§ 27-2.4-15.1 - Compensation disclosure.
SECTION 27-2.4-15.1
§ 27-2.4-15.1 Compensation disclosure.– (a) Where any insurance producer or any affiliate of such producer receives anycompensation from the customer for the initial placement of insurance, neitherthat producer nor the affiliate shall accept or receive any compensation froman insurer or other third-party for that placement of insurance unless theproducer has, prior to the customer's purchase of insurance:
(1) Obtained the customer's documented acknowledgment thatsuch compensation will be received by the producer or affiliate; and
(2) Provided a description of the method and factors utilizedfor calculating the compensation to be received from the insurer or otherthird-party for that placement.
(b) This section shall not apply to:
(1) A person licensed as an insurance producer who acts onlyas an intermediary between an insurer and the customer's producer, for example:a managing general agent, a sales manager, or wholesale broker;
(2) The placement of insurance in secondary or residualmarkets; or
(3) A producer whose sole compensation for the placement isderived from commissions, salaries and other remuneration from the insurer.
(i) Notwithstanding this provision, a producer shall, at thetime of sale or no later than the delivery of the policy, disclose that theywill be paid a commission by the company and may receive other performancebased compensation. This does not apply to salaried employees of an insurancecompany.
(c) For purposes of this section:
(1) "Affiliate" means a person that controls, is controlledby or is under common control with the producer.
(2) "Compensation from an insurer or other third-party" meanspayments, commissions, fees, awards, overrides, bonuses, contingentcommissions, loans, stock options, gifts, prizes or any other form of valuableconsideration, whether or not payable pursuant to a written agreement.
(3) "Compensation from the customer" shall not include anyfee or similar expense or any fee or amount collected by or paid to theproducer that does not exceed an amount established by the commissioner.
(4) "Customer" means the person signing the application orsubmission for insurance or the authorized representative of the insuredactually negotiating the placement of insurance with the producer. A personshall not be considered a "customer" for purposes of this section if the personis:
(i) A participant or beneficiary of an employee benefit plan;or
(ii) Covered by a group or blanket insurance policy or groupannuity contract sold, solicited or negotiated by the insurance producer oraffiliate.
(5) "Documented acknowledgement" means the customer'sacknowledgment obtained prior to the customer's purchase of insurance.
(d) An insurance producer may satisfy any requirementsimposed by this section directly or through an affiliate.