Citations Affected: IC 28-1-11-2.6.
Synopsis: Sale of insurance by financial institutions. Prohibits a
financial institution from including insurance premium expenses in the
primary credit transaction unless it has written consent from the
customer. Allows the commissioner of insurance to exempt a financial
institution under certain circumstances from the requirement of
maintaining physically separated premises for the sale of insurance.
Prohibits a financial institution from the following: (1) Rejecting an
insurance policy solely because the policy was sold by a person who is
not associated with the financial institution when the insurance is
required for a loan or extension of credit. (2) Requiring a debtor,
insurer, or insurance agent to pay a separate charge for insurance that
is required for the loan or extension of credit unless the charge is also
required when the financial institution provides the insurance. Requires
the financial institution to disclose to a consumer that the choice of an
insurance provider will not affect the credit decision or credit terms of
the transaction. Requires a person selling insurance at a financial
institution to keep separate records that must be made available for
Effective: July 1, 2001.
January 9, 2001, read first time and referred to Committee on Insurance and Financial
A BILL FOR AN ACT to amend the Indiana Code concerning
IS AMENDED TO READ AS
FOLLOWS [EFFECTIVE JULY 1, 2001]: Sec. 2.6. (a) As used in this
section, "financial institution" means a bank, a trust company, a savings
association (as defined in IC 28-15), a savings bank (as defined in
), a credit union (as defined in
industrial loan and investment company organized under IC 28-5, or a
(b) A financial institution that sells or offers for sale a life insurance policy or an annuity contract shall disclose to a person who seeks to purchase, or seeks an opinion or investment advice about, a life insurance policy or an annuity contract at least the following information:
(1) That the life insurance policy or annuity contract is not insured by the Federal Deposit Insurance Corporation or the National Credit Union Share Insurance Fund.
(2) That the life insurance policy or annuity contract is not a deposit to, obligation of, or being guaranteed by, the financial
(3) That some life insurance policies or annuity contracts are subject to investment risks, including possible loss of the principal amount invested.
(c) The disclosures required by subsection (b) must:
(1) be made in writing before or at the time of purchase of the life insurance policy or annuity contract; and
(2) be made orally or in writing during any sales presentation or when investment advice concerning a life insurance policy or an annuity contract is provided.
(d) At the time of the sale of a life insurance policy or an annuity contract, the financial institution must obtain from the purchaser a signed and dated statement containing the following acknowledgments:
(1) That the purchaser has received the disclosures required by subsection (b).
(2) That the purchaser has read the disclosures and understands them.
(e) An advertisement, a solicitation (including a solicitation contained in a periodic statement), promotional or sales material, or a sale confirmation notice that relates to a life insurance policy or an annuity contract sold or offered for sale by a financial institution must conspicuously disclose the information required by subsection (b).
(f) A financial institution may not:
(1) use information from a purchaser's personal financial statement for the purpose of selling or soliciting the purchase of life insurance; or
(2) provide information from a purchaser's personal financial statement to a third party for the purpose of the third party's sale or solicitation of the purchase of life insurance;
unless an insurance agent of the financial institution obtains the information directly from the purchaser.
(g) If a financial institution sells or solicits the sale of insurance on the premises of its principal office or a branch, the financial institution may sell or solicit the sale of insurance only in a location of the premises that is:
(1) physically separated and distinct from the banking activities of the financial institution; and
(2) clearly and conspicuously posted in a manner that easily indicates to the public that the location is separate and distinct from the banking activities of the financial institution.
(h) If a financial institution requires a person to obtain an insurance policy in connection with a non-insurance product or service, the
insurance transaction must be completed on a document separate from
the document or documents used to complete the transaction involving
the non-insurance product or service. Insurance premium expenses
may not be included in the primary credit transaction unless the
financial institution has the express written consent of the
(i) The commissioner of insurance may grant a waiver from the requirements under subsection (g) upon the written request of a financial institution if the financial institution can demonstrate the following:
(1) It is not reasonably possible to comply with subsection (g).
(2) The financial institution will take other steps to minimize the likelihood that the customer will be confused or coerced by the location on the financial institution's premises of the sale of the insurance by the financial institution.
(j) A financial institution may not do the following:
(1) Reject an insurance policy solely because the policy has been sold by a person who is not associated with the financial institution, or with any subsidiary or affiliate of the financial institution, when the insurance is required for a loan or extension of credit.
(2) Require any debtor, insurer, or insurance agent to pay a separate charge for the handling of insurance that is required for a loan, extension of credit, or any other banking product, unless the charge would be required when the financial institution, or any subsidiary or affiliate of the financial institution, is the licensed insurance agent providing the insurance.
(k) When a consumer's application for a loan or other extension of credit is:
(1) pending and insurance is solicited or offered for sale to the customer; or
(2) insurance is required for the loan or extension of credit by the financial institution;
the financial institution must provide the consumer with a written disclosure that states that the consumer's choice of an insurance provider will not affect the financial institution's credit decision or the credit terms, except that the financial institution may impose reasonable requirements concerning the creditworthiness of the insurance provider and scope of insurance chosen by the consumer.
(l) A person licensed to sell or solicit insurance on a financial institution's premises shall maintain separate books and records
relating to any insurance transaction. These records must include
any complaint made by a consumer concerning an insurance
(m) All books and records kept under subsection (l) must be made available for inspection by the insurance commissioner or the commissioner's duly authorized designee upon reasonable notice.