| (a) Application and general requirements. This section
applies to a permit holder that sells or maintains trust-funded prepaid
funeral benefit contracts (prepaid contracts). Unless the commissioner
grants an exception as provided for in subsections (f)(2) and (g)
of this section, a permit holder must maintain and produce for examination
the records as specified in this section. The permit holder:
(1) must make the records available to the department
for examination at its physical location in Texas or if approved by
the commissioner, in another state that the permit holder has designated
in written notice to the department on file at the time of the examination;
(2) is required to make all the records specified in
the department's pre-examination records request available to the
department at the beginning of an examination and must produce such
other records that provide additional clarification of required documents
as may be requested during the examination in a manner that does not
impede the efficient completion of the examination; and
(3) must maintain the records either in hard-copy form,
in an electronic database, or on another form of media from which
the record can be retrieved and printed in hard copy in a manner that
does not impede the efficient completion of the examination.
(b) Corporate Records. All corporate records of a permit
holder subject to this section and all corporate minutes created since
the last examination must be maintained and made available to the
department at each examination.
(c) General files. A permit holder subject to this
section must maintain and produce for department examination general
files regarding its prepaid funeral benefits operations. The files
must contain the original or a copy of the following:
(1) unless the permit holder is restricted from selling
prepaid funeral benefits, financial statements of the permit holder
or the permit holder's parent or holding company including a balance
sheet and income statement dated not later than the last day of the
permit holder's preceding fiscal year, or the permit holder's most
recent income tax return, which must also include a balance sheet;
(2) if the permit holder received a uniform risk rating
of 3, 4, or 5 at the last examination or if the last examination was
a limited scope examination, the examination report acknowledgements,
signed by the permit holder's board of directors for the last examination
report;
(3) all written complaints received since the last
examination related to prepaid contracts, and all documents received
or created since the last examination related to any regulatory action
or evidencing litigation activity;
(4) all recordkeeping exceptions and other department
or commissioner approvals or directions upon which the permit holder
relies in connection with its current operations;
(5) all trust agreements approved by the department
since the last examination and all trust agreements that are still
active, including amendments and changes to the trust agreements and
all successor trust agreements;
(6) all investment plans and reports created or received
since the last examination, and all such plans and reports that apply
to active trust funds;
(7) all preneed abandoned property reports filed with
the department and the State Comptroller of Public Accounts since
the last examination;
(8) records of the trustee/depository, reflecting at
a minimum all savings account statements, certificate of deposit records,
and/or trust statements, received since the last examination;
(9) a copy of all price lists for any outstanding prepaid
contract that has an issue date since the last examination;
(10) if the permit holder sells through multiple locations
or entities, provide a list of funeral home providers for all outstanding
contracts; and
(11) a list of funeral home providers or entities that
have outstanding contracts under this permit that are known to the
permit holder to have ceased business since the last examination.
(d) Individual files.
(1) A permit holder subject to this section shall maintain
a prepaid contract file on each purchaser. The file must either be
maintained separately or be capable of retrieval separately for outstanding
contracts and may be maintained either chronologically or alphabetically.
Each file must contain all correspondence pertaining to the contract.
(2) Each file pertaining to an outstanding contract
must contain a copy of the executed prepaid contract, any revocable
and irrevocable assignments, the individual ledger, and, if applicable,
all power of attorney agreements or letters of guardianship.
(3) Each file pertaining to a matured contract must
be retained for the period since the last examination. The file must
contain copies of all documents required for an outstanding prepaid
contract. In addition, a matured contract file must contain:
(A) a fully executed and completed department withdrawal
form or evidence of department withdrawal approval, and a computation
of earnings withdrawal, if applicable, unless computation procedures
are otherwise documented in the general file;
(B) the original or a final copy of the completed at-need
contract or funeral purchase agreement, itemization of services performed
and merchandise delivered, or the interment order if the prepaid contract
relates only to a grave opening and closing fee, outer burial container
or other related merchandise and services. The document must be signed
by the decedent's personal representative and indicate the prepaid
credits and discounts applied and the balance due, if any, from the
family at the time of death;
(C) a copy of a Texas certified death certificate or
a death certificate from the state in which death occurred;
(D) documentation to substantiate any upgrades or downgrades
or discounts or credits given and to explain any differences between
the prepaid and the at-need contracts;
(E) a pre-need to at-need reconciliation, which must
be signed by the funeral provider, if the provider is not also the
seller; and
(F) if applicable, evidence of payment to the decedent's
personal representative of any refund of prepaid contract overcharges
by the funeral provider.
(4) Each file pertaining to a matured-contract file
for which services were provided by a funeral provider other than
the permit holder or a permit holder related by common ownership,
must be retained for the period since the last examination. The file
must contain copies of all documents required for an outstanding prepaid
contract and:
(A) a signed statement from the purchaser or purchaser's
representative requesting the delivery of funds to the servicing funeral
provider;
(B) evidence of payment to the servicing funeral provider;
and
(C) a copy of a Texas certified death certificate or
a death certificate from the state in which death occurred.
(5) Each file pertaining to a canceled prepaid contract
must be retained for the period since the last examination. The file
must contain copies of all documents required for an outstanding contract,
a completed departmental withdrawal form or evidence of departmental
withdrawal approval; and evidence of payment of the cancellation benefit.
(e) Other records. A permit holder subject to this
section must maintain the following records regarding its prepaid
funeral benefits operations in hard-copy form, in an electronic database,
or on another form of media from which they may be reasonably retrieved
in hard-copy form:
(1) an historical contract register, maintained either
chronologically or by contract number, indicating:
(A) the contract number;
(B) the date of purchase;
(C) the purchaser's name;
(D) the beneficiary's name (if different from the purchaser's
name);
(E) the amount of the contract; and
(F) final disposition of the contract, including notations
as to whether the contract is matured or canceled, the date of withdrawal
from the depository or date withdrawal requested from the depository,
and the amount of funds withdrawn; or, in lieu thereof, a record separate
from the register, listing matured and canceled contracts for the
examination period and setting out the contract number, contract purchaser,
date of withdrawal from the depository or date withdrawal was requested
from the depository, and amount of the withdrawal;
(2) cash receipts records reflecting payments collected;
(3) deposit records reflecting payments deposited;
(4) individual ledgers for each contract purchaser,
balanced at least quarterly to the control ledger and to the records
of the trustee/depository, reflecting the:
(A) contract purchaser's name;
(B) contract number;
(C) the date of purchase;
Cont'd... |
