Subject 80-5-4 REGULATIONS REGARDING THE SALE OF INSURANCE BY FINANCIAL INSTITUTIONS
| (1) |
Insurance may be sold by financial institutions in Georgia, subject
to regulations of the Department of Banking and Finance, regulations
of the Office of the Commissioner of Insurance and other applicable
state law including but not limited to O.C.G.A. § 33-3-23.
Sale of annuities by financial institutions is covered in Regulation
Chapter 80-5-3. These regulations do not negate or affect the
following: exceptions set out in O.C.G.A. § 33-3-23
such as sale and underwriting of credit insurance (§ 33-3-23(b));
sale of products regulated by O.C.G.A. § 33-23-12(b)(3);
and insurance sold pursuant to Insurance Regulation § 120-2-11,
all of which are otherwise regulated by the Office of the
Commissioner of Insurance. |
| (2) |
Financial institutions may sell
or market insurance through state licensed insurance agents. The
agents may be either employees of the financial institution or
independent agents who have contracted with the financial institution
to sell insurance. Prior approval of the Department of Banking and
Finance is not required for a financial institution to sell
insurance, but policies and rules of the Department of Banking and
Finance should be consulted. |
| (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 insurance sales or countersigning, issuing, or
delivering contracts of insurance for one or more insurers; |
| (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 of
Insurance a certificate of authority from each insurer with whom the
agent places insurance; |
| (c) |
"Financial institution" means a
domestic state bank, national bank, savings and loan association or
other federally insured depository institution which is authorized to
accept deposits in the state of Georgia; a bank holding company; or a
subsidiary or affiliate of any of the above; |
| (d) |
"Insurance" means a contract
which is an integral part of a plan for distributing individual
losses whereby one undertakes to indemnify another or to pay a
specified amount or benefits upon determinable contingencies. The
term does not include credit insurance products referenced in
O.C.G.A. § 33-23-12(b). |
|
A financial institution that wishes to sell
insurance must give prior notification to the Office of the
Commissioner of Insurance, with a copy of the notice and any
subsequent amendments to the Department of Banking and Finance,
attention: Corporate Division.
| (1) |
A financial institution that
intends to sell insurance either through an independent agent or
through its own licensed employees shall be considered an Agency
under Department of Insurance Regulation § 120-2-3-.05 and must
meet any requirements of that Regulation Chapter. |
| (2) |
Any individual who solicits,
sells or markets insurance in association with a financial
institution located in Georgia must be licensed as an insurance agent
by the Office of Commissioner of Insurance. |
| (1) |
An arrangement for the sale of
insurance between an independent insurance 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
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 agent conducts insurance sales in order
to inspect books and records and other relevant information
maintained by the insurance agent with respect to such insurance
sales and to perform related regulatory functions; |
| (c) |
Authorize the financial
institution to monitor the insurance agent and periodically review
and verify that the insurance agent or agency and its representatives
are complying with the agreement with the financial institution and
with state and other applicable law; and |
| (d) |
Require the insurance agent or
agency contracting with the financial institution to indemnify the
institution from any liability resulting from unlawful, wrongful, or
improper actions or representations on the part of the insurance
agent with regard to the sale of insurance in its association with
the financial institution. |
|
| (1) |
When insurance agent services
are provided on the premises of a financial institution, the
insurance agent and the financial institution have a heightened
responsibility to ensure appropriate measures are implemented to
clearly segregate and distinguish the insurance agent services from
retail deposit taking operations of the financial institution.
Insurance 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 agent services
shall be conducted from the teller area. The acceptance of mortgage
payments which include insurance escrow payments will not be
considered to be insurance agent services. |
| (1) |
Advertisements for insurance products physically located in financial
institutions shall be subject to Department of Insurance law
(O.C.G.A. § 33-6-1et
seq.) and regulation and any applicable Department of
Banking and Finance law and regulation. |
| (2) |
The insurance agent must
display his/her name and status as a licensed agent in the area where
insurance transactions occur. |
| (1) |
"Advertisement" for the purposes of these regulations shall mean,
consistent with O.C.G.A. § 33-6-1et
seq. and related regulations of the Department of Insurance,
any oral or written promotional or sales material which is directed
to the public and concerns insurance products offered through an
insurance 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 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 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 insurance product. Premiums shall not be referred to as deposits.
Terminology used in connection with insurance products must be
distinguishable from that used in connection with traditional banking
products. All advertisements must disclose:
| (a) |
The insurance product is not
insured by the FDIC; |
| (b) |
The insurance product is not a deposit or other obligation of, and is
not underwritten or guaranteed by, the financial institution;
and |
| (c) |
The insurance
product is not a condition to the provision or term of any banking
service or activity. |
|
| (5) |
If the product or program name
under which an insurance 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 insurance
contract. |
| (1) |
In order to determine what types of disclosure are required, banks
must be diligent in their assessment of the nature of any nondeposit
product. Products may take various forms: e.g., investment products
such a mutual funds or annuities, and insurance products such as
homeowners' insurance or life insurance. Hybrid products with
features of more than one category will necessitate compliance with
each category's requirements. |
| (2) |
Insurance Products. Many of the
concerns about customer confusion in bank sales of investment
products may also be present in bank sales of insurance products.
Consequently, the disclosures required for sale of insurance will be
similar to those required for sale of annuities and other investment
products.
| (a) |
At the time of sale
of an insurance product, the written disclosure below or one which
contains all its elements shall be made, except that if a financial
institution does not take deposits and is not insured by the FDIC,
(i) may be omitted.
| 1. |
The
insurance products described or referred to:
| (i) |
Are not deposits and are not
insured by the FDIC; |
| (ii) |
Are not obligations of, underwritten or guaranteed by the financial
institution selling the insurance product; and |
| (iii) |
Are not a condition to the
provision or term of any banking service or activity. |
|
|
| (b) |
The
disclosures given to the customer shall be conspicuous and presented
in a clear and concise manner, with no qualifying remarks. |
| (c) |
The insurance agent shall
deliver the written disclosure described in (a) to the customer and
shall receive back from the customer 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
retained by the financial institution. |
| (d) |
In addition to paragraph (2) of
this Rule, the insurance agent shall, during discussions of insurance
products with the customer, make these disclosures orally. |
|
| (3) |
Annuity products.
Disclosures are covered in Chapter 80-5-3 of the Department of
Banking and Finance's regulations. |
| (4) |
Nondeposit Investment Products.
If an insurance product contains investment features, compliance with
federal law and policy, such as the Interagency Statement on Retail
Sales of Nondeposit Investment Products including the disclosure
requirements therein, where applicable, as well as with the
Department of Banking and Finance's statement of policy for state
chartered banks is required. |
| (5) |
Insurance agents shall identify
themselves to the customer as being either employees of the financial
institution or independent licensed insurance agents, as applicable.
Business cards and stationery shall indicate the agent's status as a
state licensed agent. |
| (1) |
Solicitation and sale of insurance products in association with a
financial institution may be provided only by state licensed and
regulated insurance agents. Unlicensed employees of the insurance
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 insurance 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 insurance
products or respond to questions about such products. |
If any provision of the rules in this Chapter
80-5-4 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.
