By: Craddick (Senate Sponsor - Hancock) H.B. No. 3370          (In the Senate - Received from the House May 3, 2017;   May 10, 2017, read first time and referred to Committee on Business &   Commerce; May 22, 2017, reported adversely, with favorable   Committee Substitute by the following vote:  Yeas 8, Nays 0;   May 22, 2017, sent to printer.)Click here to see the committee vote     COMMITTEE SUBSTITUTE FOR H.B. No. 3370 By:  Hancock     A BILL TO BE ENTITLED   AN ACT     relating to certain disclosures and notices required for certain   life insurance policies.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Chapter 1101, Insurance Code, is amended by   adding Subchapter E to read as follows:   SUBCHAPTER E. DISCLOSURES AND NOTICES RELATING TO LIFE INSURANCE   POLICIES WITH NON-GUARANTEED ELEMENTS          Sec. 1101.201.  PURPOSE. This subchapter is intended to   provide standards for disclosures relating to life insurance   policies subject to this subchapter and to recognize that a purpose   of those life insurance policies is to provide insurance coverage   at a lower initial premium than might otherwise be obtainable from   the insurer if the insurer were not allowed to change the premium   during the life of the policy.          Sec. 1101.202.  APPLICABILITY. (a)  This subchapter applies   to a life insurance policy issued by an insurer, as defined by   Section 1102.001, that contains non-guaranteed elements that may   change at the discretion of the insurer.          (b)  This subchapter does not apply to:                (1)  group life insurance without separately   identifiable accounts for insureds; or                (2)  a life insurance policy in which the insurer   assumes all risk and contractually guarantees a death benefit in   exchange for a guaranteed premium set at the time of the policy's   issuance.          Sec. 1101.203.  DISCLOSURES AFTER ISSUANCE OF POLICY. (a)     Subject to Section 1101.204, and unless the change is made pursuant   to a previously implemented current cost of insurance schedule, if   an insurer increases a non-guaranteed element in or decreases the   credited interest rate for a policy after the policy's issuance,   the insurer must provide a written notice to the policy owner   disclosing:                (1)  the non-guaranteed element that is being changed;                (2)  the value of the non-guaranteed element before and   after the proposed change;                (3)  the maximum or minimum guaranteed value, as   applicable, of the non-guaranteed element stated in the policy, if   any;                (4)  the effective date of the change;                (5)  a comparison of the change to the current and   maximum or minimum guaranteed elements, as applicable, if any,   stated in the policy; and                (6)  the options available to the policy owner under   the policy.          (b)  The notice under Subsection (a) must include the   insurer's phone number and e-mail address and the following   statement in at least 12-point bold type:          "IMPORTANT NOTICE: An increase in a non-guaranteed element or   a decrease in the credited interest rate will have an adverse impact   on the longevity and value of your policy. You should request an   illustration of the impact of this change on your policy."          (c)  Except as provided by this subsection, notice required   by Subsection (a) must be given not later than the 90th day before   the date the change is applied.  For a decrease in the credited   interest rate for a policy, notice required by Subsection (a) may be   given at the time that the decrease is applied.          (d)  If a policy owner affirmatively requests a loan, partial   surrender, or other action on the policy that might impact the   longevity of the policy, the insurer must provide to the policy   owner in writing, not later than the 10th day after the date the   owner makes the request, the insurer's phone number and e-mail   address and the following statement in at least 12-point bold type:          "IMPORTANT NOTICE: Your recent request will have an impact on   the longevity and value of your policy. You should request an   illustration of the impact of this change on your policy."          (e)  Regardless of whether any non-guaranteed elements are   changed, an insurer that issues a policy subject to this subchapter   must provide to the policy owner at least annually an illustration   containing elements specified by the commissioner by rule.          Sec. 1101.204.  NOTICE TO DEPARTMENT OF CERTAIN CHANGES TO   NON-GUARANTEED ELEMENTS.  (a)  Not later than the 180th day before   the effective date of an increase in a non-guaranteed element in an   individual's policy or certificate subject to this subchapter,   other than an increase pursuant to a previously implemented current   cost of insurance schedule, the insurer must provide notice to the   department if:                (1)  except as provided by Subsection (b), the increase   in the non-guaranteed element will result in an aggregate increase   in the cost of insurance rate that is greater than 40 percent of the   cost of insurance rate for the preceding year; and                (2)  the increase will be applied to a policy issued in   this state.          (b)  The commissioner by rule may adopt a lower percentage   increase in a cost of insurance rate for which an insurer must   provide notice to the department under Subsection (a), but the   percentage adopted may not be lower than 20 percent.          (c)  The notice under Subsection (a) must include:                (1)  the specific approved policy form for which the   insurer will implement the increase;                (2)  a copy of the disclosure to be provided under   Section 1101.203 to each owner whose policy was issued in this   state;                (3)  information on the classes of owners who will   receive the disclosure;                (4)  sufficient information for the department to   determine if the increase is actuarially justified;                (5)  if applicable, sufficient information to   demonstrate compliance with the nonforfeiture values under Chapter   1105 for the increased premium; and                (6)  any other information necessary to determine if   the increase will comply with the standards in this code.          (d)  Not later than the 60th day after receipt of a notice   under this section, the commissioner may:                (1)  disapprove the proposed increase if the   commissioner determines that the increase is not actuarially   justified or not in compliance with this code and provide the   insurer with a description in adequate detail of the changes   necessary to avoid disapproval; or                (2)  withdraw approval under Section 1701.055 of the   applicable individual life insurance policy form.          (e)  If the commissioner does not take action under   Subsection (d), the insurer may provide the disclosure required by   Section 1101.203 and apply the proposed increase in the   non-guaranteed element in the policy.           Sec. 1101.205.  RULES. (a)  The commissioner may adopt rules   as necessary to implement this subchapter.          (b)  The commissioner by rule may exempt certain types of   life insurance policies from one or more of the requirements of this   subchapter.          SECTION 2.  Subchapter E, Chapter 1101, Insurance Code, as   added by this Act, applies only to an increase in a non-guaranteed   element or a decrease in a credited interest rate that is applied to   an insurance policy on or after January 1, 2018.          SECTION 3.  This Act takes effect September 1, 2017.     * * * * *