CHAPTER Ins 3200 SALES OF INSURANCE BY FINANCIAL INSTITUTIONS
Statutory Authority: RSA 406-C:16
PART Ins 3201 GENERAL INFORMATION
Ins 3201.01 Purpose. The purpose of this rule is to authorize and regulate
the solicitation and sales of insurance products and services by financial
institutions, protect the insurance buying public, and, maintain parity between
state and federally chartered financial institutions as provided for by RSA
406-C.
Source. #7064,
eff 7-24-99; ss by #7540, eff 8-1-01
PART Ins 3202 LICENSING REQUIREMENTS
Ins 3202.01 License
Required.
(a) A financial
institution or individual shall apply for a license to engage in one or more of
the following:
(1) Soliciting individuals to purchase insurance.
Soliciting means recommending or selling specific insurance products or
services. Soliciting shall not include
the clerical or ministerial acts involved in:
a. Making a general referral to a licensed
insurance agent;
b. The dissemination of sales literature
prepared by the agency; and
c. The scheduling of appointments with licensed
insurance agents.
(2) Collecting premiums for insurance sold by the
financial institution;
(3) Transmitting an application for a policy of
insurance;
(4) Negotiating for, or placing, risks;
(5) Delivering policies; or
(6) Other than in a clerical or ministerial
manner, aiding in the transaction of the insurance business.
(b) If the individual
performs clerical tasks only, a license shall not be required for that
individual.
(c) A financial
institution shall obtain a corporate agent’s license under RSA 406-C:5 if it
directly receives insurance commissions, is compensated based on the volume of
insurance sales, or if it recommends or sponsors specific insurance
products. At least one officer of the
organization shall also obtain an agent’s license for the appropriate lines of
insurance and shall be responsible for the financial institution’s insurance
sales activities.
(d) All insurance
sales transactions shall be conducted by individually licensed agents. The financial institution officer responsible
for the financial institution’s insurance sales activities shall ensure that all
employees are made aware that the conduct of the sale of insurance by
unlicensed financial institution employees is prohibited under
Source. #7064,
eff 7-24-99
Ins 3202.02 Financial
Institution License Application.
(a) A financial
institution shall apply for a license on the insurance department application
form.
(b) Along with the
application, the applicant shall provide the following:
(1) A certified copy of its charter;
(2) An officer’s certification of a board
resolution authorizing the financial institution to engage in the sale of
insurance and to make appropriate application to the Department;
(3) A list of the financial institution officers directly
involved in insurance sales; and
Source. #7064,
eff 7-24-99; amd by #7540, eff 8-1-01
Ins 3202.03 Authorized
or Approved Carriers. Financial
institutions shall offer only insurance products of insurance companies
licensed and authorized or approved to do business in
Source. #7064,
eff 7-24-99
PART Ins 3203 PROCEDURES FOR AUTHORITY TO SELL INSURANCE
Ins 3203.01 Insurance
Sales Relationships.
(a) A licensed
financial institution may directly employ a licensed insurance agent or own a
subsidiary, all or part of which is an insurance agency.
(b) The financial
institution may contract with third parties to assist the financial institution
agency’s sales activities.
(c) A financial
institution’s licensed employees or agents shall hold the appropriate license
for the lines of insurance which they are actively selling.
Source. #7064,
eff 7-24-99
Ins 3203.02 Special
Requirements for Depository Institutions.
(a) A financial
institution may apply for a license to sell insurance if the financial
institution and employees actively engage in the business of insurance and have
complied with all the licensing requirements of the insurance department.
(b) A licensed
financial institution that directly, or
through a subsidiary as defined by applicable federal and state banking law,
may establish an insurance agency.
(c) Each insurance
agency shall be responsible for the following, as applicable to its insurance
sales activities:
(1)
Collecting commissions from insurance carriers and paying commissions to
its licensed sales staff; and
(2)
Processing insurance applications, delivering insurance policies and
collecting premiums, where consistent with procedures of the relevant insurance
carriers.
(d) Business records of the agency, including copies of
customer application(s) and policy information, customer complaints, licensing
and all other compliance records, shall be available. A licensed financial institution which shares
in commissions only, shall maintain business records commensurate with its
active participation in the sale of insurance which shall, at a minimum,
include information regarding customer complaints, licensing and all other
compliance records and information on commissions received by the financial
institution. In the alternative, the
required business records of the agency shall be maintained and available at
the agency in electronic form, with the original hard copy kept in off-site
storage.
