628.347(2)(dm)
(dm) An insurance intermediary, or insurer if no intermediary is involved, shall at the time of sale do all of the following:
628.347(2)(dm)2.
2. Obtain a customer-signed statement documenting a customer's refusal, if any, to provide suitability information.
628.347(2)(dm)3.
3. If a customer decides to enter into an annuity transaction that is not based on the insurance intermediary's or insurer's recommendation, obtain a customer-signed statement acknowledging that the annuity transaction is not recommended by the intermediary or insurer.
Effective date note
NOTE: Sub. (2) is shown as affected eff. 5-1-11 by
2009 Wis. Act 343. Prior to 5-1-11 it reads:
Effective date text
(2) Duties of insurers and insurance intermediaries with regard to recommendations. (a) Except as provided in par. (c), an insurance intermediary, or insurer if no intermediary is involved, may not recommend to a consumer the purchase or exchange of an annuity if the recommendation results in an insurance transaction or series of insurance transactions unless the intermediary or insurer has reasonable grounds to believe that the recommendation is suitable for the consumer on the basis of facts disclosed by the consumer as to his or her investments, other insurance products, and financial situation and needs.
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(b) Before making a recommendation described in par. (a), an insurance intermediary, or insurer if no intermediary is involved, shall make reasonable efforts to obtain information concerning all of the following:
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1. The consumer's financial status.
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2. The consumer's tax status.
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3. The consumer's investment objectives.
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4. Any other information that is reasonably appropriate for determining the suitability of a recommendation to the consumer.
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(c) An insurance intermediary, or insurer if no intermediary is involved, has no obligation under par. (a) to a consumer related to a recommendation if the consumer does any of the following:
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1. Refuses to provide relevant information requested by the insurer or insurance intermediary.
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2. Fails to provide complete or accurate information.
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3. Decides to enter into an insurance transaction that is not based on a recommendation of the insurer or insurance intermediary.
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(d) Any recommendation of an insurer or insurance intermediary that, under par. (c), is not subject to the obligation under par. (a) shall be reasonable under all circumstances actually known to the insurer or insurance intermediary at the time the recommendation is made.
628.347(3)
(3) Insurer's supervisory responsibility. 628.347(3)(a)(a) An insurer shall establish a supervision system that is reasonably designed to achieve the insurer's and its insurance intermediaries' compliance with this section. Under the system, the insurer shall do at least all of the following:
628.347(3)(a)1.
1. Maintain reasonable procedures to inform its insurance intermediaries of the requirements of this section and incorporate the requirements of this section into relevant insurance intermediary training manuals.
628.347(3)(a)2.
2. Establish standards for insurance intermediary product training and maintain reasonable procedures to require its insurance intermediaries to comply with the requirements of
sub. (4m).
628.347(3)(a)3.
3. Provide product-specific training and training materials that explain all material features of its annuity products to its insurance intermediaries.
628.347(3)(a)4.
4. Maintain procedures for review of each recommendation before issuance of an annuity that are designed to ensure that there is a reasonable basis to determine that a recommendation is suitable. An insurer's procedures may apply a screening system for the purpose of identifying selected transactions for additional review. An insurer's procedures may be accomplished electronically or through other means, including physical review. An electronic or other system may be designed to require additional review only of those transactions identified for additional review by the selection criteria.
628.347(3)(a)5.
5. Maintain reasonable procedures to detect recommendations that are not suitable, which may include confirmation of consumer suitability information, systematic customer surveys, interviews, confirmation letters, and programs of internal monitoring. Nothing in this subdivision prevents an insurer from complying with this subdivision by applying sampling procedures or by confirming suitability information after issuance or delivery of the annuity, or both.
628.347(3)(a)6.
6. Annually provide a report to senior management, including to the senior manager responsible for audit functions, that details a review, with appropriate testing, that is reasonably designed to determine the effectiveness of the supervision system, the exceptions found, and corrective action taken or recommended, if any.
628.347(3)(b)1.1. Nothing in this subsection restricts an insurer from contracting for the performance of a function required [under]
par. (a), including maintenance of procedures. An insurer is responsible for taking appropriate corrective action and may be subject to, sanctions and penalties under
subs. (5) and
(6), regardless of whether the insurer contracts for the performance of a function and regardless of the insurer's compliance with
subd. 2.
628.347 Note
NOTE: A missing word is shown in brackets. Corrective legislation is pending.
