§431:10D-504 Duties of insurers that use producers.  Each insurer shall:

(1)  Maintain a system ofsupervision and control to insure compliance with the requirements of this partthat shall include at least the following:

(A)  Inform itsproducers of the requirements of this part and incorporate the requirements ofthis part into all relevant producer training manuals prepared by the insurer;

(B)  Provide to eachproducer a written statement of the company's position with respect to theacceptability of replacements providing guidance to its producer as to theappropriateness of these transactions;

(C)  A system toreview the appropriateness of each replacement transaction that the producerdoes not indicate is in accord with subparagraph (B);

(D)  Procedures toconfirm that the requirements of this part have been met; and

(E)  Procedures todetect transactions that are replacements of existing policies or contracts bythe existing insurer, but that have not been reported as such by the applicantor producer.

Compliance withthis section may include but shall not be limited to systematic customersurveys, interviews, confirmation letters, or programs of internal monitoring;

(2)  Have the capacity tomonitor each producer's life insurance policy and annuity contract forreplacements for the insurer, and shall produce, upon request, and make suchrecords available to the commissioner.  The capacity to monitor shall includethe ability to produce records for each producer's:

(A)  Lifereplacements, including financed purchases, as a percentage of the producer'stotal annual sales for life insurance;

(B)  Number oflapses of policies by the producer as a percentage of the producer's totalannual sales for life insurance;

(C)  Annuitycontract replacements as a percentage of the producer's total annual contractsales;

(D)  Number oftransactions that are unreported replacements of existing policies or contractsby the existing insurer detected by the company's monitoring system as requiredby paragraph (1)(E); and

(E)  Replacements,indexed by replacing producer and existing insurer;

(3)  Require with or as apart of each application for life insurance or an annuity a signed statement byboth the applicant and the producer as to whether the applicant has existingpolicies or contracts;

(4)  Require with eachapplication for life insurance or an annuity that indicates an existing policyor contract a completed notice as required by section 431:10D‑503(b)regarding replacements;

(5)  When the applicant hasexisting policies or contracts, each insurer shall be able to produce copies ofany sales material as required by section 431:10D‑503(e), the basicillustration and any supplemental illustrations related to the specific policyor contract that is purchased, and the producer's and applicant's signedstatements with respect to financing and replacement for at least five yearsafter the termination or expiration of the proposed policy or contract;

(6)  Ascertain that thesales material and illustrations required by section 431:10D-503(e) meet therequirements of this part and are complete and accurate for the proposed policyor contract;

(7)  If an application doesnot meet the requirements of this part, notify the producer and applicant andfulfill the outstanding requirements; and

(8)  Maintain records inpaper, photograph, microprocess, mechanical, or electronic media, or by anyprocess that accurately reproduces the actual paper document. [L 2000, c 252,pt of §3; am L 2001, c 121, §3]