Utah Department of Administrative Services Division of Administrative Rules

File No. 34026

This rule was published in the November 15, 2010, issue (Vol. 2010, No. 22) of the Utah State Bulletin.


Insurance, Administration

Rule R590-93

Replacement of Life Insurance and Annuities

Change in Proposed Rule

DAR File No.: 34026
Filed: 10/28/2010 01:13:29 PM

RULE ANALYSIS

Purpose of the rule or reason for the change:

Due to a suggestion received during the comment period, the department has decided to make a further change to the rule.

Summary of the rule or change:

The changes clarify that an indirect replacement is a violation of this rule. (DAR NOTE: This change in proposed rule has been filed to make additional changes to a proposed amendment that was published in the September 15, 2010, issue of the Utah State Bulletin, on page 59. Underlining in the rule below indicates text that has been added since the publication of the proposed rule mentioned above; strike-out indicates text that has been deleted. You must view the change in proposed rule and the proposed amendment together to understand all of the changes that will be enforceable should the agency make this rule effective.)

State statutory or constitutional authorization for this rule:

  • Section 31A-23a-402
  • Section 31A-2-201

Anticipated cost or savings to:

the state budget:

The changes to this rule will have no fiscal impact on the department or the state budget. The changes are for clarification purposes only.

local governments:

This rule will have no fiscal impact on local governments since it deals only with the relationship between the department and its licensees.

small businesses:

The changes will have no fiscal impact on small businesses. The intent of the change is to clarify the violation of indirectly replacing a life or annuity contract.

persons other than small businesses, businesses, or local governmental entities:

The changes will have no fiscal impact on businesses or local governments. The intent of the change is to clarify the violation of indirectly replacing a life or annuity contract. The additional wording will strengthen the consumer protection aspect of this rule by clarifying indirect sales of life and annuity policies.

Compliance costs for affected persons:

The changes will have no fiscal impact on businesses or local governments. The intent of the change is to clarify the violation of indirectly replacing a life or annuity contract. The additional wording will strengthen the consumer protection aspect of this rule by clarifying indirect sales of life and annuity policies.

Comments by the department head on the fiscal impact the rule may have on businesses:

The change in wording will strengthen the consumer protection aspect of this rule and will have no fiscal impact on businesses.

Neal T. Gooch, Commissioner

The full text of this rule may be inspected, during regular business hours, at the Division of Administrative Rules, or at:

Insurance
Administration
450 N MAIN ST
SALT LAKE CITY, UT 84114-1201

Direct questions regarding this rule to:

  • Jilene Whitby at the above address, by phone at 801-538-3803, by FAX at 801-538-3829, or by Internet E-mail at jwhitby@utah.gov

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

12/15/2010

This rule may become effective on:

12/22/2010

Authorized by:

Jilene Whitby, Information Specialist

RULE TEXT

R590. Insurance, Administration.

R590-93. Replacement of Life Insurance and Annuities.

 

. . . . . . .

 

R590-93-9. Violations and Penalties.

(1) Any failure to comply with this rule shall be considered a violation of 31A-23a-402. Examples of violations include:

(a) any deceptive or misleading information set forth in sales material;

(b) failing to ask the applicant in completing the application the pertinent questions regarding existing policies or contracts and whether the proposed insurance will replace, discontinue, or change an existing policy or contract;

(c) the intentional incorrect recording of an answer;

(d) advising an applicant to respond negatively to any question regarding replacement in order to prevent notice to the existing insurer;

(e) advising a policy or contract holder to write directly to the company in such a way as to attempt to obscure the identity of the replacing producer or company; or

(f) advising a policy or contract holder to obtain policy values from an existing policy or contract with the intent to indirectly replace the policy or contract without complying with the requirements of this rule.

(2) Policy and contract holders have the right to replace existing life insurance policies or annuity contracts after indicating in or as a part of applications for new coverage that replacement is not their intention; however, patterns of such action by policy or contract holders of the same producer shall be deemed prima facie evidence of the producer's knowledge that replacement was intended in connection with the identified transactions, and these patterns of action shall be deemed prima facie evidence of the producer's intent to violate this rule.

(3) Where it is determined that the requirements of this rule have not been met, the replacing insurer shall provide to the policy holder an in force illustration if available or a policy summary for the replacement policy or disclosure document for the replacement contract and the appropriate Notice regarding replacements in Appendix A or C.

(4) Violations of this rule shall subject the violators to penalties that may include the revocation or suspension of a producer's or company's license, monetary fines and the forfeiture of any commissions or compensation paid to a producer as a result of the transaction in connection with which the violations occurred. In addition, where the commissioner has determined that the violations were material to the sale, the insurer may be required to make restitution, restore policy or contract values and pay interest at the legal rate as provided in Title 15 of the Utah Code on the amount refunded in cash.

 

. . . . . . .

 

KEY: life insurance, annuity replacement

Date of Enactment or Last Substantive Amendment: 2010

Notice of Continuation: April 15, 2009

Authorizing, and Implemented or Interpreted Law: 31A-2-201; 31A-23a-402

 


Additional Information

The Portable Document Format (PDF) version of the Bulletin is the official version. The PDF version of this issue is available at http://www.rules.utah.gov/publicat/bull-pdf/2010/b20101115.pdf. The HTML edition of the Bulletin is a convenience copy. Any discrepancy between the PDF version and HTML version is resolved in favor of the PDF version.

Text to be deleted is struck through and surrounded by brackets (e.g., [example]). Text to be added is underlined (e.g., example).  Older browsers may not depict some or any of these attributes on the screen or when the document is printed.

For questions regarding the content or application of this rule, please contact Jilene Whitby at the above address, by phone at 801-538-3803, by FAX at 801-538-3829, or by Internet E-mail at jwhitby@utah.gov.