628.347(3)(b)2.
2. An insurer's supervision system under
par. (a) shall include supervision of any contractual performance under this subsection, including all of the following:
628.347(3)(b)2.a.
a. Monitoring and, as appropriate, conducting audits to ensure that the contracted function is properly performed.
628.347(3)(b)2.b.
b. 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.
628.347(3)(c)
(c) An insurer is not required to include in its system of supervision an insurance intermediary's recommendations to consumers of products other than the annuities offered by the insurer.
Effective date note
NOTE: Sub. (3) is shown as repealed and recreated eff. 5-1-11 by
2009 Wis. Act 343. Prior to 5-1-11 it reads:
Effective date text
(3) Insurer's supervisory responsibility. (a) An insurer either shall ensure that a system to supervise recommendations that is reasonably designed to achieve compliance with this section is established and maintained by complying with pars. (c) to (e), or shall establish and maintain such a system, which shall include at least all of the following:
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1. Maintaining written procedures.
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2. Conducting periodic reviews of its records that are reasonably designed to assist in detecting and preventing violations of this section.
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(b) A general agent or independent agency either shall adopt a system established by an insurer to supervise recommendations of its insurance intermediaries that is reasonably designed to achieve compliance with this section, or shall establish and maintain such a system, which shall include at least all of the following:
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1. Maintaining written procedures.
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2. Conducting periodic reviews of records that are reasonably designed to assist in detecting and preventing violations of this section.
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(c) An insurer may contract with a 3rd party, which may be a general agent or independent agency, to establish and maintain a system of supervision as required under par. (a) with respect to insurance intermediaries under contract with or employed by the 3rd party.
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(d) An insurer shall make reasonable inquiry to ensure that any 3rd party with which the insurer contracts under par. (c) is performing the functions required under par. (a) and shall take such action as is reasonable under the circumstances to enforce the contractual obligation to perform the functions. An insurer may comply with its obligation to make reasonable inquiry in all of the following ways:
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1. The insurer annually obtains from a senior manager of the 3rd party who has responsibility for the delegated functions a representation that the 3rd party is performing the required functions and that the senior manager has a reasonable basis for making the representation.
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2. The insurer, based on reasonable selection criteria, periodically selects 3rd parties contracting under par. (c) for reviews to determine whether the 3rd parties are performing the required functions. The insurer shall perform those procedures to conduct the reviews that are reasonable under the circumstances.
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(e) An insurer that contracts with a 3rd party under par. (c) and that complies with the supervisory requirement under par. (d) satisfies its responsibilities under par. (a) as to insurance intermediaries under contract with or employed by the 3rd party.
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(f) An insurer is not required under par. (a), and a general agent or independent agency is not required under par. (b), to do any of the following:
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1. Review, or provide for the review of, all insurance intermediary solicited transactions.
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2. Include in its system of supervision an insurance intermediary's recommendations made to consumers of products other than annuities offered by the insurer, general agent, or independent agency.
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(g) A general agent or independent agency contracting with an insurer under par. (c) shall promptly, upon request by the insurer under par. (d), provide a representation as described in par. (d) 1. or give a clear statement that it is unable to meet the representation criteria.
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(h) No person may provide a representation under par. (d) 1. unless the person satisfies all of the following:
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1. The person is a senior manager with responsibility for the delegated functions.
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2. The person has a reasonable basis for making the representation.
628.347(3m)
(3m) Prohibited acts of intermediary. An insurance intermediary may not dissuade, or attempt to dissuade, a consumer from doing any of the following:
628.347(3m)(a)
(a) Truthfully responding to an insurer's request for confirmation of suitability information.
628.347(4)
(4) Financial Industry Regulatory Authority rules. 628.347(4)(a)(a) Subject to
pars. (b) and
(c), sales made in compliance with FINRA requirements pertaining to suitability and supervision of annuity transactions satisfy the requirements under this section. Nothing in this subsection, however, limits the commissioner's ability to enforce this section, including conducting any investigation necessary for that enforcement.
628.347(4)(b)
(b) For
par. (a) to apply, an insurer must do all of the following:
628.347(4)(b)1.
1. Monitor the FINRA member broker-dealer using information collected in the normal course of an insurer's business.
628.347(4)(b)2.
2. Provide to the FINRA member broker-dealer information and reports that are reasonably appropriate to assist the FINRA member broker-dealer to maintain its supervision system.
