PRELIMINARY DRAFT LIST OF STATUTES THAT APPEAR TO CONFLICT WITH THE GLB ACT (AS OF 12/19/01)
Countersignature Statutes
FLORIDA Countersignature Law – Fl. St. 626.741 Nonresidents are not permitted to “directly or indirectly solicit, negotiate, or effect insurance contracts” in Florida unless accompanied by a resident agent’s countersignature on the risk. NEVADA Countersignature Law – Nev. Rev. Stat. Ann. § 680A.300 The Nevada statute requires a licensed resident agent to countersign any policy of insurance on persons, property or risks resident, located or to be performed in Nevada. SOUTH DAKOTA Countersignature Law - § 58-6-62 The South Dakota statute requires policies to be countersigned by a resident insurance producer. However, this statute exempts many types of insurance from the countersignature requirement. WEST VIRGINIA Countersignature Law – § 33-12-7 House Bill 2963 was introduced in the house on March 22, 2001. The purpose of the bill is to eliminate countersignature requirements with respect to all types of insurance, with the exception of surety insurance. The last action taken on the bill was to refer it to the house judiciary committee. Last year, HB 2845 was introduced to repeal the countersignature requirements. This bill did not pass.
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Loan Officer Sales
FLORIDA Loan Officer Sales Restriction - § 626.9551(2)(d) “A loan officer of a financial institution who is involved in the application, solicitation, or closing of a loan transaction may not solicit or sell insurance in connection with the same loan, but such loan officer may refer the loan customer to another insurance agent who is not involved in the application, solicitation or closing of the same loan transaction.” ILLINOIS Loan Officer Sales Restriction - 215 ILCS 5/1413 “Separate physical location and sales force when insurance is solicited or sold in connection with a loan. (a) An employee of a financial institution may not solicit or sell insurance at the same desk where a loan transaction is conducted when the insurance is solicited or sold in connection with the same loan. (b) A loan officer of a financial institution who is involved in the application, solicitation, or closing of a loan transaction may not solicit or sell insurance in connection with the same loan, but such loan officer may refer the loan customer to another insurance producer who is not involved in the application, solicitation, or closing of the same loan transaction.” MICHIGAN Loan Officer Sales Restriction - § 500.1243(13); Michigan Bulletin 2001-06-OFIS “A loan representative may not act as an agent or solicitor for the sale or provision of required insurance related to an application, approval, commitment, or closing of a loan if the loan representative participated in the application, approval, commitment, or closing of that loan. Bulletin addresses preemption problems with Michigan Statute 500.1243. NEW MEXICO Loan Officer Sales Restriction – 59A-12-10 § Q The sale of insurance by a lending institution, credit union, sales finance company, insurance company, insurance agent, an institution that grants or arranges consumer credit or an institution that solicits or makes loans in New Mexico may be conducted by a person whose responsibilities include loan transactions or other transactions involving the extension of credit so long as the person who is primarily responsible for making the specific loan or extension of credit is not the same person engaged in the sale of insurance for that same transaction…” OHIO Loan Officer Sales Restriction – 3901.211(A)(7)
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“No person that lends money or extends credit shall do any of the following: If an application for a loan or extension of credit is pending, offer, sell, or require insurance in connection with the loan or extension of credit, unless both of the following occur:…” OREGON Loan Officer Sales Restriction - 715.075(4) “No person who acts on behalf of the corporation to transact insurance, as that term is defined in ORS 731.146, shall while employed by the corporation engage on behalf of the holding company or any bank owned by it in any activities relating to the making of loans or the granting of other credits to the customers of any bank owned by the holding company, including but not limited to serving as a loan officer or as a member of a loan committee or any other group charged with approval of loans and other credits.” PUERTO RICO Loan Officer Sales – Rule No. 74 (art. 5) § 2 “The directors or any other person authorized by the commissioner to act on behalf of the subsidiary corporation, who is a customer service representative of the depository institution and who participates in the application, solicitation or closing of a credit transaction, may not solicit or sell insurance products in connection with or pertaining to said credit transaction.” TEXAS Loan Officer Sales – 21.21-9 § 4 “If insurance is offered or sold to a bank customer in connection with a loan transaction by a bank, the insurance sales person involved in that insurance transaction may not be involved in that loan transaction and may not also be the person making that loan.