(e) A financial
institution that establishes a networking arrangement with a third party
marketer shall obtain a corporate agent’s license to share in commissions. The third party marketer shall be properly
licensed in
(f) The following
principles shall be applied to financial institutions when acting as insurance
agents in determining the scope of solicitation and sales activities so long as
such solicitation and sales activities otherwise comply with RSA 406-C and the
other provisions of this chapter:
(1) Contacts and meetings with customers and
solicitation sales of insurance by licensed
agents of the financial institution agency may be held;
(2) Mailings to advertise and sell as well as
brochures, leaflets and other literature alerting potential customers to the
financial institution’s insurance activities may be distributed;
(3) Personnel of bank branches may make referrals
to the bank’s insurance agency; and
(4) Telephone and cybermarketing may be used.
Source. #7064,
eff 7-24-99; amd by #7540, eff 8-1-01
Ins 3203.03 Qualifications
and Training.
(a) A financial
institution shall have experienced and qualified personnel to conduct the
insurance sales program in a manner that provides customers with proper advice
and accurate information.
(b) Licensed
employees shall satisfy the continuing education requirements in Ins 1300.
(c) To aid in
distinguishing between insurance and non-insurance products, financial
institutions shall develop written policies consistent with the provisions of
RSA 406-C and this chapter specifying who may sell and
recommend insurance products and how individuals selling and recommending
insurance products identify themselves and their sales roles.
Source. #7064,
eff 7-24-99
Ins 3203.04 Independent
Agent or Agency.
(a) An independent
agent or insurance agency may lease, rent, or otherwise occupy space in an
unlicensed financial institution subject to the following conditions:
(1) The dollar amount of rent shall be fixed and shall
not be based on a percentage of premium income or otherwise tied to the
transaction of insurance;
(2) The lease shall contain:
a. A clause expressly negating a partnership or
joint venture;
b. A clause stipulating that the landlord has no
right to exercise control over the tenant insurance agency except for
collection of rent or other common and usual landlord/tenant activities and
relationships; and
(3) The lease shall contain a clause requiring the
insurance agency to comply with the separation of activities and disclosure
requirements of RSA Chapter 406-C.
Source. #7064,
eff 7-24-99
Ins 3203.05 Commissions.
(a) Commissions shall
not be paid to, or shared with, an individual or business entity, including but
not limited to a financial institution, which is not licensed as an insurance
agent or broker in
(b) Non-licensed
individuals or business entities shall not be awarded a portion of the
insurance revenue.
(c) Any compensation
paid other than as provided in this part shall constitute prohibited commission
sharing.
Source. #7064,
eff 7-24-99
Ins 3203.06 Referral
Fees. Only licensed employees of a
financial institution shall, directly or indirectly receive any compensation or
consideration from an insurance agent or broker, insurance agency, insurance
company, or a financial institution, based upon referral of potential insurance
purchases to, or making appointments with, a licensed insurance agent or
broker. However, an employee of a
financial institution who is not licensed to sell insurance may refer a party to
a person who is licensed to sell insurance if the employee making such referral
is compensated for such referral in an amount that does not exceed a nominal
amount and such amount is not based on or related to the party’s purchase of
insurance.
Source. #7064,
eff 7-24-99; ss by #7540, eff 8-1-01
Ins 3203.07 Inducements
or Rebating. A financial institution
shall not offer special benefits, such as rebates or discounts on insurance in
violation of RSA 417:4, IX(a), RSA 402:39, or RSA 402:40 or any other
provisions of law.
Source. #7064,
eff 7-24-99
PART Ins 3204 CONSUMER PROTECTION
Ins 3204.01 Statutory
Requirements.
(a) Financial
institutions selling insurance shall be subject to all consumer protection
provisions of
(b) Financial
institutions selling insurance shall also be subject to the federal anti-tying
provisions of 12 U.S.C.A. §1972, and the applicable disclosure provisions of
the February 15, 1994 Interagency Statement on Retail Sales of Non-deposit
Investment Products, issued jointly by federal bank regulatory agencies as well
as Ban 520.
Source. #7064,
eff 7-24-99
Ins 3204.02 Disclosures. To avoid customer confusion, in addition to
the disclosures specifically required by the insurance laws of New Hampshire and
the rules of the department, advertising, promotional material and solicitation
shall include the disclosures required by RSA 406-C:8 to be delivered to the
customer at or before the time of sale of an insurance product.
Source. #7064,
eff 7-24-99
Ins 3204.03 Disclosures
When Insurance is Required as a Condition of Obtaining a Loan.