628.347(4)(c)
(c) This subsection applies to FINRA broker-dealer sales of variable annuities and fixed annuities if the suitability and supervision are similar to those applied to variable annuity sales.
Effective date note
NOTE: Sub. (4) is shown as affected eff. 5-1-11 by
2009 Wis. Act 343. Prior to 5-1-11 it reads:
Effective date text
(4) National Association of Securities Dealers Conduct Rules. Compliance with the National Association of Securities Dealers Conduct Rules pertaining to suitability satisfies the requirements under sub. (2) for the recommendation of variable annuities. Nothing in this subsection, however, limits the commissioner's ability to enforce this section.
628.347(4m)(a)(a) An insurance intermediary may not solicit the sale of an annuity product unless the insurance intermediary has adequate knowledge of the product to recommend the annuity and the insurance intermediary is in compliance with the insurer's standards for product training. An insurance intermediary may rely on insurer-provided product-specific training standards and materials to comply with this paragraph.
628.347(4m)(b)1.a.a. An insurance intermediary who engages in the sale of annuity products shall complete a one-time training course approved by the commissioner and provided by an education provider approved by the commissioner.
628.347(4m)(b)1.b.
b. Insurance intermediaries who hold a life insurance line of authority on May 1, 2011, and who desire to sell annuities must complete the requirements of this paragraph within 6 months after May 1, 2011. Individuals who obtain a life insurance line of authority on or after May 1, 2011, may not engage in the sale of annuities until they have completed the annuity training course required under this paragraph.
628.347(4m)(b)2.
2. The minimum length of the training required under this paragraph shall be sufficient to qualify for at least 4 continuing education credits, but may be longer.
628.347(4m)(b)3.
3. The training required under this paragraph shall include information on all of the following topics:
628.347(4m)(b)3.c.
c. How fixed, variable, and indexed annuity contract provisions affect consumers.
628.347(4m)(b)3.d.
d. The application of income taxation of qualified and non-qualified annuities.
628.347(4m)(b)3.f.
f. Appropriate sales practices and replacement and disclosure requirements.
628.347(4m)(b)4.
4. Providers of annuity training courses intended to comply with this paragraph shall cover all of the topics listed under
subd. 3. and may not present any marketing information or provide training on sales techniques or provide specific information about a particular insurer's products. Additional topics may be offered in conjunction with and in addition to those listed under
subd. 3.
628.347(4m)(b)5.
5. A provider of an annuity training course intended to comply with this paragraph shall register as a continuing education provider in this state and comply with the rules and guidelines applicable to insurance intermediary continuing education courses as set forth in rules of the office governing intermediary continuing education requirements.
628.347(4m)(b)6.
6. Annuity training courses may be conducted and completed by classroom or self-study methods in accordance with rules of the office governing intermediary continuing education requirements.
628.347(4m)(b)7.
7. Providers of annuity training shall comply with the reporting requirements and shall issue certificates of completion in accordance with rules of the office governing intermediary continuing education requirements.
628.347(4m)(b)8.
8. Satisfaction of the training requirements of another state that are substantially similar to the requirements of this paragraph satisfies the training requirements of this paragraph in this state.
628.347(4m)(b)9.
9. An insurer shall verify that an insurance intermediary has completed the annuity training course required under this paragraph before allowing the intermediary to sell an annuity product for that insurer. An insurer may satisfy its responsibility under this subdivision by obtaining certificates of completion of the training course or obtaining reports provided by commissioner-sponsored database systems or vendors or from a reasonably reliable commercial database vendor that has a reporting arrangement with approved insurance education providers.
628.347(5)
(5) Compliance; remedial measures. An insurer is responsible for compliance with this section. If a violation occurs, either because of the action or inaction of the insurer or its insurance intermediary, the commissioner may do any of the following:
Effective date note
NOTE: Sub. (5) (intro.) is shown as amended eff. 5-1-11 by
2009 Wis. Act 343. Prior to 5-1-11 it reads:
Effective date text
(5) Remedial measures. The commissioner may do any of the following:
628.347(5)(a)
(a) Order an insurer to take reasonably appropriate corrective action for any consumer harmed by a violation of this section by the insurer or the insurer's insurance intermediary.
628.347(5)(b)
(b) Order an insurance intermediary to take reasonably appropriate corrective action for any consumer harmed by a violation of this section by the insurance intermediary.
