La. Admin. Code tit. 37 § XIII-8909

Current through Register Vol. 50, No. 6, June 20, 2024

Section XIII-8909 - Duties of Insurers that Use Producers

A. Insurers shall maintain a system of supervision and control to insure compliance with the requirements of this regulation, including at least the following:

1. informing its producers of the requirements of this regulation and incorporate the requirements of this regulation into all relevant producer training manuals prepared by the insurer;

2. providing its producers a written statement of the company's position with respect to the acceptability of replacements and giving guidance to its producers as to the appropriateness of these transactions;

3. a system to review the appropriateness of each replacement transaction that the producer does not indicate is in accord with Paragraph 2 above;

4. procedures to confirm that the requirements of this regulation have been met; and

5. procedures to detect transactions that are replacements of existing policies or contracts by the existing insurer, but that have not been reported as such by the applicant or producer. Compliance with this Subsection may include, but shall not be limited to, systematic customer surveys, interviews, confirmation letters, or programs of internal monitoring.

B. Insurers shall have the capacity to monitor each producer's life insurance policy and annuity contract replacements for that insurer, and shall produce, upon request, and make such records available to the Department of Insurance. The capacity to monitor shall include the ability to produce records for each producer's:

1. life replacements, including financed purchases, as a percentage of the producer's total annual sales for life insurance;

2. number of lapses of policies by the producer as a percentage of the producer's total annual sales for life insurance;

3. annuity contract replacements as a percentage of the producer's total annual annuity contract sales;

4. number of transactions that are unreported replacements of existing policies or contracts by the existing insurer detected by the company's monitoring system as required by Paragraph A.5 of this Section; and

5. replacements, indexed by replacing producer and existing insurer.

C. Insurers shall:

1. require with or as a part of each application for life insurance or an annuity, a signed statement by both the applicant and the producer as to whether the applicant has existing policies or contracts;

2. if there is indication of existing policies or contracts:

a. require with each application for life insurance or an annuity a completed notice regarding replacements as contained in Appendix A;

b. be able to produce completed and signed copies of the notice regarding replacements for at least five years after the termination or expiration of the proposed policy or contract;

c. provide the applicant a hard copy of the required replacement notice within two business days following a producer's submission of case conducted by electronic means. In order to show compliance with §8907. A.2 and 3, the provision must occur no later than five business days from the date of applicant's signing the application.

3. in connection with a replacement transaction, be able to produce copies of any sales material as required by §8907 D, the basic illustration and any supplemental illustrations related to the specific policy or contract which is purchased and the producer's and applicant's signed statements with respect to financing and replacement for at least five years after the termination or expiration of the proposed policy or contract;

4. ascertain that the sales material and illustrations required by §8907. D of this regulation meet the requirements of this regulation and are complete and accurate for the proposed policy or contract; and

5. if an application does not meet the requirements of this regulation, notify the producer and applicant and fulfill the outstanding requirements;

6. records required to be retained by this regulation may be maintained in paper, photograph, microprocess, magnetic, mechanical or electronic media or by any process which accurately reproduces the actual document.

La. Admin. Code tit. 37, § XIII-8909

Promulgated by the Department of Insurance, Office of the Commissioner, LR 26:1302 (June 2000), amended LR 28:1597 (July 2002).

AUTHORITY NOTE: Promulgated in accordance with R.S. 22:3 and R.S. 22:644.1.