Code of Vermont Rules
Agency 21 - DEPARTMENT OF FINANCIAL REGULATION
Sub-Agency 020 - INSURANCE DIVISION
Chapter 060 - REGULATION I-2007-01, BUSINESS ENTITY LIMITED LINES PRODUCER LICENSE FOR CREDIT INSURANCE
Section 21 020 060 - REGULATION I-2007-01, BUSINESS ENTITY LIMITED LINES PRODUCER LICENSE FOR CREDIT INSURANCE
Universal Citation: VT Code of Rules 21 020 060
Current through August, 2024
Section 1 Authority
This Regulation is promulgated under the authority granted to the Commissioner of the Department of Banking, Insurance, Securities and Health Care Administration by 8 V.S.A. §§ 15, 4813a(6) and 4813f(b).
Section 2 Purpose
The purpose of this Regulation is to establish a Business Entity Limited Lines Producer License for the sale of Credit Insurance and to set forth requirements for the sale of Credit Insurance by a Business Entity Limited Lines Credit Insurance Producer and its employees and representatives.
Section 3 Scope
This Regulation governs the sale, solicitation and negotiation of Credit Insurance by a Business Entity Limited Lines Credit Insurance Producer and its employees and representatives.
Section 4 Definitions
As used in this Regulation:
A. "Business Entity" means a corporation,
association, partnership, limited liability company, limited liability
partnership or other legal entity.
B. "Business Entity Limited Lines Producer
License" means the license issued to a Business Entity pursuant to this
Regulation.
C. "Business Entity
Limited Lines Credit Insurance Producer" means a Business Entity licensed under
this Regulation to sell, solicit or negotiate Credit Insurance.
D. "Credit Insurance" means credit life,
credit disability, credit property, credit unemployment, involuntary
unemployment, mortgage life, mortgage disability, and guaranteed automobile
protection (gap) insurance, which are hereby designated as forms of limited
line Credit Insurance for purposes of this Regulation, and any other form of
insurance offered to a consumer in connection with an extension of credit to
such consumer that is limited to partially or wholly extinguishing such credit
obligation and which the Commissioner designates as a form of limited line
Credit Insurance for purposes of this Regulation. For purposes of this
Regulation, "Credit Insurance" shall not include Private Mortgage Insurance
("PMI").
E. "Designated Responsible
Licensed Producer" means a natural person described in Section
6(B)
of this Regulation.
F. "Insurer"
means any insurance company licensed to offer, sell or negotiate Credit
Insurance in this state.
G.
"Insurance Producer" means a natural person required to be licensed under the
laws of this state to sell, solicit or negotiate insurance.
H. "Limited Lines Credit Insurance Producer"
means a natural person licensed pursuant to Insurance Division Regulation
I-2007-02 to sell, solicit or negotiate Credit Insurance.
Capitalized terms not defined in this Regulation shall have the meaning set forth in 8 V.S.A. § 4813a.
Section 5 General Requirements
A. The Commissioner hereby determines that
the solicitation, sale and negotiation of Credit Insurance in this state does
not require the professional competency of a licensed Insurance Producer and
that an individual involved in such activities shall be subject to the
requirements of this Regulation unless such individual is licensed as an
Insurance Producer or as a Limited Lines Credit Insurance Producer.
B. No person, including an officer, director,
employee or representative of a Business Entity, shall sell, solicit or
negotiate Credit Insurance unless:
(i) that
person is licensed as an Insurance Producer or as a Limited Lines Credit
Insurance Producer, or
(ii) such
Business Entity and person are in compliance with the requirements of this
Regulation.
C. The
Commissioner may issue to a Business Entity that has complied with the
requirements of this Regulation, a Business Entity Limited Lines Producer
License authorizing the Business Entity to act as a Business Entity Limited
Lines Credit Insurance Producer subject to the provisions of this Regulation in
connection with the solicitation, sale or negotiation of Credit
Insurance.
Section 6 Licensing
To obtain a Business Entity Limited Lines Credit Insurance Producer license, a Business Entity shall:
A. Submit to the Commissioner an application
and fees for licensure as required under 8 V.S.A. Chapter 131. Such application
must be signed by an officer of the Business Entity;
B. Have designated a Designated Responsible
Licensed Producer for each Insurer referenced in Section
6(C):
1. who is a natural person;
2. who is a full-time supervisor or an owner
of the Business Entity;
3. who is
appointed as an agent of each Insurer referenced in Section
6(C)
of this Regulation;
4. who is
responsible for the Business Entity's compliance with the insurance laws of
this state as a Business Entity Limited Lines Credit Insurance Producer;
and
5. who is licensed as an
Insurance Producer or a Limited Lines Credit Insurance Producer and who has
certified on a form prepared by the Commissioner that he/she understands the
requirements of this Regulation, has read the provisions of this Regulation,
and has complied with all other applicable requirements set forth in 8 V.S.A.
