Each insurer shall:
(a) Inform its personnel responsible for
compliance with this Regulation of the requirements of this
Regulation;
(b) Require with or as
a part of each completed application for insurance a statement signed by the
applicant as to whether such proposed insurance will replace existing
insurance;
(c) Where a replacement
is proposed by an insurer in the solicitation of a direct-response sale or it
is known by the insurer on the date of application that a replacement will
occur:
(i) Provide the applicant or
prospective applicant with or as part of the
application the "Replacement Notice" (Exhibit A), or other
substantially similar form approved by the commissioner, with the request that
the applicant properly complete, sign and return a copy of the Notice with the
application. In these instances the insurer may delete the references to the
producer, including the producer's signature, and references not applicable to
the product being sold or replaced, without having to obtain approval of the
form from the commissioner. The "Replacement Notice" shall include any
applicable surrender charges of the new policy being replaced, any sales
charges applicable to the policy being purchased, and any surrender periods
and/or charges applicable to the new policy being purchased.
(ii) Send to the existing insurer at its home
office within three (3) working days of the date the Notice is received, a copy
of the Notice advising of the replacement or proposed replacement of existing
insurance. Forwarding of the Notice is not required if the replacing insurer
and existing insurer are one and the same in name and direct management
control;
(iii) Maintain copies of
the Notice, all written communications with respect to replacement, and a
replacement register, cross-indexed by existing insurer to be replaced, for at
least three (3) years or until the conclusion of the next regular examination
by the Insurance Department of its state of domicile, whichever is
later;
(iv) Provide the applicant
with a right to an unconditional refund of all premiums paid, which right may
be exercised within a thirty (30) day period of delivery of the policy or
contract.
(d) Where no
replacement is proposed by an insurer in the solicitation of a direct-response
sale and a Replacement Notice was not included with or as part of the
application and returned to the insurer, but it is indicated on the application
that a replacement might occur and the insurer plans to issue a policy:
(i) Suspend the application process for no
longer than ten (10) days;
(ii)
Provide the applicant with the Replacement Notice within three (3) days after
receipt of the application;
(iii)
Request that the applicant properly complete, sign and return a copy of the
Notice within five (5) days; and
(iv) Continue the process as outlined in
Sections 8(c)(ii) through 8(c)(iv). However, the insurer may continue the
application process after ten (10) days from receipt of application even if a
copy of the Notice has not been received.