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Physical Separation of Bank and Insurance Sales
ILLINOIS Physical Separation Required – 215 ILCS § 5/1413 “Separate physical location and sales force when insurance is solicited or sold in connection with a loan. (a) An employee of a financial institution may not solicit or sell insurance at the same desk where a loan transaction is conducted when the insurance is solicited or sold in connection with the same loan.” INDIANA Physical Separation Required - § 28-1-11-2.6(g) “If a financial institution sells or solicits the sale of insurance on the premises of its principal office or a branch, the financial institution may sell or solicit the sale of insurance only in a location of the premises that is: (1) physically separated and distinct from the banking activities of the financial institution; and …” LOUISIANA Physical Separation Required - 22:3060 “Physical location of loan and insurance activities. If the financial institution solicits the purchase of insurance from a customer who is applying for a loan or extension of credit, the insurance solicitation shall be conducted in an area physically separate and distinct from the loan transaction, unless the size of the facility is too small to make the physical separation possible.” MAINE Physical Separation Required – 9B MRSA § 448(4) “To the extent practicable, sales of insurance products authorized by this section must take place in a manner that minimizes customer confusion between the deposit, share or loan products offered by the institution and those insurance products.” MICHIGAN Physical Separation Required - § 500.1234 (19), (20); Michigan Bulletin 2001-06-OFIS “The offering of a loan by a lender and the sale or provision of insurance products by the lender or an affiliated agency shall be made in different areas that are clearly and conspicuously signed and separated so as to preclude confusion on the part of customers…” “Signs and other informational material concerning the availability of insurance products from the lender or an affiliated agency shall not be displayed in an area when loan applications are being taken and when loans are being closed in that area.”
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Bulletin addresses preemption problems with Michigan Statute 500.1243.
NEW HAMPSHIRE Physical Separation Required - § 406-C:7 I.; Ins. Code Ch. 3204.07(a) “Separation of Activities. I. Solicitation for the purchase or sale of insurance by the financial institution shall, to avoid customer confusion and to the extent practicable, be conducted in a physical location distinct from the area where retail deposits or credit transactions are being conducted. NEW MEXICO Physical Separation Required – 59A-12-10 U “The location for the sale of insurance on the premises of a lending institution, except an institution that does not accept deposits that are federally insured, to the extent practicable shall be: (1) physically located to be distinct from the lending activities of the institution; and (2) clearly and conspicuously signed to be easily distinguishable by the public as separate and distinct from the lending activities of the institution. OREGON Physical Separation Required – 715.075(3) “If the corporation conducts the insurance agency activity in any branch or office in which any bank owned by the bank holding company carries on its banking business, the insurance agency activity shall be physically separated from those parts of the premises in which the bank carries on the banking business.” PENNSYLVANIA Physical Separation Required – 40 § 287(a); Ins. Dept. Policy Statement “Physical Premises. The sale of annuities or insurance, except credit insurance, by financial institutions and agents and brokers thereof shall take place in a location that is distinct from the area where deposits are taken and loan applications are discussed and accepted.” PUERTO RICO Physical Separation Required – Rule No. 74 (art. 5) “The subsidiary corporation may sell, solicit offer or market insurance products or annuities within the premises of the depository institution or its affiliates, provided that said activities are conducted in an area that is physically separated from the area in which deposit-taking activities take place. Said area must be clearly distinguishable from the area in which credit extensions are negotiated.” “Dual employees shall not sell, solicit, offer or market insurance products or annuities at the desks designated for the negotiation of credit transactions.”
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TENNESSEE Physical Separation Required – 0780-1-51-.04(2) “The space occupied by the agent or insurer must be situated and sufficiently segregated in the retail area of the financial institution to insulate customers of the financial institution who have applied for or obtained credit from express or implied intimidation or interference with the customers’ free choice regarding the purchase of insurance. Accordingly, employees of the financial institution may not be positioned, in relation to the space occupied by the agent or insurer, so as to allow regular observance by financial institution customers transacting business within the space occupied by the agent or insurer…” TEXAS Physical Separation Required – 21.21-9 § 6 “The place of solicitation or sale of insurance by a bank or on the premises of a bank must be clearly and conspicuously indicated by signs in order to be readily distinguishable by the public as separate and distinct from the lending and deposit taking activities of the bank…”
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Customer Information
ARIZONA Customer Information – 20-475.01 “When a real property mortgage or a lending agreement in connection with a loan on real property provides that the mortgagor or borrower shall furnish insurance upon the mortgaged property, the mortgagee, assignee or creditor shall not disclose expiration dates or other policy information to other persons, directly or indirectly, for the purpose of permitting any person or persons to solicit the insurance or any renewal thereof without the consent of the policyholder in writing.” ARKANSAS Customer Information – 23-66-312(a)(3); 23-66-315 “No person, including, but not limited to, depository institutions and affiliates of depository institutions, primary and secondary mortgagees, vendors, or lenders may: [U]se or disclose information resulting from a requirement that a borrower, mortgagor, or purchaser furnish insurance of any kind when that information is to the advantage of the mortgagee, vendor, or lender or is to the detriment of the borrower, mortgagor, purchaser, insurer, or the agent or broker complying with this requirement.” See entire statute for 23-66-315. CONNECTICUT Customer Information - § 38a-775(d)(1)-(2); 38a-816(11)(a)(iv) “No bank, out of state bank or subsidiary of such bank or out of state bank engaged in the sale of annuities or insurance in this state may provide any financial records, as defined in section 36a 41, to any person for the purpose of selling annuities or insurance without the prior written consent of the customer to whom such insurance information pertains.” “No bank, out of state bank or subsidiary of such bank or out-of-state bank engaged in the sale of annuities or insurance in this state may use any insurance information to solicit or sell insurance to customers, or provide any insurance information to a third party in connection with the third party’s solicitation or sale of insurance to customers, without the prior written consent of the customer to whom such information pertains.” “No person may use or disclose information resulting from a requirement that a borrower, mortgagor or purchaser furnish insurance of any kind on real property being conveyed or used as collateral security to a loan, when such information is to the advantage of the mortgagee, vendor or lender, or is to the detriment of the borrower, mortgagor, purchaser, insurer, or the producer complying with such requirement.”
