Relating to certain trade practices related to life insurance, annuity contracts, and accident and health coverage, the official text

H.B. No. 2221

AN ACT

relating to certain trade practices related to life insurance,

annuity contracts, and accident and health coverage.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. The heading to Title 9, Insurance Code, is

amended to read as follows:

TITLE 9. PROVISIONS APPLICABLE TO LIFE INSURANCE, ANNUITY

CONTRACTS, AND ACCIDENT AND HEALTH COVERAGES

SECTION 2. Title 9, Insurance Code, is amended by adding

Chapter 1702 to read as follows:

CHAPTER 1702. REGULATION OF CERTAIN TRADE PRACTICES

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 1702.001. PURPOSE. The purpose of this chapter is to:

(1) set forth uniform standards of prohibited acts and

practices for life insurance, annuity contracts, accident and

health insurance, and health care plans; and

(2) provide for more uniformity in well-recognized

exceptions to existing rebate and discrimination laws for certain

value-added services, acts, or practices recognized in existing law

or contained in uniform model laws developed and recommended by the

National Association of Insurance Commissioners.

Sec. 1702.002. DEFINITIONS. In this chapter:

(1) "Agent" means:

(A) a person authorized to act as an insurance

agent as defined by Section 4001.003; or

(B) a third-party administrator authorized to

act as an administrator for an insurer under Chapter 4151.

(2) "Consumer" means a policyholder or potential

policyholder, a certificate holder or potential certificate

holder, an insured or potential insured, a contract holder or

potential contract holder, an enrollee or potential enrollee, or an

applicant for insurance, an annuity, or health care plan coverage.

(3) "Enrollee" and "health care plan" have the

meanings assigned by Section 843.002.

(4) "Insurer" means an insurance company, including a

reciprocal or interinsurance exchange, mutual insurance company,

capital stock company, Lloyd's plan, fraternal benefit society,

group hospital service corporation, or other legal entity

authorized to engage in the business of life, accident, or health

insurance or annuities in this state.

(5) "Loss-control or value-added product or service"

means a product or service offered or provided by an insurer, health

maintenance organization, or agent, by or through an employee,

affiliate, or third-party representative, to an insured,

annuitant, or enrollee at no or reduced cost when such products or

services are not specified in the insurance policy, annuity

contract, or health care plan contract and that:

(A) relates to the insurance, annuity, or health

care plan coverage; and

(B) is primarily designed to do one or more of the

following:

(i) provide loss mitigation or loss

control;

(ii) reduce claim costs or claim settlement

costs;

(iii) provide education about liability

risks or risk of loss to persons or property;

(iv) monitor or assess risk, identify

sources of risk, or develop strategies for eliminating or reducing

risk;

(v) enhance health;

(vi) enhance financial wellness through

items such as education or financial planning services;

(vii) provide post-loss services;

(viii) provide incentives for behavioral

changes to improve the health or reduce the risk of death or

disability of an insured, annuitant, or enrollee; or

(ix) assist in the administration of

employee or retiree benefit insurance, annuity, or health care plan

coverage.

Sec. 1702.003. APPLICABILITY OF CHAPTER: LIFE INSURANCE AND

ANNUITIES. (a) Except as otherwise provided by this chapter, this

chapter applies to an insurance company writing life insurance and

annuities in this state, including:

(1) a stock life insurance company;

(2) a mutual life insurance company, including a

mutual life assessment company;

(3) a stipulated premium life insurance company; and

(4) a fraternal benefit society authorized under

Chapter 885.

(b) This chapter applies to a third-party administrator

acting on behalf of a life insurer.