Chapter 131.
C. Submit to
the Commissioner a certificate by each appointing Insurer, stating that the
Insurer has satisfied itself that the Business Entity applicant is trustworthy
and competent to act as its Credit Insurance agent; that the Insurer has
provided training and education in conformity with the requirements set forth
in Section 7(C) of this Regulation, and that the Insurer will appoint the
applicant to act as its agent for the solicitation, sale or negotiation of
Credit Insurance. An officer of the Insurer shall execute the certification;
and
D. Be appointed by an Insurer
to act as its agent.
Section 7 Employees and Representatives of the Business Entity
A. An employee or representative of a
Business Entity Limited Lines Credit Insurance Producer is authorized to sell,
solicit or negotiate Credit Insurance under the authority of the Business
Entity Limited Lines Credit Insurance Producer License, without such person
being individually licensed as an Insurance Producer or a Limited Lines Credit
Insurance Producer, if all of the following conditions have been satisfied:
1. The employee or representative is 18 years
of age or older;
2. The Business
Entity has taken reasonable steps to ensure the employee or representative is
competent and trustworthy;
3. The
employee or representative has completed a training and education program
consistent with the requirements of this Regulation; and
4. The employee or representative complies
with the requirements of this Regulation.
B. A Business Entity Limited Lines Credit
Insurance Producer, the Designated Responsible Licensed Producer and the
appointing Insurer are responsible for all actions of the Business Entity's
employees and representatives relating to the sale, solicitation or negotiation
of Credit Insurance. The conduct of an employee or representative related to
insurance shall be deemed to be the conduct of the Business Entity, the
Designated Responsible Licensed Producer and the appointing Insurer for
purposes of this Regulation.
C.
Each appointing Insurer of the Business Entity Limited Lines Credit Insurance
Producer shall provide a training and education program for each employee and
representative of the Business Entity prior to allowing such person to sell,
solicit or negotiate Credit Insurance pursuant to this Regulation. The training
and education program shall meet the following minimum standards:
1. Include instruction about the kinds of
insurance subject to this Regulation that are offered for sale by the Business
Entity;
2. Provide training about
the requirements and limitations imposed on a Business Entity Limited Lines
Credit Insurance Producer and its employees and representatives. This training
shall include specific instruction that the employee or representative is
prohibited by law from making any statement or engaging in any conduct, express
or implied, that would lead a consumer to believe:
a. That the purchase of Credit Insurance is
required for a consumer to make a purchase or obtain financing;
b. That the consumer does not already have
insurance policies in place that provide the coverage being offered;
or
c. That the employee or
representative is qualified to evaluate the adequacy of the consumer's existing
insurance coverage, including but not limited to whether the consumer has
coverage with respect to the purchase or financing transaction at
issue;
3. Provide
comprehensive training about the product to be sold by an employee or
representative, including insurance coverages and terms, any coverage
limitations or exclusions, pricing, underwriting requirements and for whom such
product is suitable or unsuitable.
D. At the time of application for Credit
Insurance an employee or representative must provide the following information
to a consumer, in writing, in a format and manner established and approved by
the appointing Insurer:
1. The purpose of the
proposed coverage;
2. Proposed
coverage amounts;
3. Cost of
coverage (which may be expressed in terms of the total cost of the proposed
coverage or in terms of the unit cost of coverage relative to various dollar
amounts of a loan or purchase) and the availability of refunds, if
applicable;
4. Name of the
Insurer;
5. Any limitations or
exclusions of the proposed coverage;
6. Any underwriting requirements, including
pre-existing condition limitations or eligibility requirements;
7. A statement whether an application is
accepted and coverage is effective upon receipt of a completed application by
the employee or representative or, if not, when and how the consumer will be
told whether an application is accepted and when coverage is
effective;
8. A certificate of
coverage or other evidence of coverage if available, or a copy of the
application for insurance or other receipt if evidence of coverage is not
available; and
9. A description of
the process for filing a claim, including a toll-free number for the Insurer to
report a claim.
