983reg.PDF

STATE OF MISSISSIPPI

MISSISSIPPI DEPARTMENT OF INSURANCE

REGULATION NO. 98-3

GUIDELINES FOR SALE OF INSURANCE BY FINANCIAL INSTITUTIONS IN THE STATE OF

MISSISSIPPI

Table of Contents:

Section 1. Authority

Section 2. Purpose

Section 3. Definitions

Section 4. Regulatory Authority

Section 5. Licensure Requirement

Section 6. Separate Transactions, Records and Documents

Section 7. Extensions of Credit

Section 8. Insurance and Financial Institution Products

Section 9. Rebating and Discounting

Section 10. Discrimination

Section 11. Disclosure

Section 12. Misleading Advertising

Section 13. Commissions and Compensation

Section 14. Confidential Customer Information

Section 15. Severability

Section 16. Effective Date

Section 1. Authority

This Regulation is promulgated by the Commissioner of Insurance pursuant to the authority

granted to him by Miss. Code Ann.  25-43-1 et seq., 83-5-1 and 83-17-211, and is promulgated

in accordance with Mississippi Department of Insurance Regulation No. 88-101, said regulation

being the Rules of Practice and Procedure before the Mississippi Department of Insurance.

Section 2. Purpose

The purpose of this regulation is to provide guidelines under which financial institutions may

sell insurance in the State of Mississippi and to protect the interests of the insurance policyholders

of this state.

Section 3. Definitions

(A) "Financial institution" shall mean a bank, savings bank, savings and loan association,

trust company, credit union or any depository institution as defined by the Federal

Deposit Insurance Act, and any other individual, corporation, partnership or

association engaged in the taking or brokering of deposits or in the making or

brokering of loans in this state. The term "financial institution" shall also include any

person, including an insurance company, that is soliciting the sale or purchase of

insurance recommended or sponsored by, on the premises of, or in connection with

a product offering of, a financial institution, regardless of whether the financial

institution is located in the state. Except as otherwise set forth in this Section 3(A),

the term "financial institution" does not include an insurance company.

(B) The term "insurance" includes all products defined or regulated as insurance by Title

83, Mississippi Code of 1972, except:

(1) Credit property as defined in Miss. Code Ann.  83-17-1, credit life, accident

and health; credit involuntary unemployment insurance, mortgage life; and

mortgage accident and health;

(2) Insurance placed by a financial institution in connection with collateral pledged

as security for a loan when the debtor breaches the contractual obligation to

provide that insurance;

(3) Private mortgage insurance;

(4) Land Title; and

(5) Travel Accident and Baggage.

The term "loan" does not include the financing of insurance premiums, loans made

by broker-dealers registered in accordance with applicable State and Federal

securities laws that are wholly collateralized by securities, or a loan from the cash

value of an insurance policy.

(D) The terms "agent" and "agency" shall include all persons or entities as defined by

Title 83, Mississippi Code of 1972.

(E) The term "person" shall include any natural person, partnership, corporation,

association, unincorporated organization, or other form of business enterprise, plural

or singular, as the case demands.

Section 4. Regulatory Authority

All financial institutions that are authorized to engage in the solicitation and sale of

insurance products are subject to the insurance laws of the State of Mississippi and all other

regulations of the Mississippi Department of Insurance and other applicable provisions of law.

Section 5. Licensure Requirement

Solicitation for the purchase or sale of any insurance products shall be conducted only by

persons or entities who have complied with all applicable state insurance licensing, appointment

laws and regulations and who have been issued an agent or broker's license pursuant to Miss.

Code Ann.  83-17-1, et seq. However, employees of financial institutions who are not licensed

as an agent or broker may make referrals of financial institution customers or prospects to licensed

agents and receive a one-time nominal fee per referral of a fixed dollar amount for each customer

consistent to referral fees received in other non-deposit investment products. The term "nominal

fee" means an amount not to exceed Twenty Dollars ($20.00). The payment of this referral fee

cannot depend on whether the referral results in the sale or issuance of an insurance product or

service.

Section 6. Separate Transactions, Records and Documents

It is strongly recommended that insurance sales activities be conducted through separate

divisions or subsidiaries. However, whether the financial institution obtains an agency license or

operates through a subsidiary, division or affiliated agency, separate records must be maintained

for all insurance transactions distinct from any other activities in connection with a loan or other

credit transaction. These records shall be made available to the Mississippi Department of

Insurance for inspection. The credit and insurance transactions must be completed separately and

through separate documents.

Section 7. Extensions of Credit

No person shall delay or impede the completion of a loan transaction or other transactions

involving the extension of credit for the purpose of influencing a customer to purchase insurance

from them or through any affiliated entity.

Section 8. Insurance and Financial Institution Products

(A) No person may offer banking products or services, or fix or vary the consideration of

the offer, on a condition or requirement that the customer obtain insurance from the

financial institution or any affiliate of the financial institution.

