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Virginia Administrative Code (Last Updated: January 10, 2017) |
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Title 14. Insurance |
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Agency 5. State Corporation Commission, Bureau of Insurance |
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Chapter 30. Rules Governing Life Insurance and Annuity Replacements |
Section 60. Duties of insurers that use agents
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A. Each insurer shall maintain a system of supervision and control to insure compliance with the requirements of this chapter that shall include at least the following:
1. Inform its agents of the requirements of this chapter and incorporate the requirements of this chapter into all relevant agent training manuals prepared by the insurer;
2. Provide to each agent a written statement of the company's position with respect to the acceptability of replacements providing guidance to its agents as to the appropriateness of these transactions;
3. A system to review the appropriateness of each replacement transaction that the agent does not indicate is in accord with subdivision A 2 of this section;
4. Procedures to confirm that the requirements of this chapter 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 by the applicant or agent. Compliance with this chapter may include, but shall not be limited to, systematic customer surveys, interviews, confirmation letters, or programs of internal monitoring.
B. Each insurer shall have the capacity to monitor each agent's life insurance policy and annuity contract replacements for that insurer, and shall produce, upon request, and make such records available to the commission. The capacity to monitor shall include the ability to produce records for each agent's:
1. Life replacements, including financed purchases, as a percentage of the agent's total annual sales for life insurance;
2. Number of lapses of policies by the agent as a percentage of the agent's total annual sales for life insurance;
3. Annuity contract replacements as a percentage of the agent'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 subdivision A 5 of this section; and
5. Replacements, indexed by replacing agent and existing insurer.
C. Each insurer shall require with or as a part of each application for life insurance or an annuity a signed statement by both the applicant and the agent as to whether the applicant has existing policies or contracts.
D. Each insurer shall require a completed notice regarding replacements (Form 30-A) with each application for life insurance or an annuity that indicates an existing policy or contract.
E. When the applicant has existing policies or contracts, each insurer shall be able to produce copies of any marketing communication required by 14VAC5-30-40 E, the illustrations related to the specific policy or contract that is purchased, and the agent'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.
F. Each insurer shall ascertain that the marketing communication and illustrations required by 14VAC5-30-40 E meet the requirements of this chapter and are complete and accurate for the proposed policy or contract.
G. If an application does not meet the requirements of this chapter, each insurer shall notify the agent and applicant and fulfill the outstanding requirements.
H. Each insurer shall maintain records in paper, photograph, microprocess, magnetic, mechanical or electronic media, or by any process that accurately reproduces the actual document.
Historical Notes
Derived from Regulation No. 7, Case No. INS810114, Section VII, eff. March 1, 1982; amended, Volume 23, Issue 09, eff. April 1, 2007.