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DELAWARE Customer Information - 18 Del. Code § 2305(a)(4) “No person shall: use or disclose information resulting from a requirement that a borrower, mortgagor or purchaser furnish insurance of any kind on real property being conveyed or used as collateral security to a loan, when such information is to the advantage of the mortgagee, vendor or lender, or is to the detriment of the borrower, mortgagor, purchaser, insurer, or the producer complying with such requirement.” DISTRICT OF COLUMBIA Customer Information – 35-5120(b)(4) “No person who lends money or extends credit shall: Use or disclose, without the prior written consent of the borrower, mortgagor, or purchaser taken at a time other than the making of the loan or extension of credit, information relative to an insurance policy which is required by the credit transaction for the purpose of replacing the insurance;" FLORIDA Customer Information - § 626.9551(1)(d) “No person may: Use or provide to others insurance information required to be disclosed by a customer to a financial institution, or a subsidiary or affiliate thereof, in connection with the extension of credit for the purpose of soliciting the sale of insurance, unless the customer has given express written consent or has been given the opportunity to object to such use of the information. Insurance information means information concerning premiums, terms, and conditions of insurance coverage, insurance claims, and insurance history provided by the customer. The opportunity to object to the use of insurance information must be in writing and must be clearly and conspicuously made.” GEORGIA Customer Information - § 120-2-76-.16(2) “A financial institution shall not provide to an affiliated insurance agency or an insurance agent, insurance policy specific information to be used to solicit or sell the same line or type of insurance to a financial institution customer, unless the customer has authorized such use in writing on a document independent of any other information provided to the customer...” HAWAII Customer Information - § 431:13-104(b)(4) as amended by 2001 HI ALS 216 “No person who lends money or extends credit may: (4) Use or disclose information relative to a contract of insurance which is required by, or supplied in response to, the loan or credit transaction, for the purpose of replacing the insurance or soliciting insurance;”
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INDIANA Customer Information - § 28-1-11-2.6(f) “A financial institution may not: (1) use information from a purchaser’s personal financial statement for the purpose of selling or soliciting the purchase of life insurance; or (2) provide information from a purchaser’s personal financial statement to a third party for the purpose of the third party’s sale or solicitation of the purchase of life insurance; unless an insurance agent of the financial institution obtains the information directly from the purchaser.” IOWA Customer Information - § 507B.5 1.(d) “No person may do any of the following: d. Use or disclose information resulting from a requirement that a borrower, mortgagor or purchase furnish insurance of any kind on real property being conveyed or used as collateral security to a loan, when such information is to the advantage of the mortgagee, vendor, or lender, or is to the detriment of the borrower, mortgagor, purchase, insurer, or the agent or broker complying with such a requirement.” KANSAS Customer Information – 58-2265 “Whenever the instrument requires that the purchaser, mortgagor or borrower furnish insurance of any kind on real property being conveyed or is collateral security to a loan, the mortgagee, vendor or lender shall refrain from disclosing or using any and all such insurance information to his, her or its own advantage and to the detriment of either the borrower, purchaser, mortgagor, insurance company or agency complying with the requirements.” KENTUCKY Customer Information – 304.12-170 “Whenever the instrument requires that the purchaser, mortgagor or borrower furnish insurance of any kind on real or personal property being conveyed or as collateral security to a loan, the mortgagee or lender shall refrain from disclosing or using any and all such insurance information to his or its own advantage and to the detriment of either the borrower, purchaser, mortgagor, insurer or company or agency complying with the requirements relating to insurance.” LOUISIANA Customer Information – 22:3063 B. “… No person shall use any nonpublic customer information for the purpose of selling or soliciting the purchase of insurance or provide nonpublic customer information to a third party for the purpose of another’s sale or solicitation of the purchase of insurance, unless it is clearly and conspicuously disclosed that the information may be so used, and the customer has provided prior written consent to the use for this purpose…”
