§431:10D-505 - Duties of replacing insurers that use producers.

§431:10D-505 Duties of replacing insurers
that use producers. (a) Where a replacement is involved in the
transaction, the replacing insurer shall:

(1) Verify that the required forms are received and
are in compliance with this part;

(2) Notify any other existing insurer that may be
affected by the proposed replacement within five business days of receipt of a
completed application indicating replacement or when the replacement is
identified if not indicated on the application, and mail a copy of the available
illustration or policy summary for the proposed policy or available disclosure
document for the proposed contract within five business days of a request from
an existing insurer;

(3) Be able to produce copies of the notification
regarding replacement required in section 431:10D-503(b), indexed by producer,
for at least five years or until the next regular examination by the insurance
department of a company's state of domicile, whichever is later; and

(4) Provide to the policy or contract owner notice of
the right to return the policy or contract within thirty days of the delivery
of the contract and receive an unconditional full refund of all premiums or
considerations paid on it, including any policy fees or charges or, in the case
of a variable or market value adjustment policy or contract, a payment of the
cash surrender value provided under the policy or contract plus the fees and
other charges deducted from the gross premiums or considerations or imposed
under the policy or contract; provided that such notice may be included in
forms approved by the commissioner pursuant to this part.

(b) In transactions where the replacing
insurer and the existing insurer are the same or subsidiaries or affiliates
under common ownership or control, the replacing insurer shall allow credit for
the period of time that has elapsed under the replaced policy's or contract's
incontestability and suicide period up to the face amount of the existing
policy or contract. With regard to financed purchases, the credit may be
limited to the amount the face amount of the existing policy is reduced by the
use of existing policy values to fund the new policy or contract.

(c) If an insurer prohibits the use of sales
material other than that approved by the company, as an alternative to the
requirements made of an insurer pursuant to section 431:10D-503(e), the insurer may:

(1) Require with each application a statement signed
by the producer that:

(A) Represents that the producer used only
company-approved sales material; and

(B) States that copies of all sales material
were left with the applicant in accordance with section 431:10D-503(d); and

(2) Within ten days of the issuance of the policy or
contract:

(A) Notify the applicant by sending a letter
or by verbal communication with the applicant by a person whose duties are
separate from the marketing area of the insurer, that the producer has
represented that copies of all sales material have been left with the applicant
in accordance with section 431:10D-503(d);

(B) Provide the applicant with a toll free
number to contact company personnel involved in the compliance function if such
is not the case; and

(3) Be able to produce a copy of the letter or other
verification in the policy file for at least five years after the termination
or expiration of the policy or contract. [L 2000, c 252, pt of §3; am L 2001, c
121, §4; am L 2004, c 122, §58]