I was recently asked about handling domiciliary state approval for NY domiciled companies doing business in 50 states.
In my experience, this was a bigger problem prior to the development of the certified (or "CL6") process in NY. In those days, NY approval could take many months and NY-domiciled companies who needed approval in NY for those domiciliary states could be in a very difficult situation. Back then, my recommendation was to develop a version to file under NY's out-of-state use statute - those were filed for informational purposes and were subject to a much less stringent set of review standards. Those were typically processed within a couple of weeks and then that date could be used for domiciliary state approval.
However, NY law has changed so that NY-domiciled companies no longer file most of their forms for out-of-state use. Now the statute has an annual filing requirement for those forms. They can be used immediately outside NY so long as they are reported on an annual basis, in a format not yet fully developed. In addition, forms intended for use in NY are now often submitted under the expedited "CL6" process.
Continue Reading...Companies doing business in New York face difficult options when designing innovative products that need approval in New York. New York law and the Department's administrative guidelines provide for filing alternatives, but each has advantages and disadvantages when the product is an innovative one that the Department might not have seen or which might be new to the company. One approach is to file for full prior approval. The obvious advantage of this approach is that the Company has the benefit of a full vetting of the issues with the Department and all requested revisions are made before product launch. The major disadvantage is time. Currently, it is not unusual for review periods to exceed one year, which in the fast paced world of product development, is usually not acceptable. But another,less obvious, disadvantage is that even though many filings submitted for full prior approval are innovative ones, where the issues are complex, the Department still enforces its policy to close a file if all issues are not resolved with two rounds of correspondence.
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While no company wants to receive a post approval review letter from the New York State Insurance Department, the process can provide valuable information for use in the development of new products, policy form drafting, and the maintenance of internal files. One example that has been raised several recent post approval reviews is the Notice of Premium Due required by Section 3211 of the New York State Insurance Law. That section does not explicitly require a policy provision, but the consistency with which the Department asks about compliance on post approval may make creation of a policy provision desirable to avoid the inquiry after issue. An alternative approach might be to document administrative compliance with this statutory mandate so that a response will be easier to prepare upon receipt. This administrative notice appears to be just one of many issues that are being raised in post approval reviews that were never a part of the prior approval review process and reflect the combination of market conduct and policy form review that happens in the post approval review process.
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