(a) When a financial
institution requires a customer to obtain insurance in connection with a loan the
financial institution may inform customers that insurance is available from the
financial institution, its subsidiary or an affiliate.
(b) To avoid the
impression that a connection exists between the financial institution’s credit
decision and the customer’s choice of insurance seller, when insurance is
available through the financial institution, a customer applying for a loan or
an extension of credit shall be informed by the financial institution that:
(1) The customer shall not be required to purchase
insurance from the financial institution, a subsidiary or an affiliate; and,
(2) The purchase of insurance from an agent of
the customer’s choice shall not affect current or future credit decisions.
Source. #7064,
eff 7-24-99
Ins 3204.04 Tying
of Non-Insurance Products with Insurance Products Prohibited.
(a)
A financial institution’s non-insurance products shall not be tied in
with insurance products in a manner that violates 12 U.S.C. § 1972 or any other
applicable state statute, including RSA 402:39, RSA 402:40 and RSA Chapter 417,
the Unfair Trade Practices Act.
Financial institutions shall not require the purchase of insurance from
the financial institution or from a designated insurer or agent as a condition
of other financial institution transactions.
A financial institution shall have written policies and procedures in
place to prevent impermissible tying.
(b) Such measures
required by (a) above shall include:
(1) Monitoring sales activity to detect coercion
when offering customers multiple products or services;
(2) Training bank employees about tying
prohibitions, including providing examples of prohibited practices and
sensitizing employees to the concerns raised by tying;
(3) Involving management in reviewing training,
audit, and compliance programs, and updating any policies and procedures to
reflect changes in products, services, or applicable law;
(4) Reviewing customer files to determine whether
any extension of credit is conditioned on obtaining an insurance product from
the bank or its affiliates; and
(5) Responding to any customer allegations of
prohibited tying arrangements.
(c) The tying
prohibitions shall not prevent financial institution sales personnel from
informing a customer that insurance is required in order to obtain a loan or
that loan approval is contingent on the customer obtaining acceptable
insurance. In such circumstances, sales
personnel shall comply with Ins 3204.03.
Source. #7064,
eff 7-24-99
Ins 3204.05 Discrimination
Against Nonaffiliated Companies or Agents Prohibited.
(a) A financial
institution shall not:
(1) Condition the provision or terms of any other
service upon acquisition of insurance through a particular insurer, agent or
broker;
(2) Reject a required policy solely because the
policy was sold by a person who is not associated with the financial
institution; or
(3) Impose a requirement on any agent or broker
not associated with the financial institution that is not imposed on any agent
who is associated with the financial institution.
Source. #7064,
eff 7-24-99
Ins 3204.06 Affirmative
Statement Signed by Insurance Customer.
The financial institution shall obtain a written affirmative statement
at the time that a customer applying for a loan or an extension of credit is
first informed that insurance is available through the financial institution,
which acknowledges that the customer applying for credit has received the
disclosure required by Ins 3204.03.
Source. #7064,
eff 7-24-99
Ins 3204.07 Separation
from Deposit and Loan Activities.
(a) Sales of
insurance shall, to the extent practicable, take place in a location that is
distinct from the area where retail deposits or credit transactions are being
conducted. Where physical space will allow,
signs or other means shall be used to distinguish any established insurance
sales area from any established retail deposit taking or lending areas.
(b) When the staffing level, size or design of a
particular facility of a financial institution prevent sales from being
conducted in a location distinct from the retail area, the financial
institution shall submit a plan to the department for approval. The plan shall show the content and physical
placement of signage within the retail area.
Placement of signage shall minimize customer confusion. In no event shall the sale of insurance
products be conducted at the retail deposit-taking stations of a financial
institution.
(c) A financial
institution shall establish written procedures to demarcate the conclusion of a
deposit or loan transaction conducted in the same physical space as a
subsequent insurance solicitation.
(d) Signs or other
means shall be used to distinguish the insurance sales area from an established
retail deposit taking area such as a teller line.
(e) Signs shall:
(1) Be clearly visible to customers and
distinguish insurance products from non-insurance products;
(2) Identify insurance agencies and producers who
are affiliated with the institution and who are providing insurance products
within the retail area; and
(3) Be posted in areas where insurance is sold
and shall clarify that insurance sold is not a deposit or obligation of the
financial institution, is not guaranteed by the financial institution and is
not insured by the Federal Deposit Insurance Corporation (FDIC), the National
Credit Union Administration (NCUA), or their successors as applicable to the
licensed financial institution.
