Wyo. Code R. 021-0002-16
Banking Division
Chapter 16: Bank Sales of Ins. and Annuities
Effective Date: 09/29/1997 to 10/02/2001
Rule Type: Superceded Rules & Regulations
Reference Number: 021.0002.16.09291997
Section 1. Authority. The state banking commissioner is authorized by W.S. 13-3-704 to adopt rules to implement and administer the laws governing financial institutions, and to authorize state banks to engage in banking activities in which national banks are authorized to engage.
(a) The Office of the Comptroller of the Currency has determined that national banks in any place with a population not exceeding 5,000 people may act as agents for any fire, life, or other insurance company pursuant to the authority set forth in 12 USC 92. The state banking commissioner has determined state banks located in any place with a population not exceeding 5,000 people should be authorized to act as agents for any fire, life, or other insurance company to ensure that state banks may maintain an equal competitive position with national banks.
(b) The Office of the Comptroller of the Currency has determined that national banks may sell annuities pursuant to the authority set forth in 12 USC 24 (Seventh). The state banking commissioner has determined state banks should be authorized to sell annuities to ensure that state banks may maintain an equal competitive position with national banks.
(c) These rules provide minimum requirements for state banks that act as agents for any fire, life, or other insurance company. Sales of insurance and annuities must be conducted in such a manner as to avoid misleading or confusing the bank's customers and must be consistent with safe and sound banking practices. The state banking commissioner may require that practices deemed to be misleading or confusing to customers, or that violate the principles of safety and soundness for prudent and safe banking, be changed or terminated.
(a) As used in this chapter:
(i) 'Agent' means a person registered, licensed and qualified under the Wyoming Insurance Code, W.S. 26-1-101 to 26-48-112 (1996), as amended, and the regulations of the appropriate state regulatory agencies, to act as an agent in the sale of insurance;
(ii) 'Annuity' has the meaning set forth in W.S. 26-1-102, and includes any insurance or endowment policy or annuity contract under which an insurance company promises to pay money either in a lump sum or periodically for life or for some other specified period.
(iii) 'Bank', unless specifically stated otherwise, means a corporation chartered as a bank under the laws of Wyoming;
(iv) “Bank-related sale” means and includes the sale of insurance or annuities directly by a bank employee, by a shared employee, or by a contract agent occurring on bank premises, or any sale solicited by mail from bank premises, or any sale resulting from referral of a bank customer for which the bank or a bank employee receives a benefit or compensation;
(v) “Bank insurance agent” means a bank employee who is a properly licensed agent qualified to sell insurance in Wyoming and who sells insurance or annuities on bank premises on behalf of the bank insurance agency.
(vi) “Contract agent” means a firm or corporation, or any representative agent thereof, properly licensed and qualified to sell insurance and annuities in Wyoming, that has entered into an agreement with a bank to sell insurance and/or annuities to bank customers on bank premises.
“FDIC” means the federal deposit insurance corporation;
“FRB” means the board of governors of the federal reserve banking system;
“Insurance” has the meaning set forth in W.S. 26-1-102.
“OCC” means the federal office of the comptroller of the currency;
(xi) “Shared employee” means a person who engages in activities or performs services for customers as a bank employee and as a licensed agent selling insurance and/or annuities on bank premises on behalf of a contract agent;
(a) A bank in any place with a population not exceeding 5,000 people, as shown by the last preceding decennial census, is authorized to act as an agent for any fire, life, or other insurance company, subject to full compliance with all state and federal laws, rules, and regulations applicable to a bank-related sale of insurance.
(b) A bank in any place within Wyoming, regardless of population, is authorized to sell annuities, subject to full compliance with all state and federal law, rules and regulations applicable to a bank-related sale of annuities.
(c) Insurance and/or annuities may be provided directly by the bank insurance agency through employees of the bank who are licensed agents, or under a contract for services with a properly licensed agent qualified to sell insurance in this state, pursuant to the Wyoming Insurance Code, W.S. 26-9-101 to 26-9-142 (1996), as amended, and the rules and regulations of the state insurance department.
(d) All bank-related sales of insurance and annuities shall be in accordance with the Wyoming Insurance Code, W.S. 26-1-101 to 26-48-112 (1996), as amended, and rules and regulations of the state insurance department.
(e) A bank shall file a notice of intent to act as an insurance agent with the state banking commissioner prior to acting as an agent for an insurance company.
(f) A bank shall not be an insurance company and shall not underwrite insurance products or pay insurance claims.
(a) A bank insurance agent or a contract agent shall not require or induce a customer to purchase insurance or annuities offered by the bank insurance agency or contract agent as a prerequisite to obtaining credit or from offering a banking product or service, or fix or vary the conditions of such offers, on a condition or requirement that the customer obtain insurance or annuities from the bank insurance agency, or any particular insurance seller. A bank insurance agent or a contract agent shall not require or imply that the purchase of an insurance or annuities from a bank insurance agency or contract agent by a customer or a prospective customer of the bank is required as a condition of, or is in any way related to, the lending of money, or the establishment or maintenance of a trust account, the establishment or maintenance of a checking or savings account, or other deposit account, or the provision of services related to any such activities.
