§ 26.1-34.2-03.1 — Producer training

North Dakota § 26.1-34.2-03.1

• Jurisdiction: North Dakota
• Title 26.1: Insurance
• Ch. 26.1-34.2: Annuity Transaction Practices

Text

(3) The insurer shall provide product-specific training and training materials that
explain all material features of the insurer's annuity products to the insurer's
producers.
(4) The insurer shall establish and maintain procedures for the review of each
recommendation before issuance of an annuity which are designed to
ensure there is a reasonable basis to determine that the recommended
annuity effectively would address the particular consumer's financial
situation, insurance needs, and financial objectives. Such review procedures
may apply a screening system for the purpose of identifying selected
transactions for additional review and may be accomplished electronically or
through other means, including physical review. Such an electronic or other
system may be designed to require additional review only of those
transactions identified for additional review by the selection criteria.
(5) The insurer shall establish and maintain reasonable procedures to detect
recommendations that are not in compliance with this paragraph and
paragraphs 1, 2, and 4. This may include confirmation of the consumer
profile information, systematic customer surveys, producer and consumer
interviews, confirmation letters, producer statements or attestations, and
programs of internal monitoring. This paragraph does not prevent an insurer
from complying with this paragraph by applying sampling procedures or by
confirming the consumer profile information or other required information
under this section after issuance or delivery of the annuity.
(6) The insurer shall establish and maintain reasonable procedures to assess,
before or upon issuance or delivery of an annuity, whether a producer has
provided to the customer the information required to be provided under this
section.
(7) The insurer shall establish and maintain reasonable procedures to identify
and address suspicious consumer refusals to provide consumer profile
information.

(8) The insurer shall establish and maintain reasonable procedures to identify
and eliminate any sales contests, sales quotas, bonuses, and noncash
compensation that are based on the sales of specific annuities within a
limited period of time. The requirements of this subdivision are not intended
to prohibit the receipt of health insurance, office rent, office support,
retirement benefits, or other employee benefits by employees as long as
those benefits are not based on the volume of sales of a specific annuity
within a limited period of time.
(9) Annually, the insurer shall provide a written report to senior management,
including to the senior manager responsible for audit functions, which details
a review, with appropriate testing, reasonably designed to determine the
effectiveness of the supervision system, the exceptions found, and
corrective action taken or recommended, if any.
c. (1) This subsection does not restrict an insurer from contracting for
performance of a function, including maintenance of procedures, required
under this subdivision. An insurer is responsible for taking appropriate
corrective action and may be subject to sanctions and penalties pursuant to
section 26.1-34.2-04, regardless of whether the insurer contracts for
performance of a function and regardless of the insurer's compliance with
paragraph 2.
(2) An insurer's supervision system under this subsection must include
supervision of contractual performance under this subsection. This includes
the following:
(a) Monitoring and, as appropriate, conducting audits to assure that the
contracted function is properly performed; and
(b) Annually, obtaining a certification from a senior manager who has
responsibility for the contracted function that the manager has a
reasonable basis to represent, and does represent, that the function is
properly performed.
d. An insurer is not required to include in the insurer's system of supervision:
(1) A producer's recommendations to consumers of products other than the
annuities offered by the insurer; or
(2) Include consideration of or comparison to options available to the producer
or compensation relating to those options other than annuities or other
products offered by the insurer.
4. A producer or an insurer may not dissuade, or attempt to dissuade, a consumer from:
a. Responding truthfully to an insurer's request for confirmation of the consumer
profile information;
b. Filing a complaint; or
c. Cooperating with the investigation of a complaint.
5. a. Recommendations and sales of annuities made in compliance with comparable
standards must satisfy the requirements under this chapter. This subsection
applies to recommendations and sales of annuities made by financial
professionals in compliance with business rules, controls, and procedures that
satisfy a comparable standard even if the standard would not otherwise apply to
the product or recommendation at issue. However, this subsection does not limit
the insurance commissioner's ability to enforce, including investigate, this
chapter. This subdivision does not limit the insurer's obligation to comply with
subdivision a of subsection 3 although the insurer may base the insurer's analysis
on information received from either the financial professional or the entity
supervising the financial professional.
b. For subdivision a to apply, an insurer shall:
(1) Monitor relevant conduct of the financial professional seeking to rely upon
subdivision a or the entity responsible for supervising the financial
professional, such as the financial professional's broker-dealer or an

investment advisor registered under federal or state securities laws using
information collected in the normal course of an insurer's business; and
(2) Provide to the entity responsible for supervising the financial professional
seeking to rely on subdivision a, such as the financial professional's broker-
dealer or investment advisor registered under federal or state securities
laws, information and reports that are reasonably appropriate to assist the
entity to maintain its supervision system.
26.1-34.2-03.1. Producer training.
1. A producer may not solicit the sale of an annuity product unless the producer has
adequate knowledge of the product to recommend the annuity and the producer is in
compliance with the insurer's standards for product training. A producer may rely on
insurer-provided product-specific training standards and materials to comply with this
subsection.
2. a. A producer who engages in the sale of annuity products shall complete a
one-time, four-hour training course.
b. The training required under this subsection must include information on the
following topics:
(1) The types of annuities and various classifications of annuities;
(2) Identification of the parties to an annuity;
(3) How fixed, variable, and indexed annuity contract provisions affect
consumers;
(4) The application of income taxation of qualified and nonqualified annuities;
(5) The primary uses of annuities; and
(6) Appropriate standards of conduct, sales practices, replacement, and
disclosure requirements.
c. Providers of courses intended to comply with this subsection shall cover all topics
listed in the prescribed outline and may not present any marketing information or
provide training on sales techniques or provide specific information about a
particular insurer's products. Additional topics may be offered in conjunction with
and in addition to the required outline.
d. A producer who has completed an annuity training course approved by the
insurance department before January 1, 2022, within six months after such date,
shall complete either:
(1) A new four-credit training course approved by the insurance department
after January 1, 2022; or
(2) An additional one-time, one-credit training course approved by the
insurance department and provided by an insurance department-approved
education provider on appropriate sales practices, replacement, and
disclosure requirements under this chapter.
e. Providers of annuity training shall issue certificates of completion.
f. The satisfaction of the training requirements of another state which are
substantially similar to the provisions of this subsection are deemed to satisfy the
training requirements of this subsection in this state.
g. The satisfaction of the components of the training requirements of a course with
components substantially similar to the provisions of this subsection is deemed to
satisfy the training requirements of this subsection in this state.
h. An insurer shall verify that the producer has completed the annuity training
course required under this subsection before allowing the producer to sell an
annuity product for that insurer. An insurer may satisfy the insurer's responsibility
under this subsection by obtaining certificates of completion of the training course
or obtaining reports from a reasonably reliable commercial database vendor that
has a reporting arrangement with insurance education providers.