(B) A financial institution that offers banking products or services in conformity with the

provisions of  106 of the Bank Holding Company Act Amendments of 1970 (12

U.S.C. 1972), shall be deemed to be in compliance with the provisions of subsection

(A) of this section.

insurance product from any particular insurance agent as a condition for the lending

of money or extension of credit, the establishment or maintenance of a checking,

savings, or other deposit account, the establishment or maintenance of a trust

account, or the provision of services related to any such activities.

(D) No person may offer an insurance product in combination with banking products

unless the insurance products and banking products are available separately.

(E) No person may include the expense of insurance premiums in the primary credit

transaction without the express written consent of the customer.

Section 9. Rebating and Discounting

(A) No person may offer a rebate on an insurance product in violation of Miss. Code Ann.

 83-3-121 (Rev. 1991).

(B) No person may offer a discount on a loan or extension of credit for the purpose of

inducing the customer to purchase insurance required in connection with the loan or

extension of credit.

Section 10. Discrimination

No financial institution may:

(A) Require as a condition of providing any product or service or renewal of any contract

for providing a product or service to any customer, that the customer acquire,

finance, or negotiate any policy or contract of insurance through a particular insurer

or insurance agent.

(B) In connection with a loan or extension of credit that requires a borrower to obtain

insurance, reject an insurance policy solely because the policy has been issued or

underwritten by any person who is not associated with a particular entity;

agent who is not associated with a financial institution that is not imposed on any

insurance agent who is associated with the financial institution.

Section 11. Disclosure

(A) A financial institution shall prominently disclose in writing, in clear and concise

language, to customers, including in any advertisement or promotional material, and

orally during any customer contact, that the insurance product offered,

recommended, sponsored, or sold:

(1) Is not a deposit;

(2) Is not insured by the Federal Deposit Insurance Corporation, or in the case

of a credit union, by the National Credit Union Share Insurance Fund;

(3) Is not guaranteed by the insured financial institution or an affiliated insured

depository institution; and

(4) Where appropriate, involves investment risk, including potential loss of

principal.

(B) Any financial institution that requires a customer to obtain insurance in connection

with a loan or other extension of credit and that offers insurance either directly or

through an affiliate shall clearly disclose to the customer their choice of insurance

provider will not affect the decision of the financial institution in extending credit to

the customer.

to a customer shall obtain a written acknowledgement of receipt by the customer of

such disclosures, including the date of receipt and the customer's name and address,

prior to or at the time of the execution of any application for insurance sold by the

person. Such acknowledgement shall be in a separately executed document or in

a separately signed section of the application for insurance. The acknowledgement

required by this paragraph shall not be required if an executed application for

insurance or other document by which the customer applies for insurance is not

submitted in writing or is not executed by the customer.

Section 12. Misleading Advertising

No person may employ any advertisement that would mislead or otherwise cause a

reasonable person to believe mistakenly that the State of Mississippi or the federal government

is responsible for the insurance sales activities of the financial institution or stands behind the

financial institution's credit, or that the financial institution, the State of Mississippi, or the federal

government guarantees any returns on insurance products or is a source of payment of any

insurance obligation of or sold by the financial institution.

Section 13. Commissions and Compensation

No person shall pay directly or indirectly, any commission, service fee, brokerage or other

valuable consideration to any person for services as an insurance agent, unless the person

performing the service holds a valid license for the class of insurance as to which the service is

rendered. No person or agency shall accept any commission, service fee, brokerage or other

valuable consideration for such services unless properly licensed in accordance with the

Mississippi Department of Insurance. However, referral fees as provided in Section 5 are

authorized.

Section 14. Confidential Customer Information

(A) A financial institution may not release a customer's insurance information to any

person other than an officer, director, employee, agent, or affiliate of the financial institution without

the written consent of the customer. For the purposes of this Section, "insurance information"

means information concerning the premiums, terms and conditions of insurance coverage,

insurance claims, and the insurance history of a customer contained in the financial institution's

records.

(B) Subsection (A) of this section shall not apply to:

(1) Names, addresses and telephone numbers derived in any manner from the

financial institution's records; or

(2) The release of insurance information as otherwise authorized or prohibited by

State or federal law.

of insurance in connection with a loan or extension of credit and shall not use such

premium information for the purpose of soliciting insurance without the written

consent of the customer.

(D) A financial institution may not use health information obtained from a customer's

insurance records for any purpose other than for its own activities pursuant to this

Code.

Section 15. Severability

If any provision of any section of this regulation or the application thereof to any

circumstance or person or entity is held invalid, such invalidity shall not affect any other provision

of that section or application of the regulation which can be given effect without the invalid

provision or application, and to this end the provisions of this regulation are declared to be

severable.

Section 16. Effective Date

This regulation shall become effective March 31, 1999.

__________________________________

GEORGE DALE

COMMISSIONER OF INSURANCE

STATE OF MISSISSIPPI