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MAINE Customer Information – 24-A MRSA § 2169-A “Confidentiality of insurance information obtained by lenders. 1. Prohibited use of information. If a lender or creditor requires a purchaser or borrower to provide insurance information in connection with the extension of credit, an insurance agent or broker affiliated with that lender or creditor may not later use the information obtained to solicit or offer insurance directly to the purchaser or borrower…2. Use of information with consent. Notwithstanding subsection 1, an insurance agent or broker affiliated with a lender or creditor may use the insurance information obtained from the purchaser or borrower to solicit or offer insurance to the customer if the customer consents in writing to the use of the information. This consent may not be a condition of the extension of credit to the customer.” MICHIGAN Customer Information - § 500.1234(11), (22), (25), (28); Michigan Bulletin 2001-06-OFIS “A loan representative may not act as an agent or solicitor for the sale or provision of required insurance related to an application, approval, commitment, or closing of a loan if the loan representative participated in the application, approval, commitment or closing of that loan.” “A lender may provide the names, addresses, telephone numbers, and information related to account relationships with customers to an affiliated agency or an agent employed by the lender so long as the lender does not disclose account balances or maturity dates of certificates of deposit and does not disclose account relationships to an affiliated agency or an agent employed by the lender in a manner that account balances or maturity dates of CDs may be determined by the agency or agent. This section does not prohibit disclosure of minimum required balances, terms, or conditions of an account.” “A lender shall not directly or indirectly provide to an affiliated agency or agent employed by the lender the following customer documents or information…” “This section does not prohibit a lender from releasing customer information in its possession to any person if the customer authorizes the release of that information. The release shall be in writing, dated, and signed by the customer. A lender shall not knowingly ask a loan applicant to release such disposition of the application unless the applicant has asked about the availability of insurance products as provided under subsection (15). A lender shall not require the release as a condition of applying for the loan.” Bulletin addresses preemption problems with Michigan statute. MISSOURI Customer Information – § 375.937 .2(3) “Use or disclose, without the prior written consent of the borrower, mortgagor, or purchaser taken at a time other than the making of the loan or extension of credit, information relative to a
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contract of insurance which is required by the credit transaction, for the purpose of replacing such insurance…” MONTANA Customer Information – 33-18-501(2)(d) “No person who lends money or extends credit may: use or disclose information relative to a contract of insurance which is required by the credit transaction: (i) for the purpose of replacing such insurance; and (ii) without the prior written consent of the borrower;” NEBRASKA Customer Information – 44-1526(1)(e) “No person who lends money or extends credit shall: Use or disclose, without the prior written consent of the borrower, mortgagor, or purchaser taken at a time other than the making of the loan or extension of credit, information relative to a policy which is required by the credit transaction for the purpose of replacing such insurance.” NEW HAMPSHIRE Customer Information - § 406-C:9; Ins. 3204.08(a) “I. The financial institution shall not use any nonpublic customer information, other than information pertaining solely to insurance transactions between a customer and a financial institution or its affiliate or subsidiary for the purpose of selling or soliciting the purchase of insurance or provide the nonpublic customer information to a third party for the purpose of another’s sale or solicitation of the purchase of insurance, unless it is clearly and conspicuously disclosed that the information may be so used and the customer has provided prior written consent to the use for this purpose.” NEW MEXICO Customer Information – 59A-12-10 K “A lending institution shall not provide nonpublic customer information to a third party for the purpose of another’s sale of insurance without written authorization from the customer…”
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NORTH DAKOTA Customer Information – 6-08.1-03 .1 “A financial institution may not disclose customer information to any person, governmental agency, or law enforcement agency unless the disclosure is made in accordance with any of the following: 1. Pursuant to consent granted by the customer in accordance with this chapter…” OHIO Customer Information - § 3904.13 “No insurance institution, agent, or insurance support organization shall disclose any personal or privileged information about an individual collected or received in connection with an insurance transaction, unless the disclosure is made pursuant to any of the following:…” OREGON Customer Information - §746.195(6) “A lending institution shall not: Use or disclose to any other insurance agent, other than the original agent, the information relating to a policy of insurance furnished by a borrower unless the original agent fails to deliver a policy of insurance within 60 days prior to expiration to the lending institution without first procuring the written consent of the borrower. PENNSYLVANIA Customer Information – 40 P.S. § 288 Customer Privacy. (a) No financial institution shall use or share with a third party any customer information for the purpose of selling or soliciting the purchase of insurance or annuities unless the requirements of this section are met. (b) The following notice to a loan customer shall be set forth…” TENNESSEE Customer Information – 56-8-106(a)(5); 47-23-101 “No person who lends money or extends credit may: Use or disclose information relative to a contract of insurance which is required by the credit transaction when such information is to the advantage of the mortgagee, vendor, or lender, or is to the detriment of the borrower, mortgagor, purchase, insurer, agent or broker who has furnished insurance as collateral for a loan, unless the prior written consent of the borrower, mortgagor or purchaser has been obtained at a time other than the making of the loan or extension of credit.” See statute for 47-23-101.
