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 9  AN ACT concerning insurance; enacting the consumer insurance sales
10    act.
11
12  Be it enacted by the Legislature of the State of Kansas:
13    Section 1.  Sections 1 through 13 may be referred to as the consumers
14  insurance sales act.
15    Sec. 2.  The purpose of this act is to protect consumers through the
16  regulation of the sale of insurance by and on the premises of financial
17  institutions in the state of Kansas.
18    Sec. 3.  As used in this act:
19    (a)  ``Financial institution'' means a bank holding company, as defined
20  in the bank holding company act of 1956 as amended, 12 U.S.C. 1841, a
21  bank, savings bank, savings and loan association, trust company or any
22  depository institution as defined by the federal deposit insurance act as
23  amended, 12 U.S.C. 1813 (c)(1), or subsidiary of any of the above, and
24  any other individual, corporation, partnership or association authorized
25  to take deposits and make loans in the state of Kansas. The term financial
26  institution does not include an insurance company.
27    (b)  ``Insurance'' includes all products defined or regulated as insur-
28  ance by the state of Kansas pursuant to chapter 40 of the Kansas Statutes
29  Annotated, except: (1) Credit life, credit accident and health and credit
30  involuntary unemployment insurance; (2) insurance placed by a financial
31  institution in connection with collateral pledged as security for a loan
32  when the debtor breaches the contractual obligation to provide that in-
33  surance; and (3) private mortgage insurance.
34    (c)  ``Insurance company'' means a company that possesses a certifi-
35  cate of authority to transact insurance business in the state of Kansas.
36    (d)  ``Person'' means any natural person, partnership, corporation, as-
37  sociation, business trust, unincorporated organization or other form of
38  business enterprise, plural or singular, as the case demands.
39    Sec. 4.  The commissioner of insurance may promulgate rules and
40  regulations to effectuate the purposes of this act.
41    Sec. 5.  Solicitation for the purchase or sale of any insurance product
42  by any person, including a financial institution, or employee or agent
43  thereof, shall be conducted only by persons who have complied with all
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 1  applicable state insurance licensing and appointment laws and rules and
 2  regulations and who have been issued an agent's or broker's license.
 3    Sec. 6.  Solicitation for the purchase or sale of insurance by a financial
 4  institution shall be conducted only by persons whose responsibilities do
 5  not include loan transactions or other transactions involving the extension
 6  of credit; except that, for a financial institution location having three or
 7  less persons with lending authority, solicitation for the sale of insurance
 8  may be conducted by a person with responsibilities for loan transactions
 9  or other transactions involving the extension of credit so long as the per-
10  son primarily responsible for making the specific loan or extension of
11  credit is not the same person engaged in the solicitation for the purchase
12  or sale of insurance for that same transaction.
13    Sec. 7.  No financial institution may offer a banking product or service
14  or fix or vary the conditions of such offer on a condition or requirement
15  that the customer obtain insurance from the financial institution, or any
16  particular agent or broker.
17    Sec. 8.  (a) A financial institution, and any person soliciting the pur-
18  chase of or selling insurance on the premises of a financial institution,
19  shall disclose in writing, in clear and concise language, to customers, that:
20    (1)  Insurance offered, recommended, sponsored or sold by the fi-
21  nancial institution, or on the premises of the financial institution:
22    (A)  Is not a deposit;
23    (B)  is not insured by the federal deposit insurance corporation; and
24    (C)  is not guaranteed by the financial institution or an affiliated in-
25  surance depository institution; and
26    (2)  the product may be purchased from an agent or broker of the
27  customer's choice, and the customer's choice of another insurance pro-
28  vider will not affect the customer's relationship with the financial insti-
29  tution.
30    (b)  Any financial institution or other person required under subsec-
31  tion (a) to make disclosures to a customer shall obtain a written acknow-
32  ledgment of receipt by the customer of such disclosures, including the
33  date of receipt and the customer's name and address, prior to any appli-
34  cation for insurance sold by the financial institution. Such acknowledg-
35  ment shall be in a separate document.
36    Sec. 9.  No financial institution, directly or indirectly, may solicit the
37  purchase of any insurance from a customer who applies for a loan or
38  extension of credit from the institution before such time as the customer
39  has received a written commitment from the financial institution with
40  respect to such loan or extension of credit or, in the event that no written
41  commitment has or will be issued in connection with the loan or extension
42  of credit, before such time as the customer receives notification of ap-
43  proval of the loan or extension of credit by the financial institution and
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 1  that entity creates a written record of the loan or extension of credit
 2  approval.
 3    Sec. 10.  A loan for premiums on required insurance shall not be
 4  included in the primary credit without the written consent of the cus-
 5  tomer.
 6    Sec. 11.  (a) As used in this section, unless the context requires oth-
 7  erwise:
 8    (1)  ``Customer'' means a person with an investment, security, deposit,
 9  trust or credit relationship with a financial institution; and
10    (2)  ``nonpublic customer information'' means information regarding
11  a person that has been derived from a record of a financial institution.
12  Nonpublic customer information does not include customer names, ad-
13  dresses and telephone numbers; and, in all events, nonpublic customer
14  information shall include information concerning insurance premiums,
15  the terms and conditions of insurance coverage, insurance expirations,
16  insurance claims and insurance history of an individual.
17    (b)  No officer, director or employee of a financial institution shall use
18  any nonpublic customer information for the purpose of selling or solic-
19  iting the purchase of insurance or provide nonpublic customer informa-
20  tion to a third party for the purpose of another person's sale or solicitation
21  of the purchase of insurance, unless it is clearly and conspicuously dis-
22  closed that the information may be so used and the customer has provided
23  prior written consent in a separate document to the use for this purpose.
24    Sec. 12.  Books and records relating to the insurance transactions of
25  any financial institution, including all files relating to and reflecting cus-
26  tomer complaints, shall be kept separate and apart from all records re-
27  lating to other business transactions of such financial institution, and shall
28  be made available to the department of insurance for inspection upon
29  reasonable notice.
30    Sec. 13.  Any person violating the provisions of this act shall be sub-
31  ject to any and all enforcement procedures either currently employed or
32  subsequently promulgated by the department of insurance including, but
33  not limited to, the issuance of a cease and desist order requiring such a
34  person to cease all insurance sales and solicitation activities or the im-
35  position of any other administrative penalty the department deems ap-
36  propriate.
37    Sec. 14.  This act shall take effect and be in force from and after its
38  publication in the statute book.