection (j) establishes a deadline for the appraisal panel to decide on the amount of loss. The deadline is based on when the umpire becomes involved in the appraisal. The deadline is longer for commercial claims because losses are frequently larger or more complex than losses in residential claims.
New subsection (k) provides that TWIA and the claimant may extend the deadlines in subsections (f) or (j) by written agreement. Giving the parties the ability to extend the deadlines adds flexibility to provide more time for the appraisal when both parties agree it is appropriate. The subsection also recognizes that the commissioner may extend deadlines under 28 TAC §5.4222.
The amendment to redesignated subsection (l) provides that when the appraisers--rather than the parties--cannot agree on the amount of loss, and the umpire participates, an itemized decision agreed to by any two of these three is binding on the parties. In an appraisal, decisions about the amount of loss are made by appraisers and umpires, not the parties. The amendment clarifies that distinction.
New subsection (m) allows the appraisers to select a new umpire if a decision is not issued within the deadlines. Allowing the appraisers to select a new umpire helps ensure the appraisal is completed in a timely manner. If the appraisers cannot agree on a new umpire, either of the appraisers may ask TDI to select one. This subsection follows the same process used to select an umpire at the outset of an appraisal.
The amendment to redesignated subsection (n) removes an obsolete applicability date. The subsection's applicability remains the same.
Other amendments add articles "the" or "an" before "appraisal" as appropriate to conform with current agency drafting style.
As required by HB 3310, TDI developed the amendments in consultation with TWIA.
SUMMARY OF COMMENTS AND AGENCY RESPONSE
Commenters: TDI received one comment on the proposal, from the Office of Public Insurance Counsel, in support of it.
Comment on §5.4211
Comment. One commenter broadly expressed support for the proposal.
Agency Response. TDI appreciates the support.
STATUTORY AUTHORITY. TDI adopts amendments to §5.4211 under Insurance Code §§2210.008, 2210.574(d-1), 2210.580, and 36.001.
Insurance Code §2210.008 provides that the commissioner may adopt rules as reasonable and necessary to implement Chapter 2210.
Insurance Code §2210.574(d-1) requires the commissioner to adopt rules establishing the period in which an appraisal demand must be completed.
Insurance Code §2210.580 requires the commissioner to adopt rules regarding procedures and deadlines for payment and handling of claims.
Insurance Code §36.001 provides that the commissioner may adopt any rules necessary and appropriate to implement the powers and duties of TDI under the Insurance Code and other laws of this state.
The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on January 2, 2024.
TRD-202400019
Jessica Barta
General Counsel
Texas Department of Insurance
Effective date: January 22, 2024
Proposal publication date: November 10, 2023
For further information, please call: (512) 676-6555