If the consumer applies for Credit Insurance through a medium other than applying in writing, the foregoing information may be provided to the consumer in compliance with Title 9 V.S.A., Chapter 20.
E. For purposes of this
Regulation, an employee or representative shall not be deemed to be engaged in
the sale, solicitation or negotiation of Credit Insurance if the employee or
representative's activities with respect to Credit Insurance are limited to
referral of a customer to the Designated Responsible Licensed Producer, to a
licensed Insurance Producer, or to an employee qualified under this Section 7
of this Regulation, without any discussion of insurance coverage terms and
conditions.
Section 8 Business Entity Limited Lines Credit Insurance Producer Requirements
No insurance may be offered, sold, solicited or negotiated pursuant to this Regulation unless:
A.
At every location where a Business Entity Limited Lines Credit Insurance
Producer sells Credit Insurance, the Business Entity provides brochures or
other written materials to each consumer applying for Credit Insurance, prior
to sale, which clearly, conspicuously and in plain language:
1. Summarize the material terms, exclusions,
limitations and conditions of coverage, including the identity of the
Insurer;
2. Describe the process
for filing a claim, including a toll-free telephone number of the Insurer to
report a claim;
3. Inform the
consumer that the purchase by applicant of Credit Insurance is not required to
make a purchase or to obtain financing; and
4. Inform the consumer that neither the
Business Entity Limited Lines Credit Insurance Producer nor the Business
Entity's employees and representatives are qualified to evaluate the adequacy
of the consumer's existing insurance coverages, unless an employee or
representative is a licensed Insurance Producer.
B. All costs for the Credit Insurance are
separately itemized in any loan or purchase documents and agreements.
C. For transactions conducted by electronic
means, the Business Entity Limited Lines Credit Insurance Producer must
prominently notify the consumer of the availability of the brochures or other
written materials required by this Regulation and ensure the consumer can
readily access them.
D. If the
Business Entity is not authorized to underwrite and bind coverage on behalf of
the Insurer, every application for Credit Insurance shall be forwarded to the
Insurer within fifteen (15) business days of receipt by the Business Entity. If
the Business Entity is authorized to underwrite and bind coverage on behalf of
the Insurer, every application for Credit Insurance shall be forwarded to the
Insurer within sixty (60) business days of receipt by the Business
Entity.
Section 9 Business Entity Limited Lines Credit Insurance Producer Prohibitions
A Business Entity Limited Lines Credit Insurance Producer shall not:
A. Advertise, represent, or
otherwise portray itself or any of its employees or representatives as licensed
Insurance Producers, other than an employee or representative who is a licensed
Insurance Producer;
B. Pay any
employee or representative of the Business Entity Limited Lines Credit
Insurance Producer a commission for the sale of Credit Insurance unless such
person is a licensed Insurance Producer or a Limited Lines Credit Insurance
Producer.
Section 10 Trust Accounts
A. A Business Entity Limited
Lines Credit Insurance Producer shall establish trust accounts for moneys
collected from applicants purchasing Credit Insurance in accordance with the
requirements of Regulation 95-1, Trust Accounts.
B. Any money held in trust for a consumer
shall be paid to such consumer within thirty-five (35) business days of
receipt. Any money held in trust for an Insurer shall be paid to such Insurer
within thirty-five (35) business days of receipt, unless the Business Entity
and the Insurer have agreed to a different time period.
C. In the case of a Business Entity that is a
federally insured depository institution, for purposes of applying Regulation
95-1:
1. a "trust account" shall mean a
separately stated account as shown on the Business Entity's annual audited
financial statements; a "trust account" shall not mean a "financial
account";
2. the Business Entity
shall not be precluded from commingling funds credited to the trust account
with any other non-segregated funds held by the Business Entity;
3. a "deposit" to a trust account shall mean
that the Business Entity credits the trust account with the amount of funds
accepted by the Business Entity as a third-party recipient; and
4. a "withdrawal" or "transfer" from a trust
account shall mean that the Business Entity debits the trust account by the
amount of funds to be removed from the trust account.
Section 11 Record Retention
A Business Entity Limited Lines Credit Insurance Producer shall comply with all record retention requirements set forth in Regulation 99-1, Record Retention. Each Business Entity shall keep records of the transactions under the license granted pursuant to this Regulation.
Section 12 Effective Date
This Regulation shall take effect on May 1, 2008.
Disclaimer: These regulations may not be the most recent version. Vermont may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.
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