Section 029-123-5 - RESTRICTIONS AND LIMITATIONSA. Nature of lease: (1) Any lease agreement or other office space-sharing agreement executed by a regulated institution, and an insurer, insurance agent, broker, or consultant shall be executed on the basis of an arm's length transaction.(2) The agreement to lease may include terms that are usual and customary in the leasing of commercial office space, except that the rental payment may not be directly related to the tenant's commissions. At no time may the return to the regulated institution/lessor exceed fair market value of the space occupied.(3) The agreement to lease shall contain a clause expressly negating a partnership or joint venture between the lessee and the regulated institution/lessor.(4) The agreement to lease shall contain a clause expressly stating that the regulated institution has no right to and may not attempt to exercise control over the insurance business affairs of the lessee.(5) Regulated institutions are prohibited from leasing office space to their employees, officers, directors, principal shareholders, or members of their immediate families including firms owned or controlled by these parties for the purpose of conducting insurance business.B. Physical location/separation of facilities:(1) The rental space occupied by the insurance agent, broker or consultant must be separated from the retail area of the regulated institution in such a manner as to prevent confusion in the public mind between the regulated institution and the insurance agent, broker or consultant.(2) Rental space occupied by the insurance agent, broker or consultant must be separately identified through the use of signs, labeling, etc. so that the public will understand that it is not buying insurance from the bank.C. Advertising and promotion: (1) A regulated institution may state publicly that an insurer, insurance agent, broker or consultant is a tenant in the regulated institution's building. No other material advertising or promoting the insurer, insurance agent, broker or consultant may be displayed on the premises of the regulated institution, except that such material may be maintained within the office space of the insurer, insurance agent, broker or consultant.(2) Advertising materials of the insurer, insurance agent, broker or consultant may be included with mailings by regulated institutions to its customers. Such material must contain a statement that the tenant/insurer, insurance agent, broker or consultant is in no way affiliated with the regulated institution, and the use of such advertising mechanism does not carry an endorsement of the tenant/insurer, insurance agent, broker or consultant or his products by the regulated institution.(3) The regulated institution shall not, in any manner, advertise or promote the tenant/insurer, insurance agent, broker or consultant. The regulated institution may not endorse the tenant/insurer, insurance agent, broker or consultant or express or imply any connection between the regulated institution or its services and the tenant/insurer, insurance agent, broker or consultant or its services.D. Disclosure: The regulated institution shall require, as a condition of its lease with a tenant/insurer, insurance agent, broker or consultant, that the tenant provide each customer with a written disclosure bearing a space for the customer's signature and containing the following:
(a) a disclaimer of any affiliation or other connection between the regulated institution and the tenant,(b) a verification that the customer has received all the notices required by law including that the customer is free to purchase insurance from other insurance agents, brokers or consultants, and (c)a verification that the regulated institution has not promoted the tenant/insurer, insurance agent, broker or consultant in any manner. The lease shall also provide that the tenant shall have each of its customers read, sign and date the disclosure and that the tenant shall retain a copy of each disclosure for at least two years.
E. Federal regulations: It is recognized that the Federal Home Loan Bank Board, through the Federal Savings and Loan Insurance Corporation, and the Federal Deposit Insurance Corporation, have promulgated or may, in the future, promulgate regulations controlling the manner in which they will permit financial institutions they insure to engage in insurance activities. It is further recognized that there may exist differences in scope and coverage between this regulation and those promulgated by the said federal insuring agencies. It is not the intent of this regulation to permit any practice which is not permitted by the appropriate federal agency. To the contrary, besides any other restriction or limitation stated herein, each financial institution must fully comply with the regulations of the applicable federal insuring agency.
02-029 C.M.R. ch. 123, § 5