Sec. 1702.004. APPLICABILITY OF CHAPTER: ACCIDENT AND

HEALTH. (a) Except as otherwise provided by this chapter, this

chapter applies to:

(1) an insurer authorized to engage in the business of

accident and health insurance in this state, including:

(A) a life, health, and accident stock insurance

company;

(B) a mutual insurance company, including:

(i) a mutual life insurance company; and

(ii) a mutual assessment life insurance

company;

(C) a local mutual aid association;

(D) a mutual or natural premium life or casualty

insurance company;

(E) a general casualty company;

(F) a nonprofit hospital, medical, or dental

service corporation, including a corporation operating under

Chapter 842;

(G) a multiple employer welfare arrangement that

holds a certificate of coverage under Chapter 846;

(H) a Lloyd's plan operating under Chapter 941;

(I) a reciprocal or interinsurance exchange

operating under Chapter 942; and

(J) any other type of insurer required by law to

be authorized by the department to issue accident and health

insurance policies; and

(2) a health maintenance organization operating under

Chapter 843.

(b) This chapter applies to a third-party administrator

acting on behalf of an accident and health insurer.

Sec. 1702.005. CONSTRUCTION. Nothing in this chapter may

be construed to:

(1) permit conduct that is an unfair method of

competition or a false, misleading, or deceptive act or practice

under Section 17.46, Business & Commerce Code, or Chapter 541 of

this code;

(2) prohibit an insurer, health maintenance

organization, or agent from offering or giving to a consumer, for

free or at a discounted price in a manner that is not unfairly

discriminatory to consumers of the same class and of essentially

the same hazard, a loss-control or value-added product or service

relating to the risks covered under the relevant policy or

contract, subject to Sections 1702.051 and 1702.053; or

(3) permit an insurer, health maintenance

organization, or agent or any other person to obtain information

from a tracking device used as part of a loss-control or value-added

product or service permitted under this chapter in a manner that

would violate privacy requirements under Chapter 601 or 602.

Sec. 1702.006. RULES. The commissioner may adopt

reasonable rules necessary to implement this chapter.

SUBCHAPTER B. ANCILLARY PRODUCTS OR SERVICES AND PROHIBITED

INDUCEMENTS

Sec. 1702.051. LOSS-CONTROL OR VALUE-ADDED PRODUCTS AND

SERVICES. (a) The cost to an insurer, health maintenance

organization, or agent for a loss-control or value-added product or

service provided to an insured, annuitant, or enrollee must be

reasonable in comparison to that insured's, annuitant's, or

enrollee's premiums or coverage for the class of the insured's,

annuitant's, or enrollee's policy or contract.

(b) If an insurer, health maintenance organization, or

agent provides a loss-control or value-added product or service to

an insured, annuitant, or enrollee, the insurer, health maintenance

organization, or agent must ensure that the insured, annuitant, or

enrollee is provided with contact information to assist the

insured, annuitant, or enrollee with questions regarding the

product or service.

(c) An insurer, health maintenance organization, or agent

must:

(1) base the availability of the loss-control or

value-added product or service on documented objective criteria;

(2) offer the product or service in a manner that is

not unfairly discriminatory; and

(3) maintain the documented criteria and produce the

criteria on request by the department.

(d) An insurer, health maintenance organization, or agent

may not use or implement a tracking device to track or gather the

data of an individual as part of a loss-control or value-added

product or service unless, before any use or implementation:

(1) the intended use or implementation of the device

is disclosed to the individual; and

(2) the individual consents to the device's use or

implementation.

Sec. 1702.052. PROHIBITED INDUCEMENTS. Except as provided

by this chapter, an insurer, health maintenance organization, or

agent may not:

(1) offer or provide insurance, annuity, or health

care plan coverage as an inducement to the purchase of another

policy or contract; or

(2) otherwise use "free," "no cost," or words of

similar meaning in an advertisement.

