41-1940. SUITABILITY OF ANNUITY SALES TO CONSUMERS. (1) In recommending to a consumer the purchase of an annuity or the exchange of an annuity that results in an insurance transaction or a series of insurance transactions, the insurance producer, or the insurer where no producer is involved, shall have reasonable grounds for believing that the recommendation is suitable for the consumer on the basis of the facts disclosed by the consumer as to the consumer’s investments and other insurance products and as to the consumer’s age, financial situation and needs.

(2) Prior to the execution of a purchase or exchange of an annuity resulting from a recommendation, an insurance producer, or an insurer where no producer is involved, shall make reasonable efforts to obtain information concerning:

(a) The consumer’s financial status;

(b) The consumer’s tax status;

(c) The consumer’s investment objectives; and

(d) Such other information used or considered to be reasonable by the insurance producer, or the insurer where no producer is involved, in making recommendations to the consumer.

(3) Neither an insurance producer, nor an insurer where no producer is involved, shall have any obligation to a consumer under this section related to any recommendation if a consumer:

(a) Refuses to provide relevant information requested by the insurer or insurance producer;

(b) Decides to enter into an insurance transaction that is not based upon a recommendation of the insurer or insurance producer; or

(c) Fails to provide complete and accurate information.

(4) This section shall not apply to recommendations involving:

(a) Direct response solicitations where there is no recommendation based upon information collected from the consumer;

(b) Contracts used to fund employee retirement or benefit plans established or maintained by an employer;

(c) Settlements of or assumptions of liabilities associated with personal injury litigation or any dispute or claim resolution process; or

(d) Contracts or transactions exempted pursuant to rules promulgated by the director, where the director has determined the protections of this law are not necessary.

(5) The director may promulgate rules pursuant to this section for the protection of consumers in annuity transactions.

(6) Nothing in this section shall be construed to create or imply a private cause of action for a violation of this section or rules promulgated pursuant to this section.

History:

[41-1940, added 2005, ch. 76, sec. 1, p. 256; am. 2008, ch. 202, sec. 1, p. 650.]