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Subject 120-2-71 SALE OF ANNUITIES BY FINANCIAL INSTITUTIONS

Rule 120-2-71-.01 Sale of Annuities by Financial Institutions

(1) Fixed and variable annuities may be sold by certain lending institutions, bank holding companies, or subsidiaries or affiliates of either of the foregoing doing business in this State. However, fixed and variable annuities are underwritten by insurers and sold by insurance agents. Therefore, the purpose of this Regulation Chapter is to specify the requirements for the sale of fixed and variable annuities by lending institutions, bank holding companies, and their subsidiaries and affiliates.
(2) Nothing in this Regulation Chapter shall authorize any of the following activities by a lending institution, bank holding company, or subsidiary or affiliate of either.
(a) The sale of any fixed or variable annuity that is not underwritten by an insurer which has a certificate of authority to transact business in Georgia;
(b) The sale of any insurance product, not including a fixed or variable annuity, except as specifically authorized pursuant to O.C.G.A. § 33-3-23;
(c) Failure to comply with the licensing requirements for agents and agencies;
(d) Failure to comply with any other provisions of this Regulation Chapter with respect to the sale of fixed or variable annuities.
(e) Failure to comply with Title 33 of the Official Code of Georgia Annotated or the Rules and Regulations of the Commissioner of Insurance of the State of Georgia.
(f) Failure to comply with Title 7 of the Official Code of Georgia or the Rules and Regulations of the Department of Banking and Finance.

Rule 120-2-71-.02 Definitions

As used in this Regulation Chapter, the term:

(a) "Agent" means a person, including corporations, subsidiary corporations, partnerships, non-natural persons, etc., associated with or in the form of a financial institution who represents one or more insurers and is engaged in the business of soliciting or procuring or accepting applications for annuity sales;
(b) "Agent" means an individual appointed or employed by an insurer who solicits or procures applications for insurance; who in any way, directly or indirectly, makes or causes to be made any insurance contract for or on account of an insurer, or who as a representative of an insurer receives money for transmission to the insurer for an insurance contract, anything in the application or contract to the contrary notwithstanding, and who has on file with the Commissioner a certificate of authority from each insurer with whom the agent places insurance;
(c) "Insurance/Annuity Agents" means an individual appointed or employed by a financial institution who solicits or procures applications for annuities; who in any way, directly or indirectly, makes or causes to be made any annuity contract for or on account of an insurer; and who has on file with the Commissioner a certificate of authority from each insurer with whom the agent places annuities;
(d) An "annuity" is a contract of insurance underwritten by an insurance company that pays an income benefit (monthly, quarterly, semiannually, or annually) for: 1.) the life of a person (annuitant), 2.) the lives of two or more persons, or 3.) a specified period of time. Payments are made for a stated period of time or for the life or lives of the person or persons specified in the contract. The term does not cover the proceeds of life insurance no matter how payable;
(e) "Financial Institution" means a state or national bank, building and loan or savings and loan association, bank holding company, or a subsidiary or affiliate of any of the above;
(f) A "fixed annuity" means one party agrees to pay to the annuitant a stipulated amount (monthly, quarterly, semiannually, or annually, as desired) throughout the annuitant's lifetime whereby the dollar amount will not fluctuate regardless of adverse changes in the insurance company's mortality experience, investment return, and expenses;
(g) A "variable annuity" means a contract that pays an annuitant income payments of which the amounts vary in accordance with the market value of the securities in the separate account of the insurer on the respective valuation days;
(h) An "annuitant" is a person who receives an income benefit from an annuity for life or for a specified period of time.

Rule 120-2-71-.03 Notification to Department of Intent to Sell Annuities In or Through Financial Institutions

(1) Prior to marketing annuities, a financial institution shall provide notification to the Department of Insurance on Form GID 323FI and a copy to the Department of Banking and Finance (DBF). Such report shall:
(a) Identify any financial institution location where an insurance/annuity agent will be physically present. Each branch must be identified specifically in the registration;
(b) Acknowledge that the financial institution has read and understands these rules; and
(c) Identify any insurance company and the policy form numbers of the annuities which will be marketed in association with the financial institution.
(2) An Amended Form shall be filed within thirty (30) days if there is a change in any information previously submitted to the Department.

Rule 120-2-71-.04 Financial Institutions Registering as an Agency

(1) The conduct of annuity transactions in association with a financial institution shall be subject to the requirements of O.C.G.A. § 33-23-3 and Georgia Insurance Department Regulation 120-2-3-.05.
(2) Each financial institution where a licensed and appointed insurance/annuity agent is engaged in transactions with respect to annuity products shall be considered an insurance agency for purposes of O.C.G.A. § 33-23-3 and must register with this Department pursuant to Georgia Regulation Chapter 120-2-3-.05 using Form GID 130FI.
(3) GID Form 323FI must identify all locations or branches from which annuities will be sold.