Sec. 1702.053. NONCASH GIFTS, CHARITABLE DONATIONS,

RAFFLES, OR OTHER ITEMS AND SERVICES. (a) An insurer, health

maintenance organization, or agent may offer or provide noncash

gifts, items, or services, including meals, to or charitable

donations on behalf of a consumer, in connection with the

marketing, sale, purchase, or retention of policies or contracts of

insurance, annuity, or health care plan coverage, provided:

(1) the cost does not exceed an amount determined to be

reasonable by the commissioner per policy or contract year per

term;

(2) the offer is made in a manner that is not unfairly

discriminatory; and

(3) the consumer is not required to purchase, continue

to purchase, or renew a policy or contract in exchange for the gift,

item, or service.

(b) An insurer, health maintenance organization, or agent

may conduct raffles or drawings to the extent permitted by the laws

of this state, provided:

(1) there is no financial cost to participate;

(2) the raffle or drawing does not obligate

participants to purchase, continue to purchase, or renew a policy

or contract;

(3) the prizes are not valued in excess of a reasonable

amount determined by the commissioner and the raffle or drawing is

open to the public; and

(4) the raffle or drawing is offered in a manner that

is not unfairly discriminatory.

SUBCHAPTER C. PRACTICES RELATED TO LIFE AND ANNUITY COVERAGE

Sec. 1702.101. APPLICABILITY OF SUBCHAPTER. This

subchapter applies only to an insurer described by Section

1702.003.

Sec. 1702.102. PROHIBITED REBATES AND INDUCEMENTS. (a)

Except as provided by this subchapter, an insurer or agent may not,

with respect to business written in this state:

(1) knowingly permit the making of, offer to make, or

make a life insurance policy or annuity contract or an agreement

regarding the policy or contract, other than as plainly expressed

in the issued policy or contract;

(2) directly or indirectly pay, give, or allow or

offer to pay, give, or allow as inducement to enter into a life

insurance policy or annuity contract either:

(A) a rebate of premiums payable on the policy or

contract; or

(B) a special favor or advantage in the dividends

or other benefits of the policy or contract or a valuable

consideration or inducement not specified in the policy or

contract; or

(3) give, sell, or purchase or offer to give, sell, or

purchase in connection with a life insurance policy or annuity

contract or as inducement to enter into the policy or contract:

(A) stocks, bonds, or other securities of an

insurer or other corporation, association, or partnership;

(B) dividends or profits accrued from the stocks,

bonds, or securities; or

(C) anything of value not specified in the

contract.

(b) An insurer may not permit an agent, officer, or employee

to issue or deliver as an inducement to enter into a life insurance

policy or annuity contract:

(1) company stock or other capital stock;

(2) a benefit certificate or share in a corporation;

(3) a security; or

(4) a special or advisory board contract or any other

contract promising returns or profits.

(c) This section does not prohibit issuing or delivering a

participating insurance policy or annuity contract otherwise

authorized by law.

Sec. 1702.103. PROHIBITED DISTINCTIONS AND DISCRIMINATION.

Except as provided by Section 1702.104, an insurer may not, with

respect to a life insurance policy or annuity contract, make or

permit a distinction or unfair discrimination between individuals

of the same class and equal life expectancy regarding:

(1) the rate charged;

(2) the dividend or other payable benefit; or

(3) any of the other terms of the policy or contract.

Sec. 1702.104. EXEMPTIONS. The following are not

considered to constitute a rebate, inducement, distinction, or

discrimination prohibited by this subchapter:

(1) for a life insurance policy or annuity contract, a

bonus payment to a policyholder or contract holder or other

abatement in the policyholder's or contract holder's premiums

provided wholly or partly out of surplus accumulated from

nonparticipating policies or contracts if the payment or abatement:

(A) is fair and equitable to policyholders and

contract holders; and

(B) is in the best interests of the insurer and

the insurer's policyholders and contract holders;

(2) for a life insurance policy issued on an

industrial debit plan, an allowance to a policyholder who has

continuously for a specified period made premium payments directly

to the insurer's office that is in an amount that fairly represents

the insurer's savings in collection expenses;

