3/16/00 3749s

5/31/00 4704cofc

5/31/00 4795eba

2000 SESSION

00-2635

09/01

SENATE BILL 353

COMMITTEE: Insurance

AMENDED ANALYSIS

This bill makes changes to the laws regulating sale of insurance by financial institutions, including removing the "place of 5,000" restriction on insurance sales, changing provisions regarding the separation of banking and insurance activities, and repealing certain rulemaking provisions.

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Explanation: Matter added to current law appears in bold italics.

Matter removed from current law appears [in brackets and struckthrough.]

Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

3/16/00 3749s

5/31/00 4704cofc

5/31/00 4795eba

00-2635

09/01

STATE OF NEW HAMPSHIRE

In the Year of Our Lord Two Thousand

Be it Enacted by the Senate and House of Representatives in General Court convened:

313:1 New Section; Insurance Referrals. Amend RSA 402 by inserting after section 16-a the following new section:

402:16-b Insurance Referrals. Notwithstanding other provisions of this title, a person who has not complied with all applicable state insurance licensing and appointment laws and regulations may refer a party to a person who has complied with all applicable state insurance licensing and appointment laws and regulations, if the person making such referral is compensated for such referral in an amount that does not exceed a nominal amount and such amount is not based on or related to the party's purchase of insurance.

313:2 New Section; Insurance Referrals. Amend RSA 405 by inserting after section 17-b the following new section:

405:17-c Insurance Referrals. Notwithstanding other provisions of this title, a person who has not complied with all applicable state insurance licensing and appointment laws and regulations may refer a party to a person who has complied with all applicable state insurance licensing and appointment laws and regulations, if the person making such referral is compensated for such referral in an amount that does not exceed a nominal amount and such amount is not based on or related to the party's purchase of insurance.

313:3 Purpose; Reference to "Place With a Population of 5,000" Removed. Amend RSA 406-C:1 to read as follows:

406-C:1 Purpose. The purpose of this chapter is to authorize and regulate the solicitation for purchase and the sale in this state of insurance by financial institutions [in places with a population of 5,000 or fewer people and to direct and authorize the insurance commissioner to adopt such rules as may be necessary to protect the interests of insurance policyholders in this state] and to maintain parity with respect to the insurance powers of state and federally chartered financial institutions.

313:4 Definition; Financial Institutions. RSA 406-C:2, IV is repealed and reenacted to read as follows:

IV. "Financial institution" means a bank, savings bank, savings and loan association, trust company, or any depository institution as defined by the Federal Deposit Insurance Act, as amended, 12 U.S.C. section 1813(c)(1), which is authorized to take deposits and make loans from a place of business in the state. For the purposes of this chapter, the term financial institution shall also include any non-depository affiliate or subsidiary of a financial institution but only in the instances when the non-depository affiliate or subsidiary is soliciting the sale or purchase of insurance recommended or sponsored by, on the premises of, or in connection with a product offering of, the depository financial institution. Activities of employees and agents of a financial institution shall be deemed to be the activities of the financial institution. The term does not include an insurance

company subject to regulation under title XXXVII.

313:5 Definition; Nonpublic Customer Information. Amend RSA 406-C:2, V to read as follows:

V. "Nonpublic customer information" means information regarding a person that has been derived from a record of a financial institution concerning insurance premiums, the terms and conditions of insurance coverage, insurance expirations, insurance claims, and insurance history of an individual[, and such other information as established by rules adopted by the commissioner]. "Nonpublic customer information" does not include customer names, addresses, and telephone numbers.

313:6 Separation of Activities. Amend RSA 406-C:7 to read as follows:

406-C:7 Separation of Activities.

I. Solicitation for the purchase or sale of insurance by the financial institution shall, to avoid customer confusion and to the extent practicable, be conducted in a physical location distinct from the area where retail deposits or credit transactions are being conducted [in accordance with rules adopted by the commissioner].

II. Solicitation for the purchase or sale of insurance by a licensed employee who exercises authority over credit transactions shall be conducted in a manner which addresses the potential for customer confusion and coercion[, consistent with rules adopted by the commissioner].

III. Signage, informational materials, and sales literature concerning the availability of insurance products through the financial institution shall be utilized and displayed in [accordance with rules adopted by the commissioner] the manner required by this chapter.

IV. If the product name under which the insurance contract is marketed includes the name of a financial institution, then the marketing material must[, in accordance with rules adopted by the commissioner,] prominently identify the insurance company which issues and underwrites the insurance contract.

313:7 Disclosures. Amend the introductory paragraph of RSA 406-C:8, I to read as follows:

I. To avoid customer confusion and in addition to any other requisite disclosures, all advertising, promotional material, and solicitation, including telemarketing contacts in the case of life insurance and annuities, shall[, as required under rules, bulletins, or interpretive rulings adopted or promulgated by the commissioner,] include a prominent disclosure that substantively states that a purchase of insurance:

313:8 Insurance Referrals. RSA 406-C:12, I is repealed and reenacted to read as follows:

I. An employee of a financial institution who is not licensed to sell insurance may refer a party to a person who is licensed to sell insurance, if the employee making such referral is compensated for such referral in an amount that does not exceed a nominal amount and such amount is not based on or related to the party's purchase of insurance.

313:9 Prohibited Practices. Amend RSA 406-C:12, III to read as follows:

III. An insurance product shall not be offered in a package with non-insurance products in [violation of rules adopted by the commissioner to prohibit] a manner that constitutes unlawful tying activities, rebating, and unfair competition with respect to insurance sales.

313:10 Service Corporations; "Place of 5,000" Removed. Amend RSA 384:16-b, III to read as follows:

III. [Provided further that any contrary provision of law notwithstanding, the provisions of paragraph II apply only to a bank or banking association and its subsidiary and do not apply to an affiliate thereof, and] The provisions of this section shall not be construed to prevent such bank, banking association, or subsidiary from conducting insurance activities pursuant to RSA 406-C and rules adopted under RSA 406-C, as permitted in RSA 394-A:9[, if such financial institution or its subsidiary is located in a place of 5,000. A place of 5,000 means a town or city in this state with a population not exceeding 5,000 as determined by the last federal decennial census]. An affiliate of any bank or banking association shall be bound by the provisions of RSA 406-C, with respect to sales of insurance in this state which are recommended or sponsored by a depository financial institution or sold on the premises of a depository financial institution.

313:11 Insurance; "Place of 5,000" Removed. Amend RSA 394-A:9, I to read as follows:

I.[(a) The insurance activity may be conducted only by the financial institution, or a subsidiary of the financial institution that is located in a place of 5,000. A place of 5,000 shall mean a town or city in this state with a population not exceeding 5,000 as determined by the last federal decennial census; and

(b)] The conduct of the insurance activity shall comply with the provisions of RSA 406-C and any rules adopted thereunder, any applicable state insurance licensing laws and rules, and all applicable federal and state consumer protection laws, including the federal anti-tying provisions of 12 U.S.C. section 1972.

313:12 Rules and Regulations. Amend RSA 400-A:15, I to read as follows:

I. The commissioner shall have full power and authority to make, promulgate, amend and rescind reasonable rules and regulations for, or as an aid to, the administration or effectuation of any provision or provisions of this title or of the Gramm-Leach-Bliley Act of 1999 (public law 106-102) which relate to insurance and such other rules and regulations as are reasonably necessary to implement [the] such provisions [of this title].

313:13 Repeal. RSA 406-C:2, VI, relative to the definition of "place of 5,000," is repealed.

313:14 Effective Date. This act shall take effect 60 days after its passage.

(Approved: June 21, 2000)

(Effective Date: August 20, 2000)