89R23508 SCF-F     By: Wharton H.B. No. 4386       A BILL TO BE ENTITLED   AN ACT   relating to the exchange or surrender of an annuity contract.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Subchapter B, Chapter 1114, Insurance Code, is   amended by adding Sections 1114.0541 and 1114.0542 to read as   follows:          Sec. 1114.0541.  PROCESSING OF ANNUITY CONTRACT EXCHANGES.   (a)  In this section, "exchange" means an annuity replacement   transaction:                (1)  in which the money in an existing annuity contract   must pass directly from the existing annuity contract and existing   insurer to a new annuity contract and a replacing insurer; and                (2)  in which the owner and annuitant of the new   contract are the same as the owner and annuitant of the existing   contract, regardless of whether the owner or annuitant may be   changed after completion of the transaction.          (b)  If a transaction involves an exchange of an annuity   contract, the existing insurer and the replacing insurer shall   comply with this section.          (c)  To initiate an exchange of an annuity contract, the   replacing insurer shall provide the existing insurer an exchange   request notice on a form provided by the existing insurer. An   existing insurer shall make an exchange request notice form   available on the insurer's Internet website or require a contract   owner or replacing insurer to request from the insurer a physical   copy of the form.          (d)  An exchange request notice form may include or require   only the following elements:                (1)  a statement that the contract owner has authorized   the replacing insurer to initiate the exchange;                (2)  the existing annuity contract number;                (3)  the name, mailing address, e-mail address, and   telephone number of the contract owner and annuitant;                (4)  delivery instructions for the transfer of money;                (5)  the ink or electronic signature of the contract   owner; and                (6)  any disclosure documents required by federal law   relating to an exchange or replacement of an annuity.          (e)  An existing insurer that receives an exchange request   notice from the contract owner and the replacing insurer shall:                (1)  acknowledge receipt of the notice not later than   the fifth business day after the date the existing insurer received   the notice; and                (2)  unless the existing annuity contract being   exchanged has a provision that gives the existing insurer the right   to defer payment for a different period, and subject to Subsection   (f), transfer the contract value of the existing annuity to the   replacing insurer not later than the 30th business day after the   date the existing insurer receives the notice.          (f)  If an exchange request notice form provided to an   existing insurer under Subsection (c) does not include all required   information, the applicable period to transfer the contract value   does not begin until the day the existing insurer receives all   required information from the replacing insurer or contract owner,   as applicable.          (g)  If a transfer payment is not completed within the period   provided by Subsection (e)(2) or the existing annuity contract, as   applicable, the existing insurer shall pay penalty interest on the   unpaid amount at an annual rate of 10 percent accruing from the   first business day after the date the contract value was required to   be transferred until the contract value is transferred to the   replacing insurer in full.          (h)  Nothing in this section is intended to:                (1)  change the suitability requirements applicable to   an agent or insurer seeking to replace an annuity under Chapter   1115; or                (2)  prohibit a replacing insurer and existing insurer   from agreeing to use different formats or modes for assisting   contract owners in the timely and efficient processing of   replacements or exchanges of annuity contracts.          Sec. 1114.0542.  PROCESSING OF SURRENDER REQUESTS FOR   ANNUITY CONTRACTS. (a)  To initiate a surrender of an annuity   contract, a contract owner must submit a surrender request on a form   required by the insurer.  An insurer that issues an annuity contract   shall make a surrender request form available on the insurer's   Internet website or require the contract owner to request a   physical copy of the form from the insurer. If a contract owner   submits a written request for a physical copy of the form, the   insurer shall mail the form to the contract owner not later than the   fifth business day after the date the insurer receives the request.          (b)  A surrender request form may include or require only the   following elements:                (1)  a statement that the contract owner intends to   surrender the annuity contract;                (2)  the annuity contract number;                (3)  the name, mailing address, e-mail address, and   telephone number of the contract owner;                (4)  delivery instructions for the transfer of money;                (5)  instructions for tax withholding;                (6)  the ink or electronic signature of the contract   owner; and                (7)  any other document or disclosure required by   federal or state law.          (c)  An insurer that receives a surrender request from a   contract owner shall:                (1)  acknowledge receipt of the request not later than   the fifth business day after the date the insurer receives the   request; and                (2)  unless the contract being surrendered has a   provision that gives the insurer the right to defer payment for a   different period, and subject to Subsection (d), transfer the   current cash surrender value of the annuity contract to the   contract owner not later than the 30th business day after the date   the insurer receives the request.          (d)  If a surrender request form submitted to an insurer   under Subsection (a) does not include all required information, the   applicable period to transfer the cash surrender value does not   begin until the day the insurer receives all required information   from the contract owner.          (e)  If payment of a cash surrender value is not completed   within the period provided by Subsection (c)(2) or the annuity   contract, as applicable, the insurer shall pay penalty interest on   the unpaid amount at an annual rate of 10 percent accruing from the   first business day after the date the cash surrender value was   required to be transferred until the cash surrender value is   transferred to the contract owner in full.          (f)  Nothing in this section is intended to change the   suitability requirements applicable to an agent or other person   advising a contract owner to surrender an annuity under Chapter   1115.          SECTION 2.  Sections 1114.0541 and 1114.0542, Insurance   Code, as added by this Act, apply only to an exchange or surrender   of an annuity contract initiated on or after January 1, 2026.          SECTION 3.  This Act takes effect September 1, 2025.