Rule 120-2-71-.05 Licensure of Agents

(1) Any individual soliciting, selling or marketing annuities to individuals permanently or temporarily residing in this state must be licensed and appointed as an insurance agent in accordance with the provisions of the Georgia Insurance Code and Georgia Insurance Department Regulation Chapter 120-2-22-.07.
(2) No licensed and appointed insurance/annuity agent shall, while working from within and on behalf of a financial institution, transact any lines of insurance other than annuities except to the extent permitted by O.C.G.A. § 33-3-23.

Rule 120-2-71-.06 Underwriting of Annuities Prohibited

A financial institution may not itself directly or indirectly assume the obligation to provide the benefits of an annuity contract or otherwise undertake to perform the obligations of an annuity.

Rule 120-2-71-.07 Location for the Sale of Annuities

(1) If annuities are sold on the premises of a financial institution, the area utilized by an insurance agent for such transactions must be sufficiently segregated and distinct from areas utilized by the financial institution for accepting insured deposits so as to avoid confusion as to the separate identities and activities of the financial institution and the licensed agent.
(2) No insurance agent or employee of the financial institution shall under any circumstances conduct annuity transactions from the teller area. See DBF Regulation 80-5-3-.05

Rule 120-2-71-.08 Insurer Reporting

(1) Any insurer marketing annuities in association with one or more financial institutions shall report the existence of such program and the volume of premium written when the gross annualized premium for such program or programs exceeds or is projected to exceed 10% of the gross annual premium for that line.
(2) Such report shall be made to the Commissioner of Insurance on Form GID 323INS and shall include:
(a) the program name;
(b) the name of the associated financial institution (including branches);
(c) the form number of each annuity offered; and
(d) the total annualized premium.

Rule 120-2-71-.09 Agent Activities

(1) Only a licensed and appointed agent shall:
(a) solicit the sale of annuities or describe the benefits of the annuity contract or otherwise describe the terms of coverage including premiums or rates of return;
(b) provide an application, enrollment form or other document by which a purchaser effectuates coverage; or
(c) accept an initial premium payment from the annuity purchaser.
(2) In connection with the marketing of fixed or variable annuities, employees of a financial institution who are not licensed and appointed as insurance agents shall not:
(a) make general or specific recommendations as to fixed or variable annuities;
(b) qualify or screen a purchaser for such products;
(c) respond to questions from prospective purchasers regarding annuity products. Any individual seeking general or specific information about annuity contracts shall be advised as to the location of the licensed agent or otherwise advise as to how the agent may be contacted; or
(d) refer to fixed or variable annuities as any type of deposit product or insured deposit.
(3) The licensed and appointed insurance/annuity agent shall be identified as an insurance/annuity agent on stationery and business cards utilized by the licensee, on other materials provided to the purchaser as well as in any verbal discussions with the annuity purchaser. If the agent is licensed as a securities broker, the additional license may be disclosed on the materials as well as in any verbal discussions with the annuity purchaser regarding annuity products, provided the marketer is also identified as an insurance/annuity agent.

Rule 120-2-71-.10 Disclosure of Employment Status for Agents Employed by Financial Institutions

If employees of the financial institution that have contact with the general public or financial institution customers with respect to lending, checking, deposit taking, or trust activities are licensed as insurance agents to sell annuities, in addition to the other disclosures required by this section, the employee shall disclose verbally at the time a solicitation is made or an application is taken that the employee is acting as an insurance agent representing one or more specifically identified insurance companies, and that the annuity is not issued or guaranteed by the financial institution.

Rule 120-2-71-.11 Premium Collection

(1) Only a licensed agent or insurance/annuity agent may accept the initial premium paid for an annuity contract.
(2) A financial institution or affiliate may, at the request of the annuity purchaser, send premium billings or notices to annuity purchasers and debit the purchaser's account or credit arrangement for the payment of annuity premiums subsequent to the initial payment. Upon the written request of the annuity purchaser or insurer to discontinue this form of premium payment, the financial institution shall immediately discontinue such debits.

Rule 120-2-71-.12 Utilization of Independent Agents in Financial Institutions

(1) Any financial institution may contract with agents or an insurance agency on a full-time or part-time basis for the sale of annuity products from bank locations. Such agents shall be appointed by the licensed insurers issuing and underwriting the annuity product. Commissions shall be paid to the agent or agency and may be paid to the financial institution subject to the conditions of paragraphs 2 and 3 of this section.
(2) An insurance agent or agency may not share any commissions with the financial institution and the financial institution shall not accept any such commission unless the financial institution has registered as an agency using the GID Form 130FI.
(3) Any lease of space by a financial institution to an insurance agent under which the amount of the rent is based directly or indirectly on the volume of premium written by the insurance agent entails the sharing of commission.

