Current through Reg. 49, No. 38; September 20, 2024
(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;
(D) the face amount of the prepaid funeral
contract;
(E) total finance charges
payable under the contract, if any;
(F) total retention allowable under the
contract, if any;
(G) beginning
contract balance;
(H) amounts paid
on the contract itemized to reflect retention, finance charges and principal
paid with individual cumulative totals;
(I) earnings on deposits, if any;
and
(J) total amount of the trust;
and
(5) a control ledger
for all purchasers, balanced at least quarterly to the principal total and
contract count total of the individual ledgers and in total to the records of
the trustee/depository, reflecting:
(A) the
net cumulative total of outstanding contracts;
(B) deposits of payments;
(C) withdrawal of payments;
(D) net amount of payments on
deposit;
(E) earnings of deposit
accounts;
(F) earnings withdrawn on
deposit accounts; and
(G) net
amount of earnings.
(f) Exceptions.
(1) With respect to contracts sold prior to
the effective date of this section, a permit holder will not violate this
section if it cannot produce records required under this section which were not
previously required by statute or rule.
(2) A permit holder may apply to the
commissioner for an exception to the requirements of this section. An exception
may be granted or revoked for good cause only by prior written direction of the
commissioner.
(g)
Relocation of Records. Prior to changing the location where required records
are maintained or where the examination is to be performed pursuant to §
RSA
154.053(a) of the Texas
Finance Code, a permit holder must notify the department, specifying the new
address in writing, and, if the change in location requires the granting of an
exception, comply with subsection (f)(2) of this section before required
records are moved to the new location. The commissioner may revoke approval of
a records location if the commissioner determines that such action is necessary
to effectively regulate the permit holder and examine the records.
(h) Maintenance of Files. Documents and
records required to be maintained under this section must be filed within
thirty days of receipt. Cash received must be posted within 30 days of receipt,
and cash withdrawn on death maturity must be posted within 30 days of the
actual withdrawal.
(i) Disaster
recovery plan. If required records are maintained electronically, the permit
holder must provide evidence of a disaster recovery plan, including
documentation to substantiate periodic testing and test results, including
offsite data storage capabilities regarding all records and documentation
related to prepaid contracts.
