Post Approval Reviews Require New Submissions
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."
I can think of a couple of reasons why the Department might want to have a new submission of the revised forms, but this new procedure adds another entry and file opening to the already heavy workload of the administrative staff and it creates another level of uncertainty in the use of the certified process. It is entirely possible, based on the above procedural explanation, that additional correspondence and requests for changes could result from the prior approval review process.
Most objections that I have seen in post-approval reviews are not clear statutory or regulatory deficiencies, but rather language tweaks and requests for revised disclosures for "clarity" or based on an assertion of "entire contract" requirements. This discussion is limited to that kind of post-approval review, not one where clear violations of law or regulations are found. Under the old process to close a post-approval review file and have a final disposition, the revised forms would have to be approved as a part of that post-approval file.
Now the CL6 post approval file is closed and the company is told the review is complete. But the Company is also advised in letters such as those above, that a new submission is required to obtain prior approval of the revised forms if they wish to use them on a going-forward basis. I do not think it likely that most companies do wish to use revised forms on a going forward basis. They have approved forms that they think are perfectly legal. In fact, the Department's own review resulted in a similar determination, asking only for minor language changes. In some cases the product has been in the market for many months, or even years, without complaint or problem - not a single consumer has called confused about a provision the Department is asking be revised for clarity. So I am left with the question of what would happen if a Company received their notice that the post approval review was complete and instead of submitting revised forms for prior approval, decided that the review had illustrated that there are no deficiencies in the approved product based on statute, regulation or circular letter and so they prefer to continue issuing that approved from rather than going through the process of submitting a new product for full prior approval? This new process and the potential for significant additional delay in having a "final" product approval that is only slightly different from the one currently approved makes the question one worth thinking about.
