Posted on May 25, 2007 by Cailie Currin
Several companies have recently had their filings rejected based on statements of self-support that include the statement "and other relevant factors." In the Circular Letter that was issued after the revisions to section 4228 that first included the statement of self support requirement , the Department initially recommended this language. See www.ins.state.ny.us/circltr/1998/cl98_08.htm. However, in an opinion issued by the Office of General Counsel in 2001, www.ins.state.ny.us/ogco2001/rg106291.htm it was concluded that the requirement went beyond the language of the law.
It was my experience that many companies left the language in their certifications after that opinion by choice, and for many years there was no reaction by the Department. However, the Department now contends that the OGC opinion made use of that phrase impermissible. The use of "and other relevant factors" today will result in a CL6 file being rejected.
Posted on May 24, 2007 by Cailie Currin
In a conversation with Kathleen Nelligan of the NYSID this morning, she once again reiterated the need for specificity in SOVs. While she concurred on the importance of guidance being published on the website, she also said that the Department needs to know now what is going to be on the form when it is issued. They can't wait to enforce the standards until those standards are published. From the conversation, it is clear that if your company is in a position to fully define alternative text (including new addresses and phone numbers) that might appear, those should be included on the SOV up front. If however you thing something may change but you don't know what the new provision might be, e.g. where the service office might move to if it ever moves, you need to make clear on the SOV that your company will re-file the Memo prior to implementing any new text.
In some cases, failure to provide sufficient detail may get through the process and the SOV may be approved. But take note that the NYSID is likely to consider it use of an unapproved policy form if there is any modification that they determine is outside the scope of the SOV's explanation.
Posted on May 23, 2007 by Cailie Currin
Group Life policies and practices are currently under review by the NY Insurance Department. NY has long been concerned about conversion rights and how certificate holders receive notification of their right to convert. I have seen this raised several times on exam and now the Department is taking an active and more systemic approach to looking at this and other issues related to group life. It is anticipated that over the coming months there will be new positions and policy form requirements announced. In the meantime, the outline drafted in 2002 remains the best resource for determining NYSID interpretations of the group life statutes.
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Posted on May 22, 2007 by Cailie Currin
The NJ Department received almost 200 comments on their proposed regulation on prohibiting discretionary clauses in life and health insurance products. One of the issues raised was related to form filing and dealing with non-conforming forms that are out in the market. In their Summary of Public Comments and Agency Responses, www.state.nj.us/dobi/proposed/ad070507_disc.pdf, the Department states: "As proposed, the provision in question deemed withdrawn after January 1, [2008] all newly issued or renewing policy and contract forms that contain noncompliant discretionary clauses. Refiling noncompliant forms is not required." Note that because of the timing of the effective date, the originally published January 1, 2007 date was pushed back to January 1, 2008. Because it is the Department's policy - as expressed in this regulation - that carriers will not have the sole discretion to interpret the terms of a policy or contract, and that covered persons retain access to their appeal rights under state and federal law, they seem to conclude that re-filing of noncompliant forms is unnecessary. However, because as stated in the quoted language above, non-compliant forms are deemed withdrawn as of January 1, 2008, it remains somewhat unclear what the status will be of previously approved products that contain discretionary clauses as of January 1, 2008.
Posted on May 21, 2007 by Cailie Currin
The NYSID has concluded that substandard immediate annuities can be written on a basis "similar to that permitted for structured settlements annuities." In the 2006 Annual Report, www.ins.state.ny.us/downpdf.htm#annrpt, at page 41, the Life Bureau states that: "As with structured settlements annuities, substandard underwriting for annuities must be limited to individually underwritten cases and to individuals with serious health impairments based upon medical information submitted to the insurer and an evaluation of a person's medical condition and life expectancy by an underwriter of the insurer. Substandard annuitants must have demonstrable health problems that can result in shorter life expectancy. Underwriters can either 'age-rate' up the applicant's age or adjust the mortality factors according to the impaired risk based on the applicant's medical records." (footnote omitted).
