It is enacted by the General Assembly as follows:

SECTION 1. Title 27 of the General Laws entitled "Insurance" is hereby amended by adding thereto the following chapter:

{ADD 27-58-1. Short title. -- ADD} {ADD This act may be cited as the Financial Institution Insurance Sales Act. ADD}

{ADD 27-58-2. Purpose. -- The purpose of this chapter is to regulate financial institutions in the conduct of the business of insurance in this state. ADD}

{ADD 27-58-3. Definitions. -- For the purposes of this chapter the term "financial institution" shall include:

(1) A bank, savings bank, or trust company, as defined in title 19, its affiliates or subsidiaries, or any officer, agent, representative, or employee thereof; or any bank, savings bank, or savings and loan association chartered pursuant to federal law and located in Rhode Island, its affiliates or subsidiaries, or any officer, agent, representative, or employee thereof;

(2) A bank holding company as defined in 12 U.S.C. Section 1841, its affiliates or subsidiaries, or any officer, agent, representative, or employee thereof; or

(3) Any other individual, corporation, partnership, or association authorized to take deposits and to make loans of money under the provisions of chapters 5, 14, 14.1, and 14.2 of title 19 or any officer, agent, representative, or employee thereof.

The term "insurance" shall include all products defined or regulated as insurance by the Rhode Island Department of Business Regulation except:

(i) credit life, credit accident and health, credit involuntary unemployment insurance; group credit insurance, group mortgage cancellation life insurance, or group mortgage accident and health insurance and annuities;

(ii) insurance placed by a financial institution in connection with collateral pledged as security for a loan when the debtor breaches the contractual obligation to provide that insurance; and

(iii) private mortgage insurance. ADD}

{ADD 27-58-4. Authorization for implementing regulations. -- The commissioner may promulgate administrative regulations to effectuate the purposes of this chapter and to ensure the safety and soundness of the banking and insurance businesses. ADD}

{ADD 27-58-5. Licensure requirement. -- Any insurance transaction conducted by a financial institution shall be conducted only by a Rhode Island licensed insurance producer representing a Rhode Island authorized insurer or representing a Rhode Island eligible surplus lines insurer. ADD}

{ADD 27-58-6. Anti-tying provisions. -- (a) No financial institution may offer a banking product or service, or fix or vary the conditions of such offer, on a condition or requirement that the customer obtain insurance from the financial institution, or any particular insurance producer.

(b) No person shall require or imply that the purchase of an insurance product from a financial institution by a customer or prospective customer of the institution is required as a condition of, or is in any way related to, the lending of money or extension of credit, the establishment or maintenance of a trust account, the establishment or maintenance of a checking or savings account or other deposit account, or the provision of services related to any such activities. ADD}

{ADD 27-58-7. Disclosures. -- (a) A financial institution shall prominently disclose in writing, in clear and concise language, to the institution's customers, including in any advertisement or promotional material, pursuant to regulations prescribed by the commissioner, that insurance offered, recommended, sponsored, or sold by the financial institution:

(i) is not a deposit;

(ii) is not insured by the Federal Deposit Insurance Corporation; and

(iii) is not guaranteed by the financial institution or an affiliated insured depository institution; and

(iv) where appropriate, involves investment risk, including potential loss of principal.

(b) A financial institution, for any loan for which insurance is required shall disclose in writing to the institution's customers, in clear and concise language prior to the signing of a loan or mortgage application, that by law the purchase of insurance from that financial institution cannot be required as a condition of loan or mortgage approval. ADD}

{ADD 27-58-8. Sales force. -- Solicitation for the purchase or sale of insurance by a financial institution shall be conducted only by persons whose responsibilities do not include loan transactions or other transactions involving the extension of credit, or the taking of deposits. For the purposes of this section however, solicitation does not include signage on the premises. ADD}

{ADD 27-58-9. No discrimination against non-affiliated agents. -- No financial institution may:

(a) require as a condition of providing any product or service to any customer, or any renewal of any contract for providing such product or service, that the customer acquire, finance, or negotiate any policy or contract of insurance through a particular insurer, or insurance producer;

(b) In connection with a loan or extension of credit that requires a borrower to obtain insurance, reject an insurance policy because such policy has been issued or underwritten by any person who is not associated with such institution;

(c) impose any requirement on any insurance producer who is not associated with the financial institution that is not imposed on any insurance producer who is associated with such institution; or

(d) unless otherwise authorized by any applicable federal or state law, require any debtor, insurer, or producer to pay a separate charge in connection with the handling of insurance that is required under a contract. ADD}

{ADD 27-58-10. Confidential customer information. -- (1) As used in this section, unless the context requires otherwise:

(a) "Customer" means a person with an investment, security, deposit, trust, or credit relationship with a financial institution; and

(b) "Nonpublic customer information" means information regarding a person that has been derived from a record of a financial institution, including information concerning the terms and conditions of insurance coverage, insurance expirations, insurance claims, or insurance history of an individual. "Nonpublic customer information" does not include customer names, addresses or telephone numbers.

