18 Del. Admin. Code § 502-2.0

Current through Register Vol. 28, No. 5, November 1, 2024

Section 502-2.0 - Prohibition

2.1 Effective May 7, 1975, no person, firm or corporation shall, for a fee or other valuable consideration, hold himself or itself out to the public as being engaged in the business of offering advice, counsel, opinion or service with respect to the benefits, advantages, or disadvantages to be obtained under any contract of insurance that is to be purchased, or is being considered for purchase, unless such person, firm or corporation has been duly licensed by this department as a consultant, an agent or broker.

2.2 No insurance consultant, agent or broker licensed by this department shall, for a fee or other valuable consideration, consult with or for a client until a written agreement has been prepared and signed by both parties as required by 18 Del.C. § 1705 (e).

2.2.1 Agreements shall include, but not be limited to date, client's name, address, a brief, general statement of the work to be undertaken, the fee agreed upon and signature of both parties.

2.2.2 Records of the consultant and of the agent's or broker's transactions as a consultant shall be maintained at the principal business address of the licensee for a period of not less than 3 years and shall be made available to the commissioner on request.

2.3 Fees

2.3.1 Consultant: No consultant may, in this State, accept commissions or any valuable consideration, by whatever name called, from any insurer, insurance agent or insurance broker when such fee proceeds from or which may be attributed to the sale of insurance.

2.3.2 Agent or broker: No insurance agent or insurance broker may, in this State, accept commissions or any valuable consideration by whatever name called, from any insurer, insurance agent, or insurance broker when such fee proceeds from or which may be attributed to the sale of insurance contracts for which, or related to which, the agent has previously received a consultant's fee. This prohibition specifically includes so called "override" commissions paid to management based on the production of agents under their supervision or direction. In instances where the manager/supervisor has received a consultant's fee and, subsequently, an agent under his supervision places the insurance, the entire commission, to include the customary "override," shall pass to the Producer of Record, the writing agent.

2.3.3 Waiver of fee: Consultation agreements may be written by the agent or broker to reflect a stated consultation fee which will be waived on the condition the client actually purchases the subject insurance from or through the agent or broker serving as consultants.

18 Del. Admin. Code § 502-2.0