Posted on May 19, 2007 by Cailie Currin
One question I get asked frequently is whether the NYSID knows that variable annuities with guaranteed living benefits are being filed under the CL6 process. My answer is that I am confident that they do - that the Life Bureau's tracking system is quite good and that I think they
do keep track of what kind of submissions are coming in. That opinion was strengthened by a statement in the Life Bureau's opening section of the 2006 Annual Report, titled Faster New Product Introductions.
www.lifeinsurancelawblog.com/Page 14 2006 Annual Report.pdf. While the text does not specifically say how many of these VAGLB submissions are CL6 submissions, it is likely that a good number of them are, in fact, certified submissions.
Posted on May 18, 2007 by Cailie Currin
On page 35 of the NYSID's 2006 Annual Report, the report states that: "During the year, the Life Bureau received 1,044 Circular Letter No. 6 (2004) certified files consisting of 4,281 policy forms....the Life Bureau processed 3,845 Circular Letter No. 6 (2004) policy forms in an average of 47 days...approximately 2,639 were approved, 1,068 were rejected and 101 were withdrawn. "
CL6 filings constitued 57.7% of all files and 48.8% of all forms submitted in 2006.
Posted on May 18, 2007 by Cailie Currin
The New York State Insurance Department has released its 2006 Annual Report. As of yesterday, the report is available on the Department's website.
www.ins.state.ny.us/acrobat/annrpt06.pdf. There is a lot of interesting information about the Life Industry and NY's regulation contained in the report. Additional posts will follow commenting on specific pieces of the report.
Posted on May 17, 2007 by Cailie Currin
I recently posted my thoughts on small submissions given my experience with so many different types and styles of submissions to the New York State Insurance Department. This morning my new strategy seems to be panning out as I thought it would... I received two approvals in this morning's mail, both dated May 11. One was submitted on May 3rd and one on May 4th. Those are incredible turnaround times!! Thanks to the Department for the amazingly fast work! I know I will be making as many submissions as I can using this strategy! If I make it easy for them, they respond with speed. I can't ask for more than that!
Posted on May 16, 2007 by Cailie Currin
I recently posted about a very specific issue that has come up recently on an annuity product. But I have also been involved in efforts by a few companies recently to develop and get approval for innovative annuity products in New York. The response has been a resounding "No" from the Department. It was said very nicely, but firmly. No, these products are not permitted in New York. These are products that were designed to meet very real needs of New Yorkers for longevity protection. They are new and different - in order to meet the demand of consumers to provide a new and different array of benefits.
There is no question that the new products carry different risks than old, traditional products. Perhaps the risk is greater, but perhaps, it is just different. Does that difference mean they can't be approved and offered in NY? Even if the risk is truly greater, does that mean the products can't be offered? Is there no room for real innovation? Is it not possible to have meaningful regulation of these innovative products? Isn't it worth having that discussion?
Posted on May 15, 2007 by Cailie Currin
Recently an issue arose regarding rider fees on fixed account products subject to section 4223, the nonforfeiture law in New York. As the issue developed, it highlighted some of the challenges facing companies trying to develop new products in NY. This particular issue involved a rider on a fixed annuity. The rider would impose an asset-based charge that the company felt was appropriate for the benefit offered in the rider.
A review of the most recent annuity product outline, dated 3/16/2005, indicated the following: "The contract must specify the charge for the benfit and include a description of whether the charge is calculated based on amounts allocated to the fixed account, if any, as well as the separate accounts....The charges for the benefit must not reduce the benefits applicable to amounts allocated to the fixed account below the minimums required in the nonforfeiture law for fixed deferred annuities." Looking at that interpretive language, it appears reasonable to believe that rider fees could be imposed on a fixed account product so long as the nonforfeiture minimums were not compromised. However, that turned out not to be the case.
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Posted on May 11, 2007 by Cailie Currin
Many companies have now received post approval review letters from the NYSID. Common to all appears to be a request for policy form revisions. No company I know of has ever been told that their forms were reviewed on a post approval basis and no changes were necessary. It would be interesting to know if any company has received such a letter.
