Montana Code Annotated 2009

Clickable Image


     33-20-805. Duties of insurers, insurance producers, and independent agencies. (1) In recommending to a consumer the purchase of an annuity or the exchange of an annuity that results in another insurance transaction or series of insurance transactions, the insurance producer or the insurer when an insurance producer is not involved must have reasonable grounds for believing that the recommendation is suitable for the consumer on the basis of the facts disclosed by the consumer as to the consumer's investments, other insurance products, financial situation, and needs.
     (2) Prior to the execution of a purchase or exchange of an annuity resulting from a recommendation, an insurance producer or an insurer when an insurance producer is not involved shall make reasonable efforts to obtain information concerning:
     (a) the consumer's financial status;
     (b) the consumer's tax status;
     (c) the consumer's investment objectives; and
     (d) other information used or considered reasonable in making recommendations to the consumer by the insurance producer or by the insurer when an insurance producer is not involved.
     (3) (a) Except as provided under subsection (3)(b), an insurance producer or an insurer when an insurance producer is not involved does not have any obligation to a consumer under subsection (1) related to any recommendation if a consumer:
     (i) refuses to provide relevant information requested by the insurer or insurance producer;
     (ii) decides to enter into an insurance transaction that is not based on a recommendation of the insurer or insurance producer; or
     (iii) fails to provide complete or accurate information.
     (b) Subject to subsection (1), an insurer's or insurance producer's recommendation must be reasonable under all the circumstances actually known to the insurer or insurance producer at the time of the recommendation.
     (4) (a) An insurer may contract with a third party as provided in subsection (6) to establish and maintain a system to supervise recommendations that is reasonably designed to achieve compliance with this section.
     (b) A system designed and maintained by an insurer must at a minimum provide for:
     (i) maintaining written procedures; and
     (ii) conducting periodic reviews of the insurer's records that are reasonably designed to assist in detecting and preventing violations of this part.
     (5) An insurance producer or independent agency shall:
     (a) adopt a system established by an insurer to supervise recommendations of the insurance producer or agency's insurance producers that is reasonably designed to achieve compliance with this part; or
     (b) establish and maintain a system that at a minimum provides for:
     (i) maintaining written procedures; and
     (ii) conducting periodic reviews of records that are reasonably designed to assist in detecting and preventing violations of this part.
     (6) (a) An insurer may contract with a third party, including an insurance producer or independent agency, to establish and maintain a system of supervision as provided for in subsection (4) with respect to insurance producers under contract with or employed by the third party.
     (b) An insurer shall make reasonable inquiry to ensure that the third party is performing the functions required under subsection (4) and shall take reasonable action under the circumstances to enforce the third party's contractual obligations to perform the functions.
     (c) An insurer may comply with its obligation to make reasonable inquiry by doing each of the following:
     (i) annually obtaining a certification from a director, officer, or principal of the third party that the third party is performing the required functions; and
     (ii) based on reasonable selection criteria, periodically selecting third parties for a review to determine whether the third parties are performing the required functions.
     (7) An insurer, insurance producer, or independent agency is not required by this section to:
     (a) review or provide for review of insurance producer solicited transactions not related to annuities; or
     (b) include in its system of supervision an insurance producer's recommendations to consumers of products other than the annuities offered by the insurer, insurance producer, or independent agency.
     (8) An insurance producer or independent agency contracting as a third party with an insurer pursuant to subsection (6) shall promptly, when requested by the insurer, give a certification as described in subsection (6) or give a clear statement that it is unable to meet the certification criteria.
     (9) (a) Insurers, insurance producers, and independent agencies shall maintain or must be able to make available to the commissioner records of the information collected from the consumer and other information used in making the recommendations that were the basis for insurance transactions for 5 years after the insurance transaction is completed by the insurer. An insurer is permitted, but is not required, to maintain documentation on behalf of an insurance producer.
     (b) Records required to be maintained by this regulation may be maintained in paper, photographic, microprocess, magnetic, mechanical, or electronic media or by any process that accurately reproduces the actual document.

     History: En. Sec. 5, Ch. 476, L. 2007.

Previous Section MCA Contents Part Contents Search Help Next Section