2023 Idaho Code › Title 41 - INSURANCE › Chapter 19 - LIFE INSURANCE POLICIES AND ANNUITY CONTRACTS › Section 41-1940B - ANNUITY CONSUMER PROTECTION — SUPERVISION SYSTEM.

41-1940B. ANNUITY CONSUMER PROTECTION — SUPERVISION SYSTEM. (1) Except as permitted under section 41-1940A(8), Idaho Code, an insurer may not issue an annuity recommended to a consumer unless there is a reasonable basis to believe the annuity would effectively address the particular consumer’s financial situation, insurance needs, and financial objectives based on the consumer’s consumer profile information.
(2) An insurer shall establish and maintain a supervision system that is reasonably designed to achieve the insurer’s and its producers’ compliance with the annuity consumer protections act, including but not limited to the following:
(a) The insurer shall establish and maintain reasonable procedures to inform its producers of the requirements of the annuity consumer protections act and shall incorporate the requirements of such act into relevant producer training manuals;
(b) 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 section 41-1940C, Idaho Code;
(c) The insurer shall provide product-specific training and training materials that explain all material features of its annuity products to its producers;
(d) The insurer shall establish and maintain procedures for the review of each recommendation prior to issuance of an annuity that are designed to ensure 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 but not limited to 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;
(e) The insurer shall establish and maintain reasonable procedures to detect recommendations that are not in compliance with section 41-1940A, Idaho Code. This may include but is not limited to confirmation of the consumer’s consumer profile information, systematic customer surveys, producer and consumer interviews, confirmation letters, producer statements or attestations, and programs of internal monitoring. Nothing in this paragraph prevents an insurer from complying with this paragraph by applying sampling procedures or by confirming the consumer profile information or other required information under that section after issuance or delivery of the annuity;
(f) 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 the annuity consumer protections act;
(g) The insurer shall establish and maintain reasonable procedures to identify and address suspicious consumer refusals to provide consumer profile information;
(h) The insurer shall establish and maintain reasonable procedures to identify and eliminate any sales contests, sales quotas, bonuses, and noncash compensation that are based on the sales of specific annuities within a limited period of time. The requirements of this paragraph 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 on the volume of sales of a specific annuity within a limited period of time; and
(i) The insurer shall annually provide a written report to senior management, including to the senior manager responsible for audit functions, which report shall detail 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.
(3) Nothing in this section restricts an insurer from contracting for performance of a function, including maintenance of procedures, required under this section.
(a) An insurer is responsible for taking appropriate corrective action and may be subject to sanctions and penalties pursuant to section 41-1940D, Idaho Code, regardless of whether the insurer contracts for performance of a function and regardless of the insurer’s compliance with paragraph (b) of this subsection.
(b) An insurer’s supervision system under this section shall include supervision of contractual performance under this section. This includes but is not limited to the following:
(i) Monitoring and, as appropriate, conducting audits to assure that the contracted function is properly performed; and
(ii) Annually obtaining a certification from a senior manager who has responsibility for the contracted function that the manager has a reasonable basis to represent, and does represent, that the function is properly performed.
(4) An insurer is not required to include in its system of supervision:
(a) A producer’s recommendations to consumers of products other than the annuities offered by the insurer; or
(b) Consideration of or comparison to options available to the producer or compensation relating to those options other than annuities or other products offered by the insurer.
History:
[41-1940B, added 2021, ch. 41, sec. 4, p. 117.]