In my experience most companies are asked to make some changes to their forms. Typically the changes are minor wording changes or requests to add more detail. Generally, they do not go to the substance or design of the product, but they are changes nonetheless. In various files, I have seen these types of changes handled in many different ways. But recently I heard what the process is going to be going forward.
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Posted on May 11, 2007 by Cailie Currin
Many in the industry were anxiously waiting to see what impact the November 2006 election would have on the NY Insurance Department. While the new appointees have been published on the Department's website for a while now, a press release went out yesterday that has some biographical information on the new leadership that may be of interest, particularly for those who have not seen the website. www.ins.state.ny.us/press/2007/p0705101.htm.
More time is needed to really get a clear understanding of the directions in which this new administration will take the Department and what decisions will be made on the major issues facing the staff, but for those in the industry who have not yet had a sense of the new regulatory leadership, this press release may provide some good background information.
Posted on May 10, 2007 by Cailie Currin
I have now seen multiple letters from the NYSID warning companies that their CL6 privileges may be suspended due to problems with their companies' previous CL6 filings.
In these cases, the letters were addressed to, and were based on filings from, a single unit of the company and one that was other than the unit bringing the letter to my attention. However, the Department's warning applies to a company's filings across the board. In some cases, the unit bringing the letter to me did not realize that a temporary hold had been placed on their submissions until it had been lifted!
Of course, the NYSID doesn't know which unit generates which filings, so they are not in a position to clearly differentiate, but when companies have separate and distinct areas that generate filings and when those units may have very different policies and procedures in effect, these company-wide actions cause particular problems for large, decentralized companies.
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Posted on May 9, 2007 by Cailie Currin
Over the last few months, I have been paying close attention to the many varied submissions that I have done on behalf of client companies and have come away with a clear strategy - keep it simple!
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Posted on May 7, 2007 by Cailie Currin
The New York State Insurance Department recently posted new guidance on whole life policies that do not have a maturity or expiration date.
www.ins.state.ny.us/acrobat/20070404.pdf. This guidance indicates that it is intended for new submissions, but it is "expected" that all policies will be "administered" in a manner consistent with the principals set forth below.
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Posted on May 5, 2007 by Cailie Currin
The Life Bureau announced yesterday that they will be initiating a new method of determining how files are selected for post-approval reviews. Deborah Kahn, Associate Insurance Attorney, announced that the attorneys will review the CL6 filings shortly after approval in a limited manner. They will review the submission letters and do a quick review of the policy forms themselves to assess the nature of the product. The goal of this review is to assess a priority level to the post-approval review. A paragraph will be prepared on each filing and a priority level assigned: low, medium or high. Knowing that submission letters will be used in this manner may suggest that additional thought and care be put into the description of any innovative features. This is an interesting development in the on-going evolution of the post-approval review process.
Posted on May 5, 2007 by Cailie Currin
Have you ever wondered how particular files get chosen to undergo a post approval review? Well, according to the NYSID staff, the following factors can result in your file's selection:
1) Priority Level (See following post on this topic)
2) Training needs. Post-approval reviews are used to train new staff and so for example if they need to learn universal life products, several UL filings may be selected for post-approval review. A more experienced staff member may also be moving into a new substantive area and use post-approval reviews as the method to become familiar with a new range of products.
3) Examinations of the company. Post-approval reviews may be incorporated into the scheduled examination of a company.
It was also explained that the particular attorneys queue is a factor as well.
Posted on May 5, 2007 by Cailie Currin
The New York State Insurance Department has announced that they plan to start sending warning letters to companies that submit deficient filings.
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Posted on May 5, 2007 by Cailie Currin
At the New England chapter of the AICP E-day (
www.aicp.net/chapters/newengland.cfm) held yesterday in Hartford CT, Deborah Kahn, Associate Insurance Attorney at the New York State Insurance Department provided information about approval times.
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Posted on May 2, 2007 by Cailie Currin
While the NY Department staff appears to look at certified, i.e. CL6 ( www.ins.state.ny.us/cl04_06.htm )submissions in the order in which they are received - whether by paper or SERFF - from there things get a little less clear.
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