KRS 304.9-135: Requirements for financial institutions engaging in insurance agency

activities -- Administrative regulations -- Activities of officers or employees of

financial institution.

(1) As used in this section:

(a) "Financial institution" means:

1. A bank or bank holding company, as defined in the Bank Holding

Company Act of 1956, codified at 12 U.S.C. sec. 1841, as amended;

2. A savings bank, savings and loan association, trust company, or any

depository institution as defined in the Federal Depos it Insurance Act,

codified at 12 U.S.C. sec. 1813(c)(1), as amended; and

3. Any other individual, corporation, partnership, or association authorized

to take deposits and make loans in this Commonwealth, and any affiliate

or subsidiary of any of the above;

(b) "Insurance agency activities" means any activity relating to insurance, other

than title insurance, for which a license as agent, reinsurance intermediary

broker or manager, surplus lines broker, or consultant is required under this

chapter; and

(c) "Insurance information" means any information concerning premiums, terms,

and conditions of insurance coverage, including:

1. Expiration dates and rates; and

2. Claims maintained in the records of the financial institution or affiliate.

(2) A financial institution authorized by law to engage in insurance agency activities in

this state shall, in addition to any other applicable requirements, comply with the

following requirements:

(a) The financial institution or officer, agent, representative, or employee thereof

shall qualify for licensure under all applicable provisions of this chapter and

abide by all applicable provisions of this chapter and applicable administrative

regulations;

(b) A financial institution shall provide a written statement to a consumer

regarding the consumer's free choice of agent and insurer according to KRS

304.12-150, when the consumer's application for a loan or other extension of

credit from the financial institution is pending and when insurance is offered

to the consumer, sold to the consumer, or required in connection with the loan

or extension of credit by the financial institution or affiliate;

(c) A financial institution shall not r elease a consumer's insurance information to

any person or entity for the solicitation or selling of insurance, other than an

officer, director, employee, agent, or affiliate of a financial institution, without

prior disclosure to the consumer and the oppo rtunity for the consumer to

prevent the disclosure;

(d) A financial institution shall not release or use health information obtained

from the insurance records of a consumer for any purpose, other than

activities of a licensed agent, administrator, reinsur ance intermediary broker

or manager, surplus lines broker, or consultant, without the written consent of

the consumer;

(e) A financial institution licensed by the department to engage in insurance

agency activities shall:

1. Not violate the anti-tying provisions of the Bank Holding Company Act

Amendments of 1970, codified at 12 U.S.C. sec. 1971 et seq., in effect

as of December 31, 1997; and

2. Notify the department in writing within ten (10) days of any final

judgment or any final administrative action, by a federal agency

authorized to enforce the anti -tying provision, that finds that the

financial institution or any of its employees committed a violation of the

Bank Holding Company Act. Any such final and unappealable judgment

or final and unappealable ad ministrative action shall be deemed a

violation of this chapter;

(f) Prior to the sale of any policy of insurance to a consumer, a financial

institution shall, when practicable, provide to the consumer a written

statement that:

1. The insurance offered by the financial institution is not a deposit;

2. The insurance offered by the financial institution is not insured by the

Federal Deposit Insurance Corporation or other government agency that

insures deposits;

3. The insurance offered by the financial instit ution is not guaranteed by

the financial institution or any affiliate;

4. The insurance may involve investment risk, including potential loss of

principal; and

(g) The commissioner shall promulgate administrative regulations in accordance

with KRS Chapter 13A that specify the disclosure forms required by

paragraphs (b), (c), and (f) of this subsection.

(3) An officer or employee of a financial institution shall not directly or indirectly

delay or impede the completion of a loan transaction or any other tran saction with a

financial institution for the purpose of influencing a consumer's selection or

purchase of any insurance.

(4) A financial institution shall not use any advertisement or promotional material

causing a reasonable person to mistakenly believe that:

(a) The federal government or any state guarantees the insurance sales activities

of financial institutions or guarantees the credit of the financial institution; or

(b) Any state or federal government guarantees any return on insurance products

or is a source of payment on any insurance product sold by the financial

institution.

(5) A financial institution shall use separate documentation for all credit and insurance

transactions when a consumer obtains insurance and credit, other than credit

insurance, from a financial institution or any individual or business entity soliciting

or selling insurance on the premises of a financial institution.

(6) A financial institution shall not include an expense of insurance premiums in a

credit transaction when a c onsumer obtains insurance and credit, other than credit

insurance, from a financial institution or any individual or business entity soliciting

or selling insurance on the premises of a financial institution, without the written

consent of the consumer.

(7) (a) A financial institution shall maintain separate and distinct books and records

relating to insurance transactions conducted through the financial institution,

including files relating to consumer complaints.

(b) The books, records, and files shall be made available to the commissioner for

inspection in accordance with KRS 304.2-220.