- Section 9 of Act 1697 of 2005:
- SECTION 9. Arkansas Code Title 23, Chapter
64, subchapter 5 is amended to add a section to read as follows:
- § 23-64-520.
Compensation disclosure.
- (a) As used in this
section:
-
(1) “Affiliate” means a person that controls, is
controlled by, or is under common control with a producer;
-
(2)(A) “Compensation from an insurer or other third
party” means payments, commissions, fees, overrides, bonuses,
contingent commissions, loans, stock options, or any other form of
valuable consideration, whether or not payable pursuant to a written
agreement.
-
(B) Awards, gifts, and prizes shall be
considered “compensation from an insurer or other third
party” if the award, gift, or prize is directly tied to the
producer’s performance; and
-
(3) "Compensation from the customer" shall not include any fee or
similar expense under § 23-66-310 or any fee or amount collected
by or paid to the producer that does not exceed an amount established
by the Insurance Commissioner.
- (b)(1) Before the
placement of insurance business, all insurance producers shall disclose:
- (A)
Whether the producer or its affiliate represents the customer or the
insurer; and
-
(B) The source or sources of the producer’s or
affiliate’s compensation for the placement.
- (2)
If the producer represents the insurer, the producer shall disclose to
the customer that the producer provides services to the customer on
behalf of the insurer.
-
(3) If the producer receives compensation from the customer for a
placement of insurance or acts as a broker as defined by §
23-64-102, the producer shall disclose:
-
(A) The source or sources of the producer's or affiliate's
compensation for the placement; and
- (B)
Whether the producer or its affiliate will receive compensation for the
placement from the insurer or other third party based upon volume,
profitability, or other factors, and if the customer requests, the
producer shall provide a reasonable estimate of the amount of
compensation.
- (c) A person shall
not be considered a “customer” for purposes of this section
if the person is merely:
-
(1) A participant or beneficiary of an employee benefit plan; or
-
(2) Covered by a group or blanket insurance policy or group
annuity contract sold, solicited or negotiated by the producer or
affiliate.
- (d) This section
shall not apply to:
-
(1) A person licensed as a producer who acts only as an
intermediary between an insurer and the customer’s producer,
including, but not limited to, a managing general agent, a sales
manager, or wholesale broker when acting only as an intermediary;
-
(2) A reinsurance intermediary;
-
(3) Any placement involving a residual market mechanism;
-
(4) Renewals, unless the information previously disclosed under
subsection (b) has substantially changed; or
-
(5) Any placement of credit life or credit disability insurance.
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