Subject 80-5-3 REGULATIONS REGARDING THE SALE OF ANNUITIES BY FINANCIAL INSTITUTIONS
| (1) |
Fixed and variable annuities may be sold by financial institutions in
Georgia, subject to regulations of the Department of Banking and
Finance, regulations of the Department of Insurance and other
applicable law. |
| (2) |
Financial institutions may sell or market fixed and variable
annuities through state licensed insurance/annuity agents. The agents
may be either employees of the financial institution or independent
agents who have contracted with the financial institution to sell
annuities. Prior approval of the Department of Banking and Finance is
not required for a financial institution to sell annuities. |
| (3) |
As used in this chapter, the
term:
| (a) |
"Agency" 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 withstanding,
and who has on file with the Commissioner of Insurance a certificate
of authority from each insurer with whom the agent places
insurance; |
| (c) |
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; |
|
| (d) |
"Financial institution" means a
state or national bank, savings and loan association, bank holding
company, or a subsidiary or affiliate of any of the above; |
| (e) |
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; |
| (f) |
"Insurance/annuity agent" 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 of Insurance a certificate of authority from each
insurer with whom the agent places annuities; |
| (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. |
|
A financial institution that wishes to sell
annuities must give prior notification to the Department of
Insurance, with a copy of the notice and any subsequent amendments to
the Department of Banking and Finance.
| (1) |
A financial institution that
intends to sell annuities either through an independent agent or
through its own licensed employees shall be considered an Agency
under Department of Insurance Regulation § 120-2-71-.04 and must
meet any requirements of that Regulation Chapter |
| (2) |
Any individual who solicits,
sells or markets annuities in association with a financial
institution located in Georgia must be licensed as an
insurance/annuity agent by the Department of Insurance. |
| (1) |
An arrangement for the sale of
annuities between an independent insurance/annuity agent or agency
and a financial institution must be governed by a written agreement
approved by the financial institution's board of directors. Such
agreements will not be required if the agent is an employee of the
financial institution. Compliance with the agreement should be
periodically monitored by the financial institution's senior
management. The agreement must set forth the responsibilities of the
parties, the terms and conditions of the arrangement, and the
compensation to be received by the financial institution. The
agreement must also, at a minimum, contain provisions which:
| (a) |
Specify that each
insurance/annuity agent will comply with all applicable laws and
regulations; |
| (b) |
Authorize the financial institution, the Department of Banking and
Finance, and the Department of Insurance to have access to the
financial institution's premises where the insurance/annuity agent
conducts annuities sales in order to inspect books and records and
other relevant information maintained by the insurance/annuity agent
with respect to such annuity sales and to perform such related
regulatory functions; |
| (c) |
Authorize the financial institution to monitor the insurance/annuity
agent and periodically review and verify that the insurance/annuity
agent or agency and its representatives are complying with the
agreement with the financial institution; and |
| (d) |
Require the insurance/annuity
agent or agency contracting with the financial institution to
indemnify the institution from any liability resulting from unlawful,
wrongful, improper actions or representations on the part of the
insurance/annuity agent with regard to the sale of annuities in its
association with the financial institution. |
|
| (1) |
When insurance/annuity agent
services are provided on the premises of a financial institution, the
insurance/annuity agent and the financial institution have a
heightened responsibility to ensure appropriate measures are
implemented to clearly segregate and distinguish the
insurance/annuity agent services from retail deposit taking
operations of the financial institution. Insurance/annuity agent
services shall be conducted in a physical location distinct from the
area where the financial institution's insured deposits are routinely
taken. |
| (2) |
No
insurance/annuity agent services shall be conducted from the teller
area. |
| (1) |
Advertisements for fixed or variable annuities physically located in
financial institutions shall be subject to Department of Insurance
law (O.C.G.A. § 33-6) and regulation and applicable Department
of Banking and Finance law and regulation. |
| (2) |
The insurance/annuity agent
must display his/her name and status as an agent in the area where
annuity transactions occur. |
| (1) |
"Advertisement" for the purposes of these regulations shall mean,
consistent with Chapter 120-2-11 of the regulations of the Department
of Insurance, any oral or written promotional or sales material which
is directed to the public and concerns annuity products offered
through an insurance/annuity agent in association with a financial
institution. |
| (2) |
Such
advertisement shall conform to all the applicable law and regulations
of the Department of Insurance, in addition to the regulations
herein. |
| (3) |
All
advertisements sent to prospective customers shall clearly reflect
the source of the communication. If the insurance/annuity agent is an
employee of the financial institution, he/she shall be identified as
representing both the financial institution and the insurer. If the
insurance/annuity agent is an independent agent not employed by the
financial institution, he/she must disclose that fact. |
| (4) |
No advertisement shall suggest
or convey any inaccurate or misleading impression about the nature of
the annuity product. Premiums shall not be referred to as deposits.
