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.