(2) No financial institution shall use any nonpublic customer information for the purpose of selling or soliciting the purchase of insurance or provide the nonpublic customer information to a third party for the purpose of another's sale or solicitation of the purchase of insurance. ADD}

{ADD 27-58-11. Insurance in connection with a loan. -- (a) If insurance is required as a condition of obtaining a loan, the credit and insurance transactions shall be completed independently and through separate documents.

(b) A loan for premiums on required insurance shall not be included in the primary credit without the written consent of the customer. ADD}

{ADD 27-58-12. Physical location of insurance activities. -- The place of solicitation or sale of insurance by any financial institution shall be from an office physically separated from the banking activities of the institution. Physical separation shall not be defined as a separate building. The commissioner shall have the authority to promulgate rules and regulations to implement this section pursuant to section 27-58-4. ADD}

{ADD 27-58-13. Penalties. -- Any person who violates the provisions of this chapter, or who fails to perform any duties imposed by this act, or who violates any administrative regulation promulgated pursuant to this act shall be liable for a civil penalty not to exceed the sum of one hundred dollars ($100) for each day which such violation continues, and in addition, may be concurrently enjoined from any further violations by the superior court upon petition of the insurance commissioner. ADD}

SECTION 2. Section 27-3-47 of the General Laws in Chapter 27-3 entitled "Agents, Brokers and Solicitors" is hereby amended to read as follows:

27-3-47. Acts prohibited. -- (a) Except for the sale of credit life insurance, credit accident and health insurance, group credit insurance, group mortgage cancellation life insurance, or group mortgage accident and health insurance issued by an insurance company not owned in whole or in part by a financial institution hereinafter enumerated and the provision of administrative or data processing services to insurance companies or insurance producers, a financial institution's premises within Rhode Island shall not be used to sell and/or underwrite insurance. Premises shall mean space where retail banking operations are conducted within a financial institution.

(b) For the purposes of this section, a financial institution shall be defined as:

(1) A bank, savings bank, or trust company, as defined in this title, its affiliates or subsidiaries, or any officer, agent, representative, or employee thereof;

(2) A bank holding company as defined in 12 U.S.C.1841, its affiliates or subsidiaries or any officer, agent, representative, or employee thereof; or

(3) Any other individual, corporation, partnership, or association authorized to take deposits and to make loans of money under the provisions of chapters 20, 22, 23, 24, 25, 25.2 and 25.3 {ADD 5, 14, 14.1 and 14.2 ADD} of title 19 or any officer, agent, representative, or employee thereof.

(c) for the purposes of this section, partial ownership of an insurance company by a financial institution shall mean ownership of more than five percent (5%) of the voting shares of that insurance company. The term ownership as used in this section shall not extend to shares held by the financial institution where the institution is acting in a fiduciary relationship.

{ADD (4) This section shall not apply to the sale of insurance by a financial institution as defined in this section which has been issued an insurance producer's license under this title. ADD}

SECTION 3. Section 27-3-46 of the General Laws in Chapter 27-3 entitled "Agents, Brokers and Solicitors" is hereby repealed in its entirety.

27-3-46. Licenses prohibited. -- (a) Except for the sale of credit life insurance, credit accident and health insurance, group credit insurance, group mortgage cancellation life insurance, or group mortgage accident and health insurance issued by an insurance company not owned in whole or in part by a financial institution hereinafter enumerated, no license to act as an insurance producer as defined in chapter 2.3 of this title, shall be issued to:

SECTION 4. Severability. -- If any provision of this chapter or the application thereof to any person or circumstances is held invalid, such invalidity shall not affect other provisions or applications of the chapter, which can be given effect without the invalid provision or application, and to this end the provisions of this chapter are declared to be severable.

SECTION 5. This act shall take effect upon passage.