Connecticut General Statutes 38a-707a – Producer compensation. Disclosure and customer acknowledgment
(a) As used in this section:
Terms Used In Connecticut General Statutes 38a-707a
- Annuity: A periodic (usually annual) payment of a fixed sum of money for either the life of the recipient or for a fixed number of years. A series of payments under a contract from an insurance company, a trust company, or an individual. Annuity payments are made at regular intervals over a period of more than one full year.
- Beneficiary: A person who is entitled to receive the benefits or proceeds of a will, trust, insurance policy, retirement plan, annuity, or other contract. Source: OCC
- Commissioner: means the Insurance Commissioner. See Connecticut General Statutes 38a-702a
- Contract: A legal written agreement that becomes binding when signed.
- Insurance: means any of the lines of authority contained in this title. See Connecticut General Statutes 38a-702a
- Person: means an individual or a business entity. See Connecticut General Statutes 38a-702a
- Policy: means any document, including attached endorsements and riders, purporting to be an enforceable contract, which memorializes in writing some or all of the terms of an insurance contract. See Connecticut General Statutes 38a-1
- producer: means a person required to be licensed under the laws of this state to sell, solicit or negotiate insurance. See Connecticut General Statutes 38a-702a
- under common control with: means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract other than a commercial contract for goods or nonmanagement services, or otherwise, unless the power is the result of an official position with the person. See Connecticut General Statutes 38a-1
(1) “Affiliate” means a person who (A) controls, is controlled by, or is under common control with a producer, and (B) is permitted to receive compensation pursuant to this chapter;
(2) “Compensation from an insurer or other third party” means payments, commissions, fees, awards, overrides, bonuses, contingent commissions, loans, stock options, gifts, prizes or other forms of valuable consideration, whether or not payable pursuant to a written agreement;
(3) “Compensation directly from the customer” does not include any fee or amount allowed under § 38a-707 and regulations adopted pursuant to said section or any fee or amount collected by or paid to the producer that does not exceed an amount established by the commissioner pursuant to § 38a-707;
(4) “Customer” does not include a person whose only relationship to the producer or affiliate with respect to the placement of insurance is as (A) a participant or beneficiary of an employee benefit plan, or (B) a person covered under a group or blanket insurance policy or group annuity contract;
(5) “Documented acknowledgment” means the customer’s written consent, except that in the case of a purchase over the telephone or by electronic means for which written consent cannot reasonably be obtained, “documented acknowledgment” includes consent documented by the producer; and
(6) “Insurance producer” or “producer” means an insurance producer, as defined in § 38a-702a, except that “insurance producer” or “producer” does not include (A) a person such as a managing general agent, sales manager or wholesale broker who is licensed as an insurance producer and who acts only as an intermediary between an insurer and the customer’s producer, or (B) a reinsurance intermediary.
(b) If an insurance producer or affiliate of such producer receives any compensation directly from a customer for the initial placement of insurance, neither the producer nor the affiliate shall accept or receive any compensation from an insurer or other third party for that placement of insurance unless the producer has, prior to the time the policy is delivered to the customer:
(1) Obtained the customer’s documented acknowledgment that such compensation will be received by the producer or affiliate; and
(2) Disclosed the amount of compensation that the producer or affiliate will receive from the insurer or other third party for the placement, except that if the amount of compensation is not known at the time of disclosure, the producer shall disclose the specific method for calculating such compensation and, if possible, a reasonable estimate of the amount.
(c) Subsection (b) of this section shall not apply to:
(1) An insurance producer who (A) does not receive compensation directly from the customer for the placement of insurance, and (B) discloses to the customer prior to the time the policy is delivered to the customer:
(i) That the producer will receive compensation from an insurer in connection with that placement; or
(ii) That, in connection with that placement of insurance, the insurance producer represents the insurer and that the producer may provide services to the customer for the insurer;
(2) The placement of insurance in surplus lines or residual markets; or
(3) A producer whose sole compensation is derived from commissions or other remuneration from the insurer.