Terminology used in connection with annuity contracts must he
distinguishable from that used in connection with traditional banking
products. All advertisements must conspicuously disclose:
| (a) |
The annuity product is not
insured by the FDIC; |
| (b) |
The annuity product is not a deposit or other obligation of, and is
not underwritten or guaranteed by, the financial institution;
and |
| (c) |
The annuity
product is subject to investment risks. The market value of the
investment may fluctuate, causing possible loss of the principal
amount invested. |
|
| (5) |
If the product or program name
under which an annuity contract 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
contract. |
| (1) |
At the time of sale of an annuity product, the written disclosure
below or one which contains all its elements shall be made. The
annuity products described or referred to:
| (a) |
Are not deposits and are not
insured by the FDIC; |
| (b) |
Are not obligations of or guaranteed by the financial institution;
and |
| (c) |
Are subject to
investment risk, including interest rate risk. The market value of
the investment may fluctuate, causing possible loss of the principal
amount invested; and |
| (d) |
Are unrelated to and not a condition to the provision or term of any
banking service or activity. |
|
| (2) |
At the time of sale of an
annuity product, the insurance/annuity agent shall deliver to and
receive back from the customer a disclosure conforming to paragraph
(1) of this Rule accompanied by a signed statement that the customer
has read and understands the meaning of the disclosures. A copy of
this signed statement shall be given to the customer and to the
financial institution. |
| (3) |
The disclosures given to the
customer shall be conspicuous and presented in a clear and concise
manner, with no qualifying remarks. |
| (4) |
In addition to paragraph (1) of
this Rule, the insurance/annuity agent shall, during discussions of
annuity products with the customer, make these disclosures
orally. |
| (5) |
Where
applicable, the following disclosures shall also be included in the
written disclosure given to the customer:
| (a) |
The existence of an advisory or
other material relationship between the financial institution, or an
affiliate of the financial institution, and a company whose products
are offered or sold by the insurance agent on the premises of the
financial institution; |
| (b) |
The existence of any affiliate
or subsidiary relationship between the financial institution and the
insurance agent that is providing such insurance agent services on
the premises of the financial institution; or |
| (c) |
The existence of any fees,
penalties or surrender charges associated with the annuity product
that is being offered or sold |
|
| (6) |
The insurance/annuity agents
shall identify themselves to the customer as being either an employee
of the financial institution or an independent licensed
insurance/annuity agent. |
| (1) |
Solicitation and sale of annuity products in association with a
financial institution may be provided only by appropriately licensed
insurance/annuity agents. Unlicensed employees of the
insurance/annuity agent or financial institution may, however,
provide clerical or ministerial assistance. Unlicensed employees of
the financial institution may refer customers of the financial
institution interested in the purchase of annuity products to the
appropriate agent in the financial institution or may inform the
customer how to reach the agent. |
| (2) |
Except as permitted by these
regulations, an unlicensed employee of the financial institution
shall not discuss or promote annuity products or respond to questions
about such investments. |
If any provision of the rules in this Chapter
80-5-3 or the application of them to any financial institution 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
these rules are declared to be severable.
