Minimum Standards of Competency and Trustworthiness for Insurance Producers Concerning Personal Insurance Transactions

PURPOSE: This regulation effectuates and aids in the interpretation of the provisions of section 375.141.1(8), RSMo, which relates to the competence and trustworthiness of insurance producers. The regulation requires insurance producers to comply with certain minimum requirements in transactions involving personal insurance policies. It is promulgated pursuant to the provisions of section 374.045, RSMo and implements the provisions of section 375.141, RSMo. (1) Document and Premium Handling Standards. When dealing with any personal insurance policy, every insurance producer shall comply with the following standards of promptness regarding securing and amending coverage, providing written evidence of insurance transactions, and handling premiums, except to the extent these actions are the responsibility of the insurer. Where it is the insurer’s responsibility to take these actions, this responsibility shall be delineated in a written document, a copy of which shall be retained by the licensee and available for examination by the department. (A) Every insurance producer shall handle every application for new coverage under a personal insurance policy and every request for amendments to an existing policy in a manner which will secure the new or amended coverage as soon as is reasonably possible, unless a longer time is permitted under a written agreement between the licensee and the insured or prospective insured. If within thirty (30) days of the original application for insurance the licensee has not yet secured an insurer willing to provide coverage, the licensee immediately shall inform the prospective insured of this fact in writing. (B) Whenever an insurer requires additional information prior to issuing a new personal insurance policy, or prior to renewing, continuing, or amending an existing policy, the insurance producer through whom the insured or prospective insured applied for or procured the coverage shall inform, at the earliest reasonable opportunity, the insured or prospective insured of the need for the additional information from the insured or prospective insured. (C) Every insurance producer shall provide every purchaser of a personal insurance policy with written evidence of coverage at the time coverage is bound or the policy is issued, whichever occurs earlier, or as soon after as is reasonably possible, but in no event later than thirty (30) days after the date the coverage is bound or the policy is issued. A written binder or insurance policy shall constitute written evidence of coverage for purposes of this subsection. Any application forms, riders, or endorsements associated with the policy which are not provided along with written evidence of coverage shall be provided to the insured as soon as is reasonably possible. When an insurer declines to cover a prospective insured, the insurer’s written denial of coverage shall be provided by the licensee to the prospective insured as soon as is reasonably possible, but in no event later than thirty (30) days after the date the coverage is denied. (D) Insurance producers shall remit all premium payments associated with a personal insurance policy to those persons entitled to them as soon as is reasonably possible after their receipt by the licensee, but in no event later than thirty (30) days after the date of receipt, provided, however, that premiums may be remitted at a later point in time if the licensee is so authorized under a written agreement between the licensee and the person legally entitled to the premiums. In no event, however, shall a licensee retain premium payments if to do so will result in the failure to obtain or continue coverage on behalf of an insured or prospective insured. (2) No insurance producer or a member of the insurance producer’s immediate family shall, at any time, be named as a beneficiary or contingent beneficiary or shall acquire any ownership interest in any insurance policy held by an insurance client or former or prospective insurance client. Such a prohibition would not apply if there exists a relationship between the insurance client or former or prospective insurance client and the insurance producer or immediate family of the insurance producer which gives rise to an insurable interest. (3) No insurance producer shall obtain or solicit for a loan from an insurance client or former or prospective insurance client or any type of ownership interest in any insurance policy held by an insurance client or former or prospective insurance client. This prohibition shall not apply— (A) When it is the usual occupation or practice of the insurance client or former or prospective insurance client to receive and process loan applications and to provide loans to the public as an owner, officer, director, or employee of an institution in the business of providing such loans; or (B) When there exists a relationship between the insurance client or former or prospective insurance client and the insurance producer which gives rise to an insurable interest. (4) Receipts for Cash Premiums Payments. (A) Whenever a cash premium payment is received by an insurance producer for a personal insurance policy, a written receipt shall be executed by the licensee and given to the person making the premium payment. The receipt shall bear the words Receipt or Premium Receipt and shall include the following information: 1. The name of the insured; 2. The name of the insurer, where one (1) has been selected; 3. The date of the cash payment; 4. The amount of the cash payment; 5. The policy number, if available, or other information which will describe the insurance coverage for which the cash premium was paid; 6. The signature of the licensee or an employee of the licensee duly authorized in writing to accept these payments or to execute the receipts; and 7. Any comment required under subsection (4)(D) of this rule. (B) Use of the form, Exhibit A, included herein, shall be deemed to satisfy the requirements of this section. Other receipt forms which contain the information required by this section may also be used. Methods of documenting the payment of premiums which do not satisfy all the requirements of this section, such as the use of premium payment books for debit plans, shall be deemed to satisfy this section only if their use for this purpose has been approved in writing by the director. (C) A copy of the cash premium receipt shall be given to the person making the cash premium payment. An additional copy shall be retained by the licensee for the licensee’s records as provided in section (5) of this regulation, unless other records of the licensee and the insurer document the information required under subsections (4)(A) and (D) of this rule for purposes of inspections or examinations by the director. (D) No insurance producer shall accept a cash premium payment for new coverage under a personal insurance policy where the licensee has not selected an insurer with whom to place the coverage unless the cash premium receipt bears a comment indicating that an insurer has not yet been selected and that coverage currently does not yet exist. (5) Minimum Record Keeping Requirements for all Insurance Producers. (A) Every insurance producer shall maintain a complete set