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TEXAS Customer Information – 21.48A § 2(c); 21.21-9 § 5(b) “No Lender shall use or permit the use of any of the information taken from a policy of insurance insuring the property of a Borrower for the purpose of soliciting insurance business from the Borrower, or make any of such information available to any other person for any purpose, unless such Lender has first been furnished specific written authority from the Borrower permitting or directing such particular use or disclosure; provided, however, this paragraph shall not prevent a Lender who is a licensed local recording agent from selling insurance to a borrower.” “A person may not use nonpublic customer information for the purpose of selling or soliciting the purchase of insurance, or provide nonpublic customer information to a third party for the purpose of another’s sale or solicitation of the purchase of insurance, unless it is clearly and conspicuously disclosed that the information may be so used and the customer has been provided an opportunity to object before the use of that information for this purpose.” VERMONT Customer Information – 8 V.S.A. § 4725(a)(4) “No person may: use or disclose information resulting from a requirement that a borrower, mortgagor or purchaser furnish insurance of any kind on real property being conveyed or used as collateral security to a loan, when such information is to the advantage of the mortgagee, vendor or lender, or is to the detriment of the borrower, mortgagor, purchaser, insurer, or the producer complying with this request.” WASHINGTON Customer Information – 48.30.260 § 3(d) “Use or disclose, without the prior written consent of the borrower, mortgagor, or purchaser taken at a time other than the making of the loan or extension of credit, information relative to a contract of insurance which is required by the credit transaction, for the purpose of replacing such insurance.”
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Timing Restrictions
DISTRICT OF COLUMBIA Timing Restriction – 35-5120(b)(1) “No person who lends money or extends credit shall: solicit insurance for the protection of real property after a person indicates interest in securing a first mortgage credit extension until the person has received a commitment in writing from the lender as to a loan or credit extension.” GEORGIA Timing Restriction – 120-2-76-.19(2) “If insurance is marketed in connection with or in conjunction with any activities described in this section, any marketing to a loan applicant on bank premises shall not occur until the financial institution discloses both verbally and in writing that the purchase of an insurance product is unrelated to and not a condition to the provision or term of any banking service or activity and has committed to such banking service or activity. The written disclosure required by this section shall be a part of the disclosures required by the Department of Banking and Finance Regulation § 80-5-4-.08.” HAWAII Timing Restriction – 431:13-104(b)(1) as amended by 2001 HI ALS 216 “(b) No person who lends money or extends credit may: (1) Solicit insurance, after a person indicates interest in securing a loan or credit extension, until such person has received a commitment in writing from the lender as to a loan or credit extension.” KANSAS LOUISIANA Timing Restriction – 22:3056 Sales Force. The solicitation of a customer of a financial institution for the purchase or sale of insurance shall not be conducted by any natural person directly responsible for making a specific loan or extension of credit to that customer before such time as the final decision regarding the acceptance or denial of that specific loan or extension of credit is made and communicated in writing to the customer. MAINE Timing Restriction – 24A §2168-B “A licensed agent or broker affiliated with a lender or creditor may not solicit an application for an insurance contract in connection with the extension of credit or negotiate such a contract from a purchaser or borrower whom the agent or broker knows, or should have known, has applied to receive an extension of credit from that lender or creditor until such time as the creditor or lender (NEED TO GET STATUTE)
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has provided by hand or sent written notice to the purchaser or borrower of its action on the application or has documented in writing in the lender’s or creditor’s records its action on the application.” MICHIGAN Timing Restriction – 500.1243(14),(21); Michigan Bulletin 2001-06-OFIS “A lender or its employees shall not knowingly initiate a discussion concerning the availability of insurance products from the lender or an affiliated agency to or with a person in response to an inquiry about credit made by the person or to a loan applicant prior to the loan applicant being notified of the disposition of a loan application…” “A lender, its employees, or its representatives may advise the general