New York Life Insurance Compliance Lawyer & Attorney : Currin Law Office : Annuity Compliance & Insurance Regulation

The NYSID has recently posted a new set of reports on exam on their website.  www.ins.state.ny.us/exam_rpt/examfile.htm#nw.  A cursory review indicates that Reg 60 compliance poses a problem for a significant number of companies.  While the new administration at the NYSID has indicated that they are looking at Reg 60, these exams show that can't happen soon enough!   I don't know of any company that takes compliance with Reg 60 lightly, but as the exams indicate, the pitfalls are many.   As discussions proceed on revisions to the Regulation, companies are well-advised to review their Reg 60 procedures and make sure that every effort is made to comply with the reg as it currently reads - challenging as that may be! 

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On Saturday, I received the approval for my then longest-pending CL6 submission.  It was submitted in early April. 

Experience continues to support my recommendation to go small with submissions, when possible.  This submission was not substantively complicated, but involved many forms and variability.   The only explanation for why it took so much longer than so many others was that there was more to review and check/double check for form number consistency and accuracy.    

The good news is that it was approved!  It is always great  to start a Monday with an approval!  I am hopeful there will be more to come as the week progresses!! 

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The NY Insurance Department has recently initiated a new process for handling forms revised as a result of post-approval reviews.  I have received letters from both the actuarial side and the legal side explaining the procedural change.   The letter from actuarial came fairly early in the post approval review and it stated:  "If you need to replace any forms in this file with corrected forms for use on a going forward basis it will be necessary to make a new submission.  The revised policy forms will need to be submitted under the regular prior approval procedure and will be given priority in the prior approval queue once the post approval review has been completed.  The certified process may not be used for this submission.  Do not include new forms with your response in the post approval review file.  Only corrective endorsement if needed for in-force business should be submitted as part of this post approval review file."  The legal side stated:  "Please note that after we initiated the post approval review of these forms, an administrative decision was reached such that revised policy forms now must be submitted in a new prior approval submission if you wish to use the revised forms on a going-forward basis. The certified process may not be used for this submission." 

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In a recently released OGC opinion (www.ins.state.ny.us/ogco2007/rg070613.htm)  the NYSID opined that Reg 60 paperwork is not required when the assets of a fixed-annuity IRA are rolled over into a non-insurance IRA. 

While that is an important clarification of Reg 60, perhaps even more helpful is the statement in the Analysis section:  Reg 60 "only applies to insurance-to-insurance replacement transactions."   Because of the Reg's emphasis on the new policy being delivered, I have had several companies ask about the situation where a non-insurance IRA product was being replaced with an IRA annuity.  While it has been my opinion that Reg 60 would not apply in that situation, this OGC opinion makes clear that the Department agrees.  Because the first product was not an insurance product, the transaction is not an insurance-to-insurance transaction and Reg. 60 does not apply. 

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Yesterday I received approval of an application that I sent out by overnight mail on 7/6.  The Department would have received it on 7/7.  I got an approval dated 7/11.  I don't think we can ask for more than that! 

Once again this experience confirmed for me that simple is better.  Of course everything still needs to be right, but it is much easier for the Department to make sure that a simple filing is right -- and the rewards are sweet!!!

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At the recent  seminar, a representative of the NYSID set forth the Department's new rules for substandard annuities, as they are now approving them, when they are NOT issued in the structured settlement market.  These rules are:

1) Insurers must comply with the requirements of section 99.6 (i)(1) and (4) of Reg 151;

2) Cases must be underwritten individually;

3) Issuance on a substandard basis is limited to those who have serious and acute health impairments based on submitted medical information. 

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As regular readers know, I have  been advocating the simplification of filings for submission to New York.   In my recent experience, problems with filings are most likely to involve variable material.  While the policy forms themselves are not reviewed under the certified process, the variable material (which is now considered a policy form and stamped approved) is read in detail and is the source of many policy form rejections.   As one reader commented to me and I agree,  this seems completely inconsistent with the whole concept of CL6 filings - i.e. they are not reviewed -  but that is the practice today. 

 

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In a recent presentation to the industry, the New York State Insurance Department's First Deputy Superintendent Kermitt Brooks several times used the phrase “speeding tickets” in the context of fines.  Mr. Brooks said the Department generally is not interested in writing "speeding tickets" based on minor technical violations, but prefers a holistic approach to compliance in which companies would feel more comfortable going to the Department when they find a problem internally.  The Superintendent has issued a draft regulation with 10 general regulatory principles, which you can view here.  

 www.lifeinsurancelawblog.com/Principles-based regulation(1).pdf. 

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At the recent Speed-to-Market seminar given by NYSID staff members,  First Deputy Superintendent Kermitt J. Brooks indicated that the target approval time for CL6 submission is 25-30 days.  As frequent readers know, my experience is that clean filings already exceed that goal, but that complicated filings, where errors are much more likely,  bring the average to something less than that.  Kathy Nelligan indicated that approximately 70% of submissions come in under the certified process and that the current rejection rate is at roughly 20%.  Her remarks confirmed that many of those rejections are for certification errors and problems with variability.  

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