(b) A bank insurance agent or a contract agent may inform a customer that insurance is required in order to obtain a loan or that loan approval is contingent on the customer obtaining acceptable insurance, and that insurance is available from the bank insurance agency or the contract agent. If a bank insurance agent or a contract agent provides such information to a customer, the bank insurance agent or a contract agent also shall inform the customer:
(i) That he or she need not purchase the insurance from the bank insurance agency, the contract agent, or any particular affiliated or unaffiliated third party;
(ii) That insurance is available through brokers or agents other than the bank insurance agency or contract agent; and,
(iii) That the customer’s choice of insurance provider will not affect the bank’s credit decision or credit terms in any way.
(c) A bank insurance agent or a contract agent shall maintain written documentation of the information and disclosures provided to a customer under subsection (b) of this section.
(a) If a bank insurance agent sells insurance or annuities on bank premises, the directors shall adopt written policies and procedures for evaluating comparative risks posed by offered insurance or annuities and for ensuring that the policies offered are suitable for the customer.
(b) The bank procedures shall require that any bank insurance agent shall obtain sufficient information to make a reasoned judgment about the suitability of policies for each customer. At a minimum, before making recommendations, inquiries shall be made and responses documented concerning the customer’s coverage objectives and specific instructions.
(c) The bank procedures shall include a system for monitoring compliance with customer coverage goals and instructions. A bank insurance agent may sell an insurance policy or an annuity to a customer at the customer’s request, notwithstanding the policy is inconsistent with the bank insurance agent’s recommendation, but the bank insurance agent shall document the recommendation.
(d) If a bank insurance agent sells insurance or annuities on bank premises, the bank insurance agent shall forward any customer complaints arising from any bank-related sale to the state insurance commissioner, the state banking commissioner, and the bank.
(a) The bank may contract to lease a portion of the bank premises to a licensed agent to sell insurance or annuities to bank customers. Insurance or annuities may be sold exclusively by the agent, or by a shared employee of the bank and the agent as long as the shared employee is a licensed agent. Any such contract between the bank and a contract agent shall be approved by the board of directors of the bank.
(b) If insurance or annuities sales are provided on bank premises by contract with a licensed agent, the contract shall be in writing and, at a minimum, shall provide:
(i) A description of the duties and responsibilities of the parties;
(ii) A description of permissible activities by the contract agent on the institution’s premises, and the terms and conditions of use of the institution’s space, personnel and equipment;
(iii) That all representatives of the contract agent engaged in selling insurance or annuities on the bank premises, including shared employees, if any, shall be properly licensed as required by all applicable Wyoming insurance law and rules and regulations of the state insurance department;
(iv) That the contract agent shall provide written policies and procedures for evalu- ating comparative risks posed by offered insurance or annuities and for ensuring that the policies offered are suitable for the customer;
(v) That the contract agent shall provide written policies and procedures stating the standardized insurance or annuities advice to be provided to customers by shared employees;
(vi) That the contract agent shall provide written policies and procedures stating prohibited and permissible activities for non-participating bank employees, and that the bank shall ensure such policies are provided to each employee;
(vii) That shared employees shall have written employment contracts with the contract agent, approved by the bank;
(viii) the compensation arrangements for shared employees;
(ix) That the bank may monitor and periodically review the activities and transactions of the contract agent and its representatives to ensure compliance with the agreement;
(x) That the institution, the appropriate banking regulatory authority and the state insurance department shall have access to such records of any agent as are necessary or appropriate to evaluate compliance with the agreement and that the assets and records of the bank and the contract agent shall be segregated;
(xi) That the contract agent shall indemnify the bank and save it harmless from any liability, cost or damages resulting from actions of the contract agent in selling insurance or annuities; and
(xii) That the contract agent shall forward any customer complaints arising from the sale of insurance or annuities on bank premises to the state insurance commissioner, the state banking commissioner, and the bank.
(c) At a minimum, before making recommendations to a customer, a contract agent or shared employee shall make inquiries and document responses concerning the customer’s coverage objectives and specific instructions. A contract agent or shared employee may sell an insurance policy or an annuity to a customer at the customer’s request, notwithstanding the policy is inconsistent with the contract agent’s or shared employee’s recommendation, but the contract agent or shared employee shall document the recommendation.
Section 8. Compensation For Leased Premises. If the bank leases a portion of the bank premises to an agent, the bank may negotiate whatever terms are usual and customary in the leasing of commercial office space. The bank may be compensated from revenue earned from the insurance or annuities sales conducted at the leased premises, provided the compensation is for services performed or for rent of space and equipment provided and is not commission sharing in violation of W.S. 26-9-132. The method of compensation must not result in a partnership or joint venture relationship between the bank and the agent, or make the bank a guarantor of, or liable for, operating costs, losses or debts of the agent. If the compensation agreement provides for a percentage of revenues after deduction of losses resulting from failure of customers to perform their obligations, the loss deductions may not exceed the amount of revenues accruing to the bank’s credit after the losses are incurred.