| (19) Application fee. In connection with an application
submitted under this section, the applicant must submit the conversion
application fee required by §25.23 of this title (relating to
Application Fees).
(20) Side agreements. To the extent not otherwise required
by this subsection, the applicant must submit copies of any other
agreements between or among the applicant, a funeral provider, the
post-conversion permit holder, and/or the insurance company that contain
contractual provisions or informal understandings or undertakings
addressing any aspect of the proposed conversion or the future relationship
among the applicant, a funeral provider, the post-conversion permit
holder, and/or the insurance company with respect to any converted
prepaid contract.
(d) Consideration of application; hearing. If the application
is deficient, the department may require any person connected with
the proposed conversion to submit additional information. An application
may be approved or denied without the necessity of a hearing, subject
to the right of the applicant or the post-conversion permit holder
to request a hearing.
(1) Conditions in order approving conversion. An order
approving conversion will impose certain conditions that are not subject
to objection, as described in subsection (e) of this section. The
order may also impose other, nonstandard conditions specific to the
conversion at issue. The applicant or the post-conversion permit holder
must submit a written request for hearing pursuant to paragraph (2)
of this subsection if any nonstandard condition in the order is objectionable,
in which case the order is deemed to be a denial. Consummation of
the conversion transaction constitutes confirmation of acceptance
by the applicant, the post-conversion permit holder, and the insurance
company of any conditions imposed by the order and is considered for
all purposes an agreement with the department enforceable against
the applicant, the post-conversion permit holder, and the insurance
company.
(2) Hearing. The applicant or the post-conversion permit
holder may file a written request for hearing with the commissioner
on or before the 30th day after the date of the order denying the
application, or an order imposing nonstandard conditions objectionable
to the applicant or the post-conversion permit holder, stating with
specificity the reasons the applicant alleges that the decision of
the department is in error. The request for hearing will be forwarded
to the administrative law judge who must enter appropriate orders
and conduct the hearing on or before the 60th day after the date the
request for hearing was received, or as soon as is otherwise reasonably
possible, under Chapter 9 of this title (relating to Rules of Procedure
for Contested Case Hearings, Appeals, and Rulemakings) and Government
Code, Chapter 2001. The applicant or the post-conversion permit holder
has the burden of proof to demonstrate that the proposed insurance-funded
prepaid funeral benefits safeguards the rights and interests of each
affected purchaser to substantially the same degree as the existing
trust-funded prepaid funeral benefits sought to be replaced. A denial
of an application may not be appealed until a final order is issued.
(e) Standard conditions in order approving conversion.
An order approving conversion will impose six required conditions
that are not subject to objection. Failure to satisfy any of these
conditions constitutes a violation of an order of the commissioner
subject to possible enforcement action under Finance Code, Chapter
154.
(1) The order approving conversion will prohibit issuance
of the annuities prior to the expiration of the time period for a
purchaser to decline conversion, including any extended time period
required by paragraph (4) of this subsection, except that the annuities
may be issued prior to that date if expiration of the time period
will occur during the free look period or if a purchaser electing
to decline conversion will not be required to pay an early withdrawal
penalty for cancellation of the annuity.
(2) Pursuant to Finance Code, §154.204(b), the
order approving conversion will require the applicant to notify purchasers
of the proposed conversion by the following means:
(A) The notification letter from the applicant described
by subsection (c)(15) of this section must be sent to purchasers by
certified mail or another form of mail that requires or provides proof
of delivery to the last known address of the purchaser.
(B) The applicant must publish a one-time public notice
in a newspaper of general circulation in the county in which the applicant
is located, or in another publication or location as directed by the
department, as evidenced by a publisher's affidavit attesting to the
date of publication, advising purchasers of trust-funded prepaid contracts
from applicant of the pending conversion, the right of a purchaser
to decline conversion, and the manner in which a purchaser may obtain
more information about the purchaser's rights and options regarding
the conversion.
(3) The order approving conversion will provide that
a prepaid contract for which the notification letter is returned unclaimed
may not be converted to the insurance-funded funeral benefit arrangement
approved in the order unless the requirements of this paragraph are
met.
(A) With respect to each notification letter returned
unclaimed because the address is incorrect, the addressee is unknown
or has moved without leaving a forwarding address, or the addressee's
forwarding order has expired, the applicant must search for a new
address for the purchaser using available non-fee based resources.
If a new address is located, the applicant must resend the notification
letter one time in the manner required by subsection (e)(2)(A) of
this section.
(B) With respect to each unclaimed notification letter
for which a new address is not located and with respect to each re-mailed
notification letter that is returned unclaimed, the applicant must
review the related contract file in light of the returned letter to
verify or change its prior determination that the contract should
not be presumed abandoned under Finance Code, §154.301, and must
retain documentation evidencing its review for examination by the
department. A prepaid contract subject to this paragraph may be converted
to the insurance-funded funeral benefit arrangement approved in the
order only if the applicant makes a new affirmative finding that the
contract should not be presumed abandoned. On or before the 120th
day after the date of the order, the applicant must submit a report
to the department summarizing its activities under this subparagraph
and reporting the basis for findings made.
(4) The order approving conversion will require the
post-conversion permit holder, on or before the 120th day after the
date of the order, to submit to the department a notarized statement
attesting that the annuities have been issued and funded on behalf
of the purchasers listed in the pro forma post-conversion summary
included in the conversion application and disclosing the date that
the notification letters included in the conversion application were
mailed to the purchasers.
(5) The order approving conversion will require the
post-conversion permit holder, on or before the 120th day after the
date the trust funds are transferred as authorized by the order, to
submit to the department a final post-conversion summary pertaining
to each converted prepaid contract, determined as of the conversion
date, with totals for all prepaid contracts, if applicable, addressing
each of the following categories:
(A) name of annuitant;
(B) policy number of the annuity issued to the annuitant,
or of each annuity if a supplemental annuity is also issued;
(C) contract purchase price;
(D) paid-in principal;
(E) unpaid principal balance, if any;
(F) the amount of transferred trust funds applied to
the premium for each annuity;
(G) amount retained by the applicant under Finance
Code, §154.252;
(H) cash surrender value of each annuity, assuming
the annuity were to be surrendered on the conversion date; and
(I) death benefit under each annuity, assuming death
were to occur on the conversion date.
(6) The order approving conversion will require the
conversion transaction to be fully implemented and completed on or
before the 150th day after the date of the conversion order.
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