191—16.26(507B) Duties of replacing insurers that use producers.
	16.26(1) Where a replacement is involved in the transaction, the replacing insurer that uses producers shall:
	a. 	Verify that the required forms are received and are in compliance with these rules;
	b. 	Notify any other existing insurer that may be affected by the proposed replacement within five business days of receipt of a completed application indicating replacement or when the replacement is identified if not indicated on the application, and mail a copy of the available illustration or policy summary for the proposed policy or available disclosure document for the proposed contract within five business days of a request from an existing insurer;
	c. 	Be able to produce copies of the notification regarding replacement required in subrule 16.24(2), indexed by producer, for at least five years or until the next regular examination by the insurance department of an insurer’s state of domicile, whichever is later; and
	d. 	Provide to the policy or contract owner notice of the right to return the policy or contract within 30 days of the delivery of the contract and receive an unconditional full refund of all premiums or considerations paid on it, including any policy fees or charges or, in the case of a variable or market value adjustment policy or contract, a payment of the cash surrender value provided under the policy or contract plus the fees and other charges deducted from the gross premiums or considerations or imposed under such policy or contract. The notice may be included in Appendix A or C.
	16.26(2) Where a replacement is involved in the transaction and where the replacing insurer and the existing insurer are the same or subsidiaries or affiliates under common ownership or control, the replacing insurer shall allow credit for the period of time that has elapsed under the replaced policy’s or contract’s incontestability and suicide period up to the face amount of the existing policy or contract.
	16.26(3) Where a replacement is involved in the transaction and where an insurer prohibits the use of sales material other than that approved by the insurer, the insurer may, as an alternative to the requirements of subrule 16.24(4) do all of the following:
	a. 	Require of and obtain from the producer a signed statement with each application that:
	(1)	Represents that the producer used only insurer-approved sales material; and
	(2)	Represents that copies of all sales material were left with the applicant in accordance with subrule 16.24(3).
	b. 	Provide the following to the applicant by a letter or by verbal communication, by a person whose duties are separate from the marketing area of the insurer, within ten days of the issuance of the policy or contract:
	(1)	Information that the producer has represented that copies of all sales material have been left with the applicant in accordance with subrule 16.24(3);
	(2)	The toll-free number by which the applicant can contact company personnel involved in the compliance function if copies of all sales material were not left with the applicant; and
	(3)	Information regarding the importance of retaining copies of the sales material for future reference.
	c. 	Be able to produce a copy of the letter or other verification obtained pursuant to this subrule in the policy file for at least five years after the termination or expiration of the policy or contract.
[ARC 7735C, IAB 3/20/24, effective 4/24/24]