public and its customers, through mailings or otherwise that insurance products are available from the lender or affiliated agency and may advise the general public and its customers how to obtain more information about those insurance products, so long as: (a) The information is not provided because of a submission of any loan application until after the loan applicant has been notified of the disposition of the application, or in response to any inquiry about the availability, terms, and conditions of any loan.” Bulletin addresses preemption problems with Michigan Statute 500.1243. MISSOURI Timing Restriction – 375.937 .2(5) “No person who lends money or extends credit may: Solicit insurance for the protection of real property, after a person indicates interest in securing a first mortgage credit extension, until such person has received a commitment in writing from the lender as to a loan or credit extension.” MONTANA Timing Restriction – 33-18-501(2)(a) “No person who lends money or extends credit may: solicit insurance for the protection of real property, after a person indicates interest in securing a first-mortgage credit extension, until such person has received a commitment in writing from the lender as to a loan or credit extension.” NEBRASKA Timing Restriction – 44-1526(1)(b) “No person who lends money or extends credit shall: solicit insurance for the protection of real property after a borrower, mortgagor, or purchaser indicates interest in securing a first mortgage credit extension until such borrower, mortgagor, or purchaser has received a commitment in writing from the lender as to a loan or credit extension. This requirement for a commitment shall not apply when the premium for the required insurance is to be financed as part of the loan or extension of credit involving personal property transactions.”
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NEW MEXICO Timing Restriction – 59A-12-10 P “A lending institution may not in the same transaction solicit the purchase of insurance from a customer who has applied for a loan from the institution before the time that customer has received a written commitment from the lending institution with respect to the loan, a lending institution shall not solicit the purchase of insurance before the time the customer receives notification of approval of the loan by the lending institution, and the institution creates a written record of the loan approval…” OHIO Timing Restriction – 3901.211(A)(7) “No person that lends money or extends credit shall do any of the following: If an application for a loan or extension of credit is pending, offer, sell, or require insurance in connection with the loan or extension of credit unless both of the following occur…”
OREGON Timing Restriction – 746.195(1) “A lending institution shall not: Solicit the sale of insurance for the protection of real or personal property after a person indicates interest in securing a loan or credit extension, until the lending institution has agreed to make the loan or credit extension.” PUERTO RICO Timing Restriction – Rule No. 74 (art. 5) § 2 “The dual employee shall only perform the referral after the extension of credit has been approved, unless approval of the extension of credit is conditioned to the acquisition of insurance. TENNESSEE Timing Restriction – 56-8-106(a)(2) “No person who lends money or extends credit may: Solicit insurance for the protection of property, after a person indicates interest in securing a loan against such property, except automobile physical damage insurance or an extension of credit, until such person has received a commitment in writing from the lender as to a loan or credit extension.” TEXAS Timing Restriction – 21.21-9 §3(c) “An individual who is an employee or agent of a bank, or a subsidiary or affiliate of a bank, may not, directly or indirectly, make an insurance-related referral related to, or solicit the purchase of any insurance from a customer knowing that the customer has applied for a loan or extension of
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credit from a financial institution, before the customer has received a written commitment with respect to that loan or extension of credit…” WASHINGTON Timing Restriction – 48.30.260 (3)(a) “Solicit insurance for the protection of property, after a person indicates interest in securing a loan or credit extension, until such person has received a commitment from the lender as to a loan or credit extension.” WISCONSIN Timing Restriction – Wisconsin Banking Letter No. 38A, Sept. 8, 1989 “Except with respect to insurance which insures a bank against loss in connection with a particular loan, and mortgage or title insurance, no officer or employee of a bank who personally approves a borrower’s application with respect to a particular loan may sell any insurance to the borrower at the time a loan is made. The time a loan is made includes any time from the date of the loan application to the date of the loan closing.”