Rule 120-2-71-.13 Compensation of Agents

Licensed independent agents may be paid by an insurer for their activities in connection with the sale of annuities. The insurers and agent shall independently determine the terms of the agent contract including compensation.

Rule 120-2-71-.14 Access to Records and Premises

(1) An insurance agent marketing annuities is responsible for maintaining such records as are necessary to enable the Department to determine that transactions under his or her license comply with all applicable requirements of the insurance code and for making such records available to the Georgia Insurance Department.
(2) If the licensed insurance agent markets other products, provides other services, or maintains other information regarding the customer which related to other than annuity transactions, all records relating to annuity transactions shall be separately maintained.
(3) The Commissioner of Insurance shall have access to the books and records relating to the sale of annuities irrespective of the physical location of such books and records.
(4) A contract or agreement regarding the sale of annuities between the financial institution and any independent insurance agent or other person conducting annuity transactions shall be in writing and available for inspection by the Georgia Insurance Department.

Rule 120-2-71-.15 Advertising

(1) Advertisements of fixed and variable annuities marketed pursuant to this regulation shall be subject to the provisions of O.C.G.A. § 33-6-1et seq. and Georgia Insurance Department Regulation 120-2-11 and the applicable provisions of Department of Banking and Finance Regulation 80-5-3-.07.
(2) No licensed or unlicensed person shall in connection with the marketing of annuities refer to coverage available by the Georgia Life and Health Insurance Guaranty Association, unless specifically asked by the annuity purchaser.
(3) If annuity 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.
(4) If the product or program named under which an annuity is marketed includes the name of a financial institution or the name of a program associated with the financial institution, the product or program name must also identify the insurance company which is issuing and underwriting the annuity.
(5) Premiums shall not be referred to as "deposits." Terminology used in connection with annuities must be sufficiently different than that used in connection with traditional banking products and services so as to avoid confusion.
(6) Advertisements of annuities are the responsibility of the insurer and are subject to review by the Georgia Insurance Department. If an advertisement describes annuity products and other types of financial services or investments, the entire advertisement must be submitted to the Georgia Insurance Department in the form in which it will be communicated to consumers.
(7) An unlicensed employee of a financial institution may distribute an advertisement describing an annuity product to a prospective annuity purchaser or may refer a customer to a display containing such advertisements. However, that employee shall not recommend the purchase of an annuity, describe the features of an annuity, or respond to questions regarding the content of the advertisement. In response to any questions, the employee must indicate that the consumer should pose that question to the licensed agent.

Rule 120-2-71-.16 Communication with Annuitants

Premium notices, notices of cancellation, renewal notices, statements of annuity values or other communications relating to inforce annuities shall be separated from financial institution account information.

Rule 120-2-71-.17 Disclosures to Prospective and Existing Annuitants

Disclosures to the customer must be made in accordance with Department of Banking and Finance Regulation 80-5-3-.08.

Rule 120-2-71-.18 Joint Announcements

Endorsements, announcements, or advertisements, regarding annuities by a financial institution in conjunction with an agent or insurer, communicated to financial institution customers or prospective customers by direct mail or otherwise shall be subject to the requirements of O.C.G.A. § 33-6-1et seq..

Rule 120-2-71-.19 Anti-Tying Provisions

(1) No person may by words, actions, or distribution of written materials require or create the impression that the purchase of an annuity by a borrower or prospective borrower is required as a condition of or is in any way related to the lending of money or the extension of credit, the establishment or maintenance of a trust account, the establishment or maintenance of an insured deposit account, or the provision of services related to such activities.
(2) If annuities are marketed in connection with or in conjunction with any activities described in this section:
(a) The marketer shall disclose both verbally and in writing that the purchase of an annuity is unrelated to and not a condition to the provision or term of any banking services or activity. The written disclosure required by this section shall be part of the disclosures required by the Department of Banking and Finance Regulation 80-5-3-.08.
(b) If an annuity product is offered in a package with other services described in (1) above, the financial institution shall offer the annuity product available separately, subject to the terms and conditions no less favorable to the consumer than in the package

Rule 120-2-71-.20 Related Laws and Rules

In addition to the statutes and rules referenced herein products and transactions addressed by these Rules shall be subject to all applicable provisions of Title 33 and Title 7 of the Official Code of Georgia Annotated.

Rule 120-2-71-.21 Penalties

Any person, insurer, agent, agency, or financial institution violating the provisions of this Regulation Chapter shall be subject to the administrative actions and procedures, including but not limited to suspension, fine, revocation of license, as provided to the Commissioner of Insurance and/or the Commissioner of Banking and Finance pursuant to O.C.G.A. § 33-23-21 and § 7-1-91.

Rule 120-2-71-.22 Severability

If any provision of this Regulation Chapter or the application of it to any person or circumstance is held invalid, such invalidity shall not affect the provisions or applications of the rules herein which can be given effect without the invalid portion. To that end, the provisions of this rule are declared to be severable.