§ 23-66-307 - Actions required to replace a life insurance policy or annuity -- Rules -- Penalties. - Arkansas Statutes

23-66-307. Actions required to replace a life insurance policy or annuity -- Rules -- Penalties.

(a) The General Assembly finds that:

(1) It is the public policy of this state that life and accident and health insurance producers shall provide reasonable and professional service to each insured or prospective insured;

(2) Each producer is charged with the responsibility of exercising discretion and good faith in the sales presentation or transaction;

(3) It is within the general welfare of the people that each life and accident and health insurance producer, when professionally advisable, shall improve upon or change the type of insurance that any insured or prospective insured presently has by providing either better coverage or an overall program of insurance more suitable for the needs of the insured, his or her family, or a business; and

(4) Abuses occur when insurance producers:

(A) Sell or solicit unsuitable insurance products;

(B) Fail to provide reasonable or professional service to an insured or a prospective insured; or

(C) Fail to exercise good faith and professional discretion in an insurance sales presentation or transaction.

(b) If an insurance producer attempts to sell a new individual life insurance policy or individual annuity contract or asks or urges a person to apply for a particular kind of life insurance or annuity from a particular company, it is unlawful for the insurance producer to encourage, induce, or solicit an insured to permit an existing individual life insurance policy or an existing individual annuity contract that has developed or may develop a cash surrender value to lapse or to otherwise forfeit or surrender the existing policy or contract unless the insurance producer:

(1) (A) Furnishes the policyholder a written and dated memorandum comparing the provisions of the existing policy or contract with the provisions of the proposed policy or contract.

(B) The written memorandum shall be signed by the producer and by the insured to acknowledge receipt of the written memorandum; and

(2) (A) Files a duplicate of the memorandum with the company represented by the producer.

(B) The company and the producer shall retain the duplicate memorandum for five (5) years.

(c) The Insurance Commissioner may:

(1) Prescribe the form of the written memorandum required by subsection (b) of this section; and

(2) Promulgate reasonable rules after notice and hearing to implement this section.

(d) A violation of this section is:

(1) A Class A misdemeanor; and

(2) Punishable by disciplinary action under the Arkansas Insurance Code.