(3) for a group insurance policy, a readjustment in

the rate of premium based on the loss or expense experience under

the policy at the end of a policy year if the adjustment is

retroactive for only that policy year;

(4) for an annuity contract, a waiver of surrender

charges under the contract when the contract holder exchanges that

contract for another annuity contract issued by the same insurer or

an affiliate of the same insurer that is part of the same holding

company group if:

(A) the waiver and the exchange are fully,

fairly, and accurately explained to the contract holder in a manner

that is not deceptive or misleading; and

(B) the contract holder is given credit for the

time that the previous contract was held in determining any

surrender charges under the new contract;

(5) in connection with an offer or sale of a life

insurance policy or annuity contract, a promotional advertising

item, educational item, or traditional courtesy commonly extended

to consumers and that is valued at $25 or less; or

(6) any loss-control or value-added service or product

or other item allowed by Subchapter B.

SUBCHAPTER D. PRACTICES RELATED TO ACCIDENT AND HEALTH COVERAGE

Sec. 1702.151. APPLICABILITY OF SUBCHAPTER. This

subchapter applies only to an insurer or health maintenance

organization described by Section 1702.004.

Sec. 1702.152. PROHIBITED REBATES AND INDUCEMENTS. (a)

Except as provided by this subchapter or another provision in this

code, with respect to accident and health insurance or health care

plan coverage written in this state, an insurer, health maintenance

organization, or agent may not:

(1) knowingly permit the making of or offering of,

offer to make, or make an accident and health insurance policy or

health care plan contract or an agreement regarding the policy or

contract other than as plainly expressed in the issued policy or

contract;

(2) directly or indirectly pay, give, or allow or

offer to pay, give, or allow as an inducement to enter into an

accident and health insurance policy or health care plan contract:

(A) a rebate of premiums payable on the policy or

contract; or

(B) a special favor or advantage in the dividends

or other benefits of the policy or contract or a valuable

consideration or inducement not specified in the policy or

contract; or

(3) give, sell, or purchase or offer to give, sell, or

purchase in connection with an accident and health insurance policy

or health care plan contract or as an inducement to enter into the

policy or contract:

(A) stocks, bonds, or other securities of an

insurer or other corporation, association, or partnership;

(B) dividends or profits accrued from the stocks,

bonds, or securities; or

(C) anything of value not specified in the policy

or contract.

(b) An insurer or health maintenance organization may not

permit an agent, officer, or employee to issue or deliver as an

inducement to entering into an insurance policy or health care plan

contract:

(1) company stock or other capital stock;

(2) a benefit certificate or share in a corporation;

(3) securities; or

(4) a special or advisory board contract or any other

contract promising returns or profits.

(c) This section does not prohibit an insurer or health

maintenance organization from issuing or delivering a

participating insurance policy or health care plan contract

otherwise authorized by law.

Sec. 1702.153. PROHIBITED DISCRIMINATION AND DISTINCTIONS.

Except as provided by Section 1702.154 and other applicable

provisions in this code specific to particular types of accident

and health coverage or health care plan coverage, an insurer or

health maintenance organization may not, with respect to an

accident and health insurance policy or health care plan contract,

make or permit a distinction or an unfair discrimination between

individuals of the same class and equal life expectancy regarding:

(1) the rate charged;

(2) the dividend or other payable benefit; or

(3) any of the other terms of the policy or contract.

Sec. 1702.154. EXEMPTIONS. The following are not

considered a rebate, inducement, or discrimination prohibited by

this subchapter:

(1) for an accident and health policy or a health care

plan contract, a bonus payment to a policyholder or contract holder

or other abatement in the policyholder's or contract holder's

premiums provided wholly or partly out of surplus accumulated from

nonparticipating policies or contracts if the bonus or abatement:

(A) is fair and equitable to policyholders or

contract holders; and

(B) is in the best interests of the insurer or

health maintenance organization and its policyholders or contract

holders;

(2) for a group insurance policy or health care plan

contract, a readjustment in the rate of premium based on the loss or

expense experience under the policy or contract at the end of a

policy or contract year if the adjustment is retroactive for only

that policy or contract year;

(3) in connection with an offer or sale of an accident

and health insurance policy or health care plan contract, a

promotional advertising item, educational item, or traditional

courtesy commonly extended to consumers and that is valued at $25 or

less; or

(4) a loss-control or value-added product or service

or other item allowed by Subchapter B.