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Referral Fees
COLORADO Referral Fees – 10-11-108(1)(c) “A title insurance company or title insurance agent shall not: (c) Give or receive or attempt to give or receive remuneration in any form pursuant to any agreement or understanding, oral or otherwise, for the referral of title insurance business;” KENTUCKY Referral Fees – 304.9-135(4)(c-d) “An employee of a financial institution may receive compensation for the referral of a consumer, who seeks information about or wishes to purchase any insurance product, to a licensed person or for the provision of the telephone number of a licensed person who sells or provides information on the product only if: (a) The employee receives the referral fee regardless of whether insurance coverage is sold; (b) The referral compensation is a fixed amount; (c) The referral compensation is a portion of a financial institution’s program offering referral fees for other non-insurance products or services marketed by the financial institution; and (d) the referral compensation is paid by the financial institution.” LOUISIANA Referral Fees – 22:3057(c) “…No person directly responsible for making a specific loan or extension of credit shall receive any compensation for referral of a customer who is required to provide insurance in connection with that loan or extension of credit.” MICHIGAN Referral Fees – 500.1243(30); Bulletin 2001-06-OFIS “…an insurance agency or agent shall not reward or remunerate an affiliated lender for procuring or inducing insurance product business for the agency or agent or for furnishing leads and prospects or acting in any other manner as an agent…” Bulletin addresses preemption problems with Michigan Statute 500.1243. NEW HAMPSHIRE Referral Fees – Ins.3203.06; § 402:16-b “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.”
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“Insurance Referrals. Notwithstanding other provisions of this title, a person who has not complied with all applicable state insurance licensing and appointment laws and regulations may refer a party to a person who has complied with all applicable state insurance licensing and appointment laws and regulations, if the person 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.” NEW MEXICO Referral Fees – 59A-12-10 N “A lending institution shall not pay a commission or other valuable consideration to a person for services of an insurance agent, solicitor or broker unless the person performing the service holds a valid insurance license for the class of insurance for which the service is rendered or performed at the time the service is performed. No person, other than a person properly licensed in accordance with the Insurance Code, shall accept any commission or valuable consideration for those services.” OHIO Referral Fees – 3901.211(A)(5)(b) “No person that lends money or extends credit shall do any of the following: Pay or receive commissions or other valuable consideration except in accordance with chapter 3905 of the Revised Code. However, nothing in division (A)(5) of this section prohibits the payment of compensation to a person not licensed under that chapter for the referral of a customer, if all of the following apply: (a) the compensation is not based on the purchase of insurance by the customer (b) the compensation is a one-time nominal fee of a fixed dollar amount for each referral (c) the referral does not include a discussion of specific insurance policy terms and conditions PENNSYLVANIA Referral Fees – Insurance Department Policy Statement “Tellers and other employees, while located in the routine deposit taking area, may not make general or specific investment recommendations regarding insurance or annuities products, qualify a customer as eligible to purchase such products, accept orders for such products, even if unsolicited, or perform any other activity that involves the sale of an insurance or annuity product. Employees who are not authorized to sell insurance or annuity products may refer customers to individuals who are specifically licensed to assist customers interested in the purchase of such products. Since insurance agents not affiliated with a bank are prohibited from paying referral fees to any unlicensed persons, unlicensed employees of a bank may not receive a referral fee from the bank or its subsidiary or affiliated agency.”
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PUERTO RICO Referral Fees –Rule No. 74 (art. 8) “may refer a consumer that has expressed his/her interest in obtaining, or learning about the insurance products or annuities …” “a natural person to whom a license has not been issued pursuant to the Code and who is an employee of the depository institution or its affiliates, may be compensated for the referral of consumers only if said compensation per referral consists of a one time nominal charge that shall not exceed a fixed dollar amount per referral.” Licensed persons may not receive compensation for referrals. “The referral fee may not exceed the amount of ten dollars ($10.00) per referral.” TEXAS Referral Fees – 21.21-9 § 3 “An individual who is an employee or agent of a bank, or a subsidiary or affiliate of a bank, may not, directly or indirectly, make an insurance-related referral related to, or solicit the purchase of any insurance from…”
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Disclosures
