OAR 836-080-0022: Duties of Insurers that Use Agents Insurance Producers

Each insurer that uses an insurance producer shall: (1) Maintain a system of supervision and control to insure compliance with the requirements of OAR 836-080-0001 to 836-080-0043. The system shall do at least the following: (a) Inform its insurance producers of the requirements of OAR 836-080-0001 to 836-080-0043 and incorporate the requirements of 836-080-0001 to 836-080-0043 into all relevant insurance producer training manuals prepared by the insurer; (b) Provide to each insurance producer a written statement of the insurer's position with respect to the acceptability of replacements, providing guidance to its insurance producer as to the appropriateness of these transactions; (c) Include a system for reviewing the appropriateness of each replacement transaction that the insurance producer does not indicate is in accord with subsection (b) of this section; (d) Include procedures that confirm the requirements of OAR 836-080-0001 to 836-080-0043 have been met; and (e) Include procedures to detect transactions that are replacements of existing policies or contracts by the existing insurer, but that have not been reported as such by the applicant or insurance producer. Compliance with OAR 836-080-0001 to 836-080-0043 may include, but shall not be limited to, systematic customer surveys, interviews, confirmation letters or programs of internal monitoring; (2) Have the capacity to monitor each insurance producer's life insurance policy and annuity contract replacements for that insurer, and shall produce, upon request, such records for and make such records available to, the Director. The capacity to monitor shall include the ability to produce records for the following with respect to each insurance producer: (a) Life replacements, including financed purchases, as a percentage of the insurance producer's total annual sales for life insurance; (b) Number of lapses of policies by the insurance producer as a percentage of the agent's total annual sales for life insurance; (c) Annuity contract replacements as a percentage of the insurance producer's total annual annuity contract sales; (d) Number of transactions that are unreported replacements of existing policies or contracts by the existing insurer detected by the insurer's monitoring system as required by subsection (1)(e) of this section; and (e) Replacements, indexed by replacing insurance producer and existing insurer; (3) Require with or as a part of each application for life insurance or an annuity a signed statement by both the applicant and the insurance producer as to whether the applicant has existing policies or contracts; (4) Require with each application for life insurance or an annuity that indicates an existing policy or contract a completed notice regarding replacements as contained in Appendix A to this rule, unless the notice is not required under OAR 836-080-0014(1) and (2); (5) When the applicant has existing policies or contracts, be able to produce copies of any sales material required by OAR 836-080-0014(5), the basic illustration and any supplemental illustrations related to the specific policy or contract that is purchased, and the insurance producer's and applicant's signed statements with respect to financing and replacement for at least five years after the termination or expiration of the proposed policy or contract; (6) Ascertain that the sales material and illustrations required by OAR 836-080-0014(5) meet the requirements of 836-080-0001 to 836-080-0043 and are complete and accurate for the proposed policy or contract; (7) If an application does not meet the requirements of OAR 836-080-0001 to 836-080-0043, notify the insurance producer and applicant and fulfill the outstanding requirements; and (8) Maintain records in paper, photograph, microprocess, magnetic, mechanical or electronic media or by any process that accurately reproduces the actual document. [ED. NOTE: Appendices referenced are available from the agency.]