H.B. No. 4386 amends the Texas Insurance Code by adding two new sections, 1114.0541 and 1114.0542, which establish specific processes for the exchange and surrender of annuity contracts. Section 1114.0541 outlines the requirements for processing annuity contract exchanges, defining an "exchange" and detailing the responsibilities of both the existing and replacing insurers. It mandates that the replacing insurer must provide an exchange request notice to the existing insurer, which must include necessary information for a tax-free exchange and other state law requirements. The existing insurer is required to respond within five business days and transfer the contract value within 30 business days, with provisions for penalties if these timelines are not met.

Section 1114.0542 addresses the surrender of annuity contracts, requiring contract owners to submit a surrender request in a specified manner. Insurers must transfer the cash surrender value within 30 business days unless certain conditions apply, such as the contract allowing for a deferral of payment or if the insurer suspects fraud. Similar to the exchange process, penalties for delayed payments are also stipulated. Both sections will apply to exchanges and surrenders initiated on or after January 1, 2026, and the act will take effect on September 1, 2025.

Statutes affected:
Introduced: Insurance Code 1114.054 (Insurance Code 1114)
House Committee Report: (Insurance Code 1114)
Engrossed: (Insurance Code 1114)
Senate Committee Report: (Insurance Code 1114)
Enrolled: (Insurance Code 1114)