(f) Tellers and other
employees behind the teller line, while conducting retail deposit or credit
transactions, shall not:
(1) Unless in response to a question, inform a
customer that insurance products are sold at the financial institution;
(2) Make general or specific investment
recommendations regarding insurance products;
(3) Qualify a customer as eligible to purchase
the products;
(4) Accept orders for the products, even if
unsolicited; or
(5) Perform other activities that involve the
sale of an insurance product so as to trigger the licensing requirements of Ins 3202.01.
(g) Solicitation for
the purchase or sale of insurance by a financial institution’s licensed
employee who also exercises authority over credit transactions shall include:
(1) The disclosures required in Ins 3204.02 to
address the potential for customer confusion and possible coercion; and
(2) A written and oral disclosure that the
purchase of insurance from the licensed employee shall not enhance or affect
current or future credit decisions of the financial institution.
(h) Signage,
informational materials, and sales literature concerning the availability of
insurance products sold through the financial institution shall be displayed so
as to distinguish any established insurance sales area from any established
retail deposit or credit area and shall comply with applicable requirements of
Ins 2600 and Ins 3204.09.
(i) A financial
institution shall maintain a file for a 3 year period of any written customer
complaint received with respect to insurance solicitations made by licensed
employees of the financial institution.
Source. #7064,
eff 7-24-99
Ins 3204.08 Customer
Privacy.
(a) Consistent with
the provisions of RSA 406-C:9 a financial institution shall not use any
non-public customer information, other than information pertaining solely to
insurance transactions between a customer and the financial institution or its
affiliate or subsidiary, or provide such non-public customer information to a
third party for the purpose of selling or soliciting the purchase of insurance
unless the customer has provided a written consent to use such non-public
customer information for insurance solicitation and it is clearly and
conspicuously disclosed to the customer that the non-public customer
information may be so used.
(b) All completed
insurance applications shall be returned only to the licensed insurance agent
and under no circumstances shall the financial institution indicate that such
applications be returned to an unlicensed financial institution.
Source. #7064,
eff 7-24-99
Ins 3204.09 Advertising
of Insurance by a Financial Institution.
(a) Advertisements
directed to prospective or existing insurance purchasers shall be from a
licensed financial institution, agent or insurer.
(b) If insurance
advertisements directed to prospective purchasers are included in mailings of
bank statements or other documents generated by the financial institution
relating to products or services provided by the financial institution, the
mailings shall clearly identify the separate sources of the materials.
(c) Notices of
cancellation or non-renewal, or other similar communications relating to
in-force insurance shall originate with a licensed financial institution,
agent, insurance company, insurance agency, or third party administrator, if
any, and shall be distinct from deposit account communications or any other
financial institution communication.
(d) Insurance
statements may include information regarding checking, savings or trust accounts,
certificates of deposit, or other banking products or services if the insurance
information is segregated from other banking information and if the disclosure
requirements of RSA 406-C:8 are otherwise satisfied.
(e) Terminology used
in connection with the solicitation and sales of insurance products and
services shall be sufficiently different from that used in connection with
traditional banking products and services so as to avoid confusion.
(f) Promotional
material shall clearly distinguish insured deposit products from uninsured
insurance products such that an individual of ordinary intelligence would
immediately recognize that the insurance material offered by a licensed
insurance agent or insurer is separate from the financial institution’s insured
deposit product material. In addition,
an insurance product shall not have a name which is misleadingly similar to the
name of a financial institution so as to reasonably create customer confusion.
Source. #7064,
eff 7-24-99
PART Ins 3205 COMPLIANCE, ENFORCEMENT AND PENALTY
PROVISIONS
Ins 3205.01 Compliance. Financial institutions shall develop and
implement policies and procedures to ensure that sales activities are conducted
in compliance with applicable laws and rules and in a manner consistent with
this chapter. Compliance procedures
shall identify potential conflicts of interest and how conflicts shall be
addressed. The compliance procedures
shall also provide for a system to monitor customer complaints and their
resolution. The compliance function
shall be conducted independently of insurance and annuity product sales and
management activities.
Source. #7064,
eff 7-24-99
Ins 3205.02 Penalties.
(a) A violation of Ins 3202.01 through Ins
3205.01, shall result in an enforcement action under RSA 406-C. The department shall specify which sections,
including specific subsections if any, of RSA 406-C are alleged violated in any
enforcement action brought under this section.
(b) In addition to
any other penalties provided by the laws of this state, a financial institution
or individual who violates a requirement of the administrative rules sections
cited in (a) above shall, after notice and hearing in accordance with the
procedures set forth in Ins 201 through Ins 204, be subject to suspension,
revocation or fine pursuant to RSA 406-C:18 unless in instances of an
administrative fine the financial institution or individual requests no fine as
set forth in (d) below.
