HBA-DMH C.S.H.B. 2100 77(R)    BILL ANALYSIS


Office of House Bill AnalysisC.S.H.B. 2100
By: Eiland
Insurance
4/26/2001
Committee Report (Substituted)



BACKGROUND AND PURPOSE 

A prepaid funeral benefits contract is a preneed agreement made between a
consumer and a funeral home. The Texas Department of Banking (department)
regulates the sale of prepaid funeral contracts and requires that insurance
policies issued to pay for funeral services be reviewed and approved by the
Texas Department of Insurance.  C.S.H.B. 2100 creates a specialty license
for prepaid funeral benefits contract sellers. 

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that this bill does
not expressly delegate any additional rulemaking authority to a state
officer, department, agency, or institution. 

ANALYSIS

C.S.H.B. 2100 amends the Insurance Code to require the commissioner of
insurance (commissioner) to issue a specialty license to a prepaid funeral
benefits contract seller under certain conditions.  The bill authorizes a
licensed prepaid funeral benefits contract seller to act as an agent for
any authorized insurer only in connection with the sale of policies issued
to fund an insurance-funded prepaid funeral benefits contract that has been
approved by the Texas Department of Banking.  The bill provides that the
prepaid funeral benefits contract seller who is not an employee of a
funeral home or a corporate seller authorized to sell prepaid funeral
benefits contracts must be individually licensed and appointed by an
insurance company as a specialty license holder.  The bill provides that an
individual specialty license holder and any employee of the specialty
license holder must complete a specified training program before selling an
insurance funded prepaid funeral benefits contract.  The training program
approved by the commissioner must require the appointing insurance company
to update its licensing program as necessary to educate its specialty
license holder about any new products used by the insurance company fund
prepaid funeral benefits contracts before a new product is issued.  The
training program must include at least three hours of ethics instruction
related to the sale of prepaid funeral benefit contracts.  The bill
prohibits insurance from being issued unless the brochures or other written
materials containing the required disclosures are provided to the
prospective purchaser of the insurance coverage.  

EFFECTIVE DATE

September 1, 2001.

COMPARISON OF ORIGINAL TO SUBSTITUTE

C.S.H.B. 2100 differs from the original bill by providing that a prepaid
funeral benefits contract seller who is not an employee of a funeral home
or a corporate seller authorized to sell prepaid funeral benefits contracts
must be individually licensed and appointed by an insurance company as a
specialty license holder.  The substitute includes provisions regarding
training for an individual specialty license holder and any employee of the
specialty license holder and provides what the training program must
require and include. 
 
The substitute requires, rather than authorizes, the commissioner of
insurance to issue a specialty licence under certain conditions.  The
substitute prohibits insurance from being issued unless the brochures or
other written materials containing the required disclosures are provided,
rather than prominently displayed and readily available, to the prospective
purchaser of the insurance coverage.