Sec. 1702.155. PROGRAMS PROMOTING DISEASE PREVENTION,

WELLNESS, AND HEALTH. (a) An insurer issuing an accident and

health insurance policy or a health maintenance organization

issuing a health care plan contract may establish premium

discounts, rebates, or a reduction in otherwise applicable

copayments, coinsurance, or deductibles, or any combination of

those incentives, for an insured or enrollee who participates in

programs promoting disease prevention, wellness, or health.

(b) A discount, rebate, or reduction established under this

section is not considered a prohibited rebate or inducement, an

unfair method of competition, or an unfair or deceptive act or trade

practice in the business of insurance.

SECTION 3. Section 81.001(c), Insurance Code, is amended to

read as follows:

(c) This section does not apply to conduct that is:

(1) a violation that is ongoing at the time the

department seeks to impose the sanction, penalty, or fine;

(2) a violation of Subchapter A, Chapter 544, or

Section 1702.103 [541.057], as those provisions relate to

discrimination on the basis of race or color, regardless of the time

the conduct occurs; or

(3) a violation of Title 5, Labor Code.

SECTION 4. Section 846.007(d), Insurance Code, is amended

to read as follows:

(d) A multiple employer welfare arrangement may establish

premium discounts, rebates, or a reduction in otherwise applicable

copayments or deductibles in return for adherence to programs of

health promotion and disease prevention. A discount, rebate, or

reduction established under this subsection does not violate

Section 1702.152 [541.056(a)].

SECTION 5. Section 1114.057, Insurance Code, is amended to

read as follows:

Sec. 1114.057. DISCLOSURE OF AVAILABILITY OF WAIVER OF

SURRENDER CHARGES. An insurer that offers to waive surrender

charges as described by Section 1702.104(4) [541.058(b)(4)] shall

provide reasonable notice of that offer to the insurer's

prospective or current contract holders. The notice may be

provided by any available means, including a disclosure document or

by display on a link that is prominently placed on the insurer's

Internet website.

SECTION 6. Section 1501.107(b), Insurance Code, is amended

to read as follows:

(b) A discount, rebate, or reduction established under this

section does not violate Section 1702.152 [541.056(a)].

SECTION 7. Sections 541.056, 541.057, 541.058, 543.003, and

1201.013, Insurance Code, are repealed.

SECTION 8. The changes in law made by this Act apply only to

an insurance policy, annuity contract, or health care plan contract

that is delivered, issued for delivery, or renewed on or after

January 1, 2026. A policy or contract delivered, issued for

delivery, or renewed before January 1, 2026, is governed by the law

as it existed immediately before the effective date of this Act, and

that law is continued in effect for that purpose.

SECTION 9. This Act takes effect September 1, 2025.

______________________________
______________________________

President of the Senate
Speaker of the House

I certify that H.B. No. 2221 was passed by the House on May 2,

2025, by the following vote: Yeas 132, Nays 0, 1 present, not

voting; and that the House concurred in Senate amendments to H.B.

No. 2221 on May 28, 2025, by the following vote: Yeas 124, Nays 12,

1 present, not voting.

______________________________

Chief Clerk of the House

I certify that H.B. No. 2221 was passed by the Senate, with

amendments, on May 26, 2025, by the following vote: Yeas 31, Nays

0.

______________________________

Secretary of the Senate

APPROVED: __________________

Date

__________________

Governor