of records for each personal insurance policy applied for or procured through the licensee, except to the extent the maintenance of these records is, in whole or in part, the responsibility of the insurer. Where it is the insurer’s responsibility to maintain these records, this responsibility shall be delineated in a written document(s), a copy of which shall be retained by the licensee. The records which must be maintained shall include, but not be limited to, the following: 1. Any policy applications, declaration pages, endorsements, riders, or binders associated with the policy; 2. Any written correspondence or copies of records transmitted to or received by the licensee concerning the policy; 3. Any documents associated with any claims filed with the licensee under the policy; and 4. Any receipts or other documents associated with any premium payments made to the licensee under the policy, including receipts for cash premium payments required under section (4) of this regulation. (B) The records required to be maintained under this section shall be open to the inspection or examination of the director or his/her agents, and shall be maintained in an orderly manner so that the information in the records is readily available during the inspection or examination. The requirement of this subsection shall be deemed satisfied whenever a requested record can be retrieved from its storage location within five (5) business days of a request by the director or the director’s designee. (C) An insurance producer operating under an exclusive contract with an insurer, including one (1) insurer and its subsidiaries or affiliates, upon termination of the agency appointment, shall be required to maintain only those records as the contract authorizes him/her to retain, provided that the insurer shall bear responsibility for maintaining all other records which otherwise would have been required to be maintained by the insurance producer. (D) All records required to be maintained under this section shall be maintained for as long as the personal insurance policy in question is in force and for at least three (3) years thereafter. (6) It shall be a dishonest or unethical practice in the business of insurance for an insurance producer to use a senior-specific certification or professional designation that indicates or implies in such a way as to mislead a purchaser or prospective purchaser that the insurance producer has special certification or training in advising or servicing seniors in connection with the solicitation, sale, or negotiation of an insurance product, or in the provision of advice as to the value of or the advisability of purchasing or selling an insurance product, either directly or indirectly through publications or writings, or by issuing or promulgating analyses or reports related to an insurance product. (A) The prohibited use of such certifications or professional designation includes, but is not limited to, the following: 1. Use of a certification or professional designation by a person who has not actually earned or is otherwise ineligible to use such certification or designation; 2. Use of a nonexistent or self-conferred certification or professional designation; 3. Use of a certification or professional designation that indicates or implies a level of occupational qualifications obtained through education, training, or experience that the insurance producer using the certification or professional designation does not have; and 4. Use of a certification or professional designation that was obtained from a designating or certifying organization that: A. Is primarily engaged in the business of instruction in sales or marketing; B. Does not have reasonable standards or procedures for assuring the competency of its certificants or designees; C. Does not have reasonable standards or procedures for monitoring and disciplining its certificants or designees for improper or unethical conduct; or D. Does not have reasonable continuing education requirements for its certificants or designees in order to maintain the certificate or designation. (B) There is a rebuttable presumption that a designating or certifying organization is not disqualified solely for purposes of paragraph (6)(A)4. above, when the designation or certification from the organization does not primarily apply to sales or marketing and when the organization has been accredited by: 1. The American National Standards Institute (ANSI); 2. The National Commission for Certifying Agencies; or 3. Any organization that is on the United States Department of Education’s list entitled “Accrediting Agencies Recognized for Title IV Purposes.” (C) In determining whether a combination of words (or an acronym standing for a combination of words) constitutes a certification or professional designation indicating or implying that an adviser has special certification or training in advising or servicing senior citizens or retirees, factors to be considered shall include: 1. Use of one or more words, such as “senior,” “retirement,” “elder,” or like words, combined with one or more words, such as “certified,” “registered,” “chartered,” “adviser,” “specialist,” “consultant,” “planner,” or like words, in the name of the certification or professional designation; and 2. The manner in which those words are combined. (D) For purposes of this rule— 1. “Certification or professional designation” does not include a job title within an organization that is licensed or registered by a state or federal financial services regulatory agency, when that job title: A. Indicates seniority or standing within the organization; or B. Specifies an individual’s area of specialization within the organization; 2. “Elderly or senior person” is a person sixty (60) years of age or older; and 3. “Federal financial services regulatory agency” includes, but is not limited to, any agency that regulates— A. Insurers; B. Insurance producers; C. Broker-dealers; D. Investment advisers; or E. Investment companies as defined under the Investment Company Act of 1940. (E) Nothing in this rule shall limit the director’s authority to enforce existing provisions of law. (F) This section shall take effect on January 1, 2009. EXHIBIT A PREMIUM RECEIPT Amount of payment: $______________ . __________ Date of Payment:__________/__________/_________ Name of Insurance Company: ________________________________________________________________ Policy Number or Description: _______________________________________________________________ Name of Insured: __________________________________________________________________________ Comment: _________________________________________________________________________________ Insurance Producer’s Signature: ________________________________________________________________________ KEEP THIS RECEIPT AS PART OF YOUR RECORDS FOR YOUR OWN PROTECTION. AUTHORITY: section 374.045, RSMo 2000 and section 375.141, RSMo Supp. 2007.* Original rule filed April 5, 1991, effective Oct. 31, 1991. Amended: Filed Nov. 29, 1993, effective July 30, 1994. Amended: Filed July 12, 2002, effective Feb. 28, 2003. Amended: Filed Nov. 30, 2007, effective July 30, 2008. Amended: Filed April 30, 2008, effective Jan. 1, 2009. *Original authority: 374.045, RSMo 1967, amended 1993, 1995 and 375.141, RSMo 1961, amended 1965, 1967, 1981, 1984, 1989, 1993, 2001.