44-8106 Recommendation; purchase or exchange of annuity; requirements; insurer; duties. - Nebraska Statutes

44-8106. Recommendation; purchase or exchange of annuity; requirements; insurer; duties.(1) The insurance producer, or insurer if an insurance producer is not involved, shall have reasonable grounds to believe that the recommendation is suitable for the consumer based on the facts disclosed by the consumer before making a recommendation to a consumer under the Nebraska Protection in Annuity Transactions Act. The recommendation shall be based on the facts disclosed by the consumer relating to his or her investments, other insurance products, and the financial situation and needs of the consumer.(2) Before the execution of a purchase or exchange of an annuity resulting from a recommendation, an insurance producer, or an insurer if an insurance producer is not 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 in making recommendations to the consumer.(3)(a) Except as provided under subdivision (3)(b) of this section, neither an insurance producer, nor an insurer if an insurance producer is not involved, shall have any obligation to a consumer under subsection (1) of this section related to any recommendation if the consumer:(i) Refuses to provide relevant information requested by the insurance producer or insurer;(ii) Decides to enter into an insurance transaction that is not based on a recommendation of the insurance producer or insurer; or(iii) Fails to provide complete or accurate information.(b) If a consumer provides information as described in subdivision (3)(a) of this section, an insurance producer or insurer shall make a recommendation that is reasonable under all the circumstances that are actually known to the insurance producer or insurer at the time of the recommendation.(4)(a) An insurer shall:(i) Assure that a system to supervise recommendations that is reasonably designed to achieve compliance with the Nebraska Protection in Annuity Transactions Act is established and maintained by complying with subdivisions (4)(d) through (f) of this section; or(ii) Establish and maintain a system to supervise recommendations.(b) Such system shall include, but not be limited to:(i) Maintaining written procedures; and(ii) Conducting periodic reviews of its records that are reasonably designed to assist in detecting and preventing violations of the act.(c) A general agent and independent agency shall either adopt a system established by an insurer to supervise recommendations of its insurance producers that is reasonably designed to achieve compliance with the act or establish and maintain such a system. Such system shall include, but not be limited to:(i) Maintaining written procedures; and(ii) Conducting periodic reviews of records that are reasonably designed to assist in detecting and preventing violations of the act.(d) An insurer may contract with a third party, including a general agent or independent agency, to establish and maintain a system of supervision as required by subdivision (4)(a) of this section with respect to insurance producers under contract with or employed by the third party.(e) An insurer shall make reasonable inquiry to assure that the third party contracting under subdivision (4)(d) of this section is performing the functions required under subdivision (4)(a) of this section and shall take such reasonable action to enforce the contractual obligation to perform the functions. An insurer may comply with its obligation to make reasonable inquiry by doing the following:(i) Obtaining annually a certification from a third-party senior manager that the manager represents that the third party is performing the required functions; and(ii) Periodically selecting third parties contracting under subdivision (4)(d) of this section to determine whether the third parties are performing the required functions. The insurer shall perform those procedures to conduct the review that are reasonable under the circumstances. Such third parties shall be selected based on reasonable selection criteria.(f) An insurer shall have fulfilled its responsibilities under subdivision (4)(a) of this section if the insurer:(i) Contracts with a third party pursuant to subdivision (4)(d) of this section; and(ii) Complies with the requirements to supervise in subdivision (4)(e) of this section.(g) An insurer, general agent, or independent agency is not required by subdivision (4)(a) or (b) of this section to:(i) Review all insurance producer solicited transactions; or(ii) Supervise an insurance producer's recommendations to consumers of products other than the annuities offered by the insurer, general agent, or independent agency.(h) A general agent or independent agency contracting with an insurer pursuant to subdivision (4)(d) of this section shall, when requested by the insurer pursuant to subdivision (4)(e) of this section, promptly give a certification as described in subdivision (4)(e)(i) of this section or give a clear statement that it is unable to meet the certification criteria.(i) No person may provide a certification under subdivision (4)(e)(i) of this section unless:(i) The person is a senior manager with responsibility for the delegated functions; and(ii) The person has a reasonable basis for making the certification.(5) Compliance with the National Association of Securities Dealers Conduct Rules pertaining to suitability shall satisfy the requirements under this section for the recommendation of variable annuities. However, nothing in this subsection shall limit the ability of the Director of Insurance to enforce the act. SourceLaws 2006, LB 875, § 18; Laws 2007, LB117, § 31.