(c) After
appropriate notice and hearing, an administrative fine of $2,500 shall be
levied for each finding of violation of a provision of the sections cited in
(a) above as set forth in RSA 406-C. The
financial institution or individual may request a reduced fine or no fine.
(d) The financial
institution or individual may request no fine as set forth in (d) below, or a reduced fine as set forth in (c)
above through demonstration by the financial institution or individual that:
(1) There is no or minimal damage or costs to
consumers, the State or other licensed entities as a result of the violation;
(2) The financial institution or individual has
not committed multiple or repeated violations;
(3) The act or omission in issue was not knowing,
intentional, or committed in bad faith; and
(4) The requested reduced fine represents an
appropriate penalty based on the nature and severity of the resultant harm.
(e) Financial
institutions or individuals shall additionally be subject to suspension
pursuant to RSA 406-C:18 when the violation of the sections noted in (a) above
is ongoing or there is a high probability the violation will be repeated based
on findings of record.
(f) Financial institutions
or individuals shall be subject to revocation pursuant to RSA 406-C:18 if:
(1) The act or omission was knowing, intentional
or committed in bad faith; or
(2) There was significant damage or cost to consumers,
the State or other licensed entities as a result of the violation.
(g) A knowing
violation of a section other than those cited in (a) above shall result in an
enforcement action under RSA 400-A:15, III, subject to the requirements
therein.
(h) After
appropriate notice and hearing, an administrative fine of $2,500 shall be
levied for each finding of violation of RSA 400-A:15, III if the penalty of
suspension or revocation as specified below is not appropriate.
(i) The financial
institution or individual may request at hearing a reduced fine or no fine
imposed under (h) above through successful demonstration that:
(1) There is no or minimal damage or costs to
consumers, the State or other licensed entities as a result of the violation;
(2) The financial institution or individual has
not committed multiple or repeated violations; and
(3) The requested reduced fine represents an
appropriate penalty based on the nature and severity of the resultant harm.
(j) Financial
institutions or individuals shall be subject to suspension pursuant to RSA
400-A:15, III if one of the following occurs:
(1) The violation is continuing; or
(2) There is a high probability the violation
will be repeated, based on findings of record; and
(3) Imposition of a penalty other than
suspension, such as a fine, will not be a sufficient deterrent.
(k) Financial
institutions or individuals shall be subject to revocation pursuant to RSA
400-A:15, III if:
(1) The violative act or omission was intentional
or committed in bad faith; or
(2) There was significant damage or cost to
consumers, the State or other licensed entities as a result of the violation.
(l) Repeated or
multiple violations of this part shall constitute separate violations subject to
penalty.
Source. #7064,
eff 7-24-99; ss by #7300, eff 7-1-00; amd by #7540, eff 8-1-01
Appendix
|
Rule |
|
|
Ins
3201.01 |
RSA
406-C:1 |
|
Ins
3202.01 |
RSA
406-C:3, 4, 5 |
|
Ins
3202.02 |
RSA
406-C:3; 402:16 |
|
Ins
3202.03 |
RSA
405:32; 406-C:6 |
|
Ins
3203.01 |
RSA
406-C:5, 6 |
|
Ins
3203.02 |
RSA
406-C:1 |
|
Ins
3203.03 |
RSA
406-C:12 |
|
Ins
3203.04 |
RSA
406-C:12 |
|
Ins 3203.05 |
RSA
417:4 IX; 402:39; 402:40 |
|
Ins
3203.06 |
RSA
417:4 IX; 402:39; 402:40 |
|
Ins
3203.07 |
RSA
417:4 IX; 402:39; 402:40 |
|
Ins
3204.01 |
RSA
417:4 |
|
Ins
3204.02 |
RSA
406-C:8 |
|
Ins
3204.03 |
RSA
406-C:8 |
|
Ins
3204.04 |
RSA
406-C:10 |
|
Ins 3204.05 |
RSA
406-C:11 |
|
Ins
3204.06 |
RSA
406-C:9 |
|
Ins
3204.07 |
RSA
406-C:7 |
|
Ins
3204.08 |
RSA
406-C:9, 13 |
|
Ins
3204.09 |
RSA
406-C:12 |
|
Ins
3205.01 |
RSA
406-C:17 |
|
Ins
3205.02 |
RSA
406-C:17, 406-C:18; 400-A:15, III |