DUE: April 8, 2010
Pursuant to §38.001 of the Texas Insurance Code (TIC), the Texas Department of Insurance (TDI) issues the attached mandatory data call for viatical and life settlement providers conducting viatical or life settlement business in Texas (collectively, hereafter, "providers"). This data call is necessary for TDI to determine providers' compliance with requirements of TIC Chapter 1111 and the rules adopted to implement that chapter at Texas Administrative Code (TAC) §§3.1701 - 3.1717. It is necessary that carriers submit complete responses to this data call to be in compliance with 28 TAC §3.1717.
Responses to this data call are due no later than April 8, 2010. Please be advised that failure to report by the deadline may result in regulatory action, including disciplinary action. Providers are required, pursuant to this data call, to provide the following information for calendar years 2008 and 2009.
1. Business Practices and Plans: Providers are required to file a detailed description of their business practices and plans. The description should include information relating to their target market for policies to be purchased and the manner in which the provider markets their services to their target market. The description should also provide information regarding the sources of funding for policy acquisitions and policies to be acquired in the future, including the provider's relationship with funding sources and the percentage of policies acquired by all respective funding types. The description should specify any bonding activities of the provider relating to policy acquisitions and marketing. The description should include any reliance on premium finance agreements or involvement or affiliation with companies providing such agreements and the names of the particular premium finance companies involved. The description must describe the methods used to secure profits following policy acquisition. The description must also include details regarding the methods used to determine the life expectancy relating to potential policy purchases, and whether such life expectancy determinations are conducted by an employee of the provider or by an outside entity, and the names of any outside entities involved in determining life expectancies.
2. Disposition of Acquired Policies: Providers are required to file a detailed description of their disposition methods of acquired policies. The description must include information regarding whether the provider remains the final owner of the acquired policy or whether the provider markets the ownership of the policy or the right to benefits or proceeds from the policy. The description must specify whether the provider's marketing or advertising materials portray a potential purchase or deposit of funds with the provider as an investment, and whether the provider is registered with the Texas Securities Board. If the provider markets acquired policies, a detailed description must be provided regarding the target buyers and any relationship between the target buyers and the funding sources. The description must specify methods used to identify and contact potential buyers. Providers must specify what licensure, if any, is possessed by the employees marketing to potential buyers. The description must provide information specifying the methods and practices used to determine whether the purchase of the policy or an interest in a policy or benefit is an appropriate or suitable purchase, or alternately, whether the provider places the responsibility of this determination on the purchaser. Providers must specify the percentage of acquired policies sold to entities registered with TDI as viatical or life settlement providers, provider representatives, or brokers. Providers must specify the controls and practices they have implemented that prevent the overselling of an interest in or ownership of an acquired policy or its benefits. Providers must specify whether they have instituted any practices to prevent the resale of interests in acquired policies by purchasers not registered with TDI as a provider.
3. Representations Regarding Acquired Policies: Providers are required to describe any representations, warranties, or claims that they have made to buyers or funding sources regarding potential financial or percentage return on a deposit of funds with the provider. Providers are required to detail any information regarding whether they have ever represented a financial return to be guaranteed or backed by a surety or other bond. If bonds have been referenced or utilized, provide the name of the surety or other bonding companies involved. Providers must specify the disclosures they make regarding the associated risks, including whether they disclose that a loss of principal is a possibility.
4. Confidentiality Controls: Providers must specify the percentage of acquired Texas policies sold to individuals or entities that are not registered with TDI as viatical or life settlement provider, provider representative, or broker. Providers must provide detailed information on the controls they have in place to verify appropriate maintenance of confidential information for policies that are not subsequently sold, for policies sold to non-registered individuals or entities, and for policies which are sold to third parties and then resold by those third parties to subsequent non-registered individuals or entities. Providers must provide detailed information on the methods they use to assess the confidentiality controls of all entities or individuals receiving confidential information, including potential direct and secondary investors.
5. Annuity Transactions: Providers must specify the number of annuity contracts on Texas residents purchased in 2008 and 2009, if any.
Please provide supporting documentation for each of the items of information requested in this data call.
Your registered contact will receive a reminder of this data call by email as well. If you prefer an alternate individual be contacted for subsequent inquiries relating to this data call, please specify that individual and their contact information with the information that is submitted in response to this data call.
The information required by this data call should be emailed to LifeHealth@tdi.state.tx.us. Questions regarding the information required by this data call may be directed to the above e-mail address or by telephone at 512-322-3401.
Mike Geeslin
Commissioner of Insurance