§ 58-33A-20 — Insurer's system for supervising recommendations.

An insurer shall establish and maintain a supervision system that is reasonably designed to achieve compliance with §§ 58-33A-13 to 58-33A-27 , inclusive, including: (1) The insurer shall establish and maintain reasonable procedures to inform its producers of the requirements of §§ 58-33A-16 to 58-33A-26 , inclusive and shall incorporate the requirements of this regulation into relevant producer training manuals; (2) The insurer shall establish and maintain standards for producer product training and shall establish and maintain reasonable procedures to require its producers to comply with the requirements of §§ 58-33A-25.1 to 58-33A-25.3 , inclusive; (3) The insurer shall provide product-specific training and training materials that explain all material features of its annuity products to its producers; (4) The insurer shall establish and maintain procedures for review of each recommendation prior to issuance of an annuity that are designed to ensure that there is a reasonable basis to determine that the recommended annuity would effectively 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 §§ 58-33A-13 to 58-33A-27 , inclusive. This may include confirmation of consumer profile information, systematic customer surveys, producer and consumer interviews, confirmation letters, producer statements or attestations, and programs of internal monitoring. Nothing in this subdivision prevents an insurer from complying with this subdivision by applying sampling procedures or by confirming consumer profile information or other required information after issuance or delivery of the annuity; (6) The insurer shall annually provide a written report to senior management, including to the senior manager responsible for audit functions, that 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; (7) The insurer shall establish and maintain reasonable procedures to assess, prior to or upon issuance or delivery of an annuity, whether a producer has provided to the consumer the information required to be provided under this section; (8) The insurer shall establish and maintain reasonable procedures to identify and address suspicious consumer refusals to provide consumer profile information; and (9) The insurer shall establish and maintain reasonable procedures to identify and eliminate any sales contests, sales quotas, bonuses, and non-cash 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 upon the volume of sales of a specific annuity within a limited period of time.

Legislative History

SL 2008, ch 273, § 8; SL 2012, ch 250, § 7; SL 2022, ch 186, § 20, eff. Jan. 1, 2023.