COLORADO Disclosures – 10-2-604 “A financial institution, and any person selling insurance with a cash value or a cash accumulation component on behalf of a financial institution, shall disclose to the financial institution's customers or members, and on any advertisements or promotional material, that …” CONNECTICUT Disclosures – 38a-775(b) …shall disclose in writing prior to or at the time an annuity or life insurance product is purchased, in any advertisement or promotional material soliciting sales of annuities or life insurance products, and orally during any sales presentation, …” GEORGIA Disclosures – Banking Regulation 80-5-4-.08(2)(a)(iii), (d); 80-5-4-.07(4) “…The insurance products described and referred to: (iii) Are not a condition to the provision or term of any banking service or activity.” “(d) …the insurance agent shall, during discussions of insurance products with the customer, make these disclosures orally.” “No advertisement shall suggest or convey any inaccurate or misleading impression about the nature of the insurance product… All advertisements must disclose…” ILLINOIS Disclosures – 215 ILCS 5/1409 “A financial institution shall clearly and conspicuously disclose in any written advertisement or promotional or informational material…” INDIANA Disclosures – 28-1-1-2.6(c), (e) “The disclosures required by subsection (b) must: (1) be made in writing before or at the time of purchase of the life insurance policy or annuity contract; and (2) be made orally or in writing during any sales presentation or when investment advice concerning a life insurance policy or an annuity contract is provided.” “An advertisement, a solicitation (including a solicitation contained in a periodic statement), promotional or sales material, or a sale confirmation notice that relates to a life insurance policy
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or an annuity contract sold or offered for sale by a financial institution must conspicuously disclose the information required by subsection (b).” KENTUCKY Disclosures – 304.9-135(2)(e)(4) “Prior to the sale of any policy of insurance to a consumer, a financial institution shall provide to the consumer a written statement, signed or initialed by the consumer, that…the insurance is optional or, if required, may be purchased from any insurance agent or insurer selected by the consumer if that agent or insurer provides the same or equivalent coverage;” LOUISIANA Disclosures - § 3059 A and C. “At the time a written application for insurance is made, the financial institution shall obtain a separate written statement, signed by the customer, acknowledging that the customer has received and understands the following disclosures…” “All advertisements, sales literature, and other materials which relate to the marketing or insurance sold through the financial institution shall clearly state that the insurance is not insured by a federal agency or guaranteed by the financial institution, …” MICHIGAN Disclosures – 500.1243(17); Michigan Bulletin 2001-06-OFIS “The required disclosure required by subsection (16) shall be made to a loan applicant at the time the loan applicant inquires about the availability of required insurance or at such time as the lender advises the loan applicant that the required insurance is available through the lender or an affiliate of the lender, whichever is earlier…” Bulletin addresses preemption problems with Michigan Statute 500.1234. MISSISSIPPI Disclosures – Reg. 98-3 § 11(A); Reg. 98-3 § 11(c) “A financial institution shall prominently disclose in writing, in clear and concise language, to customers, including in any advertisement or promotional material, and orally during any customer contact, that the insurance product offered…” “Any person required under subsections (A) or (B) of this section to make disclosures to a customer shall obtain a written acknowledgement of receipt by the customer of such disclosures, including the date of receipt and the customer’s name and address, prior to or at the time of the execution of any application for insurance sold by the person. Such acknowledgement shall be in a separately executed document or in a separately signed section of the application for insurance…”
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NEW HAMPSHIRE Disclosures – 406-C:8 I.; Ins. Code 3204.02 Does not state that disclosures are to be in writing. “At the time of sale, the financial institution shall also provide written disclosure of how to complain to the insurance department about problems in the sale or solicitation of an insurance product.” All advertising, promotional material and solicitation shall include the disclosures. NEW MEXICO Disclosures – 59A-12-10 H-I Requires oral disclosures. “Insurance advertisements and other sales materials shall be accurate and not misleading or deceptive. Insurance advertising and other sales materials regarding insurance shall include disclosures that contain language that is the same or substantially similar to the following…” OHIO Disclosures – 3901.211(A)(7)(a) “A written disclosure is given to the customer indicating that the customer’s choice of an insurer will not affect the credit decision or credit terms in any way, except that reasonable standards concerning the creditworthiness of the insurer and the scope of coverage chosen may apply.” PUERTO RICO Disclosures – Rule No. 74 (art. 7) § 2 “orally and in writing” TEXAS Disclosures – 21.21-9 § 3 “The following disclosure requirements apply to each agent that is a bank, or that solicits the purchase of or sells insurance recommended or sponsored by a bank, on the premises of a bank, or in connection with a product offering of a bank. Promotional materials relating to insurance products distributed to customers and potential customers must clearly disclose that insurance products sold through the bank affiliated agent…”
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“At the time a loan application is made, a bank shall provide to the customer a written disclosure in substantially the form provided by this subsection…” VERMONT Disclosures – Ins. Div. Bul. 117 § (C) “…To accomplish this, the bank shall provide written disclosure in 10 point type or larger before the sale of an insurance product and written or oral disclosure with solicitations of insurance products. Appropriate disclosure is also required when a bank affiliate, subsidiary or agency uses the bank’s name with its solicitation or refers to its relationship to the consumer…”
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Controlled Business Statute
NEW JERSEY Controlled Business Statute – 17:46B-39; 17:46B-1. “Personal or controlled insurance. If the rates and charges for personal or controlled insurance from an one source so issued in any 1 calendar year received by a title insurance company or by a title insurance agent shall exceed 25%, or from all such sources shall exceed 50% of the total rates and charges received by such title insurance company or by such title insurance agent for title insurance issued in the same year, the excess shall be deemed to be unlawful rebate.”
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