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

Yesterday I received some suggestions from a CL6 reviewer on ways to make a submission of revised variable material move more quickly.  These were quite helpful and much appreciated.  While there were several, one suggests that it may make sense for companies to completely re-think  how they organize their Variable Material.  It will certainly take some time to do, but the feedback from the Department is that it will speed the reviews and so, ultimately, that effort should pay off with faster approvals! 

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Yesterday I was frustrated by one issue where it seemed that scarce resources were being spent on an issue that  seems small to me in the overall scheme of things, and today I am confronted by another - this time one from the NYSID. 

Post-approval reviews often raise the issue of terminology in when a change of owner/beneficiary is effective and when an assignment is effective.  The outlines indicate that the former should be effective upon receipt.  They are silent on assignments.  But if any word appears in the policy provision beside receipt, e.g. "received for recording"  an objection is very likely to follow.  Post-approval review letters are often quite assertive on this issue stating along the lines of:  A policy change subject to recording by the company has the potential for excessive delays which are beyond the control of the policyowner.  The Department has found such administrative delays to be unfair, unjust, and inequitable in violation of Section 3201(c)(2). 

This assertion is regardless of whether there is any evidence that any administrative delay has ever occurred or whether any policyowner has ever been disadvantaged.    Further, it is not considered sufficient to provide the Department with an assurance that received for recording (or whatever similar language is used by the particular company) merely means date stamping a piece of mail received, which is obviously no different than receiving.  An endorsement to in-force business to eliminate any reference to any word other than received or receipt is still demanded. 

Absolutely no change will be made to any company process as a result of this endorsement.  To the best of anyone's knowledge that I have talked to, this has never been a problem in the real world.  Obviously, an endorsement is very costly to the company both in actual immediate costs, and also in dealing with subsequent customer service calls asking what the endorsement is about.  

The Department is spending its very limited resources demanding these endorsements, reviewing them, approving them and overseeing their mailing to in-force business.  Increased company costs get passed along to the very same consumers who call (further increasing costs) asking what the endorsement means.  Those confused consumers get told not to worry, the endorsement doesn't mean anything because absolutely nothing changes in policy administration.   Where is the benefit here?  Is that what the post-approval process is really about? 

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In this morning's mail, I had 5 approvals!  That is a great way to start a Friday.  All of them were CL6 submissions and all 5 had been submitted less than 2 weeks ago!!!   It is very nice to see that the recent faster turnarounds on CL6 submissions seem to be lasting.  In the past we have had some really great periods but they were often followed by very slow times.   These days, the turn around is predictable and consistent, which makes it so much easier for planning submissions in relation to product launches! 

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Disclaimer:  I speak only for myself here.  I do not purport to speak for "the industry."  I do not purport to speak for my clients.  This is just me.  So....

In the policy forms meeting with the Department today there was an extended discussion  about the process for making fund changes and a good deal of dissatisfaction expressed.  I can understand wanting more flexibility in Variable Material, particularly with respect to fund changes.  However, as of today, we have a clear process.  We know what to do, the guidance is easy to comply with and it is fast!  For me, this is the definition of a good process.  We can argue around and around about what is necessary from a legal and regulatory viewpoint, but on a day-to-day basis, this process is a good one because it is clear.   I like knowing that within 5-10 days of getting final fund change information I can have documented approval for them to be used because I know exactly what to do and how long it will take. 

What I am very concerned about is opening up a protracted discussion which will, by definition, create uncertainty.   But not only that, most importantly, who is going to be involved in this discussion?  At the Department, it is going to be the people we need to have spending time on other, in my personal view, more important matters.  I would like Kathy, Ralph, Deb, Dennis and Tom and the people who report to them, spending time on innovative products, on revising the outlines, on new regulations, on wrapping up post-approval reviews and on the myriad of other things that need their attention so that life insurers can do their business in New York.  They will likely spend hours internally - and with us - talking about Variable Material and fund changes - all to fix something that may not be perfect, but it works!  At least we know how to get fund changes approved! 

Who can get an "innovative product" approved quickly?  And we won't be able to if the staff is spending all their time debating fund change nuances and other items already dealt with in the recently posted guidance.  Some may not have gotten everything they want, that rarely happens in a regulated industry.  But can't we pick our battles, deal with it and get on to more pressing issues?  After all, there are only so many hours in a day.....

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The NYSID has recently posted a new round of OGC opinions.  In this group are two related to life insurance. 

The first:  Re: Anti-money laundering program of life insurers is number 08-01-06.   This opinion contains a fairly unusual discussion by a state Insurance Department of federal law.  The conclusion is that neither federal or state law precludes an insurer from accepting premium on a term policy by bank check or money order.  However, the opinion also states though that an insurer is not obligated under NY law to accept premium by bank check or money order, so long as the policy prohibiting such modes of payment is implemented uniformly and nothing in the policy would be an unfair trade practice.  Although the opinion offers no examples of what such an unfair trade practice might be, it does say that such a finding is conceivable. 

The second:   Re: Licensure Requirement for Insurance Consulting is number 08-01-12.   This opinion has 6 specific questions related to nonresident unlicensed fee-based consultants.  The questions each receive a negative response from the Department, indicating that none of the inquired-about actions can be done without a NY license and may be sanctionable.   This discussion is interesting not only for the specific facts presented, but for the scope of the "Insurance Consultant" license and the job duties for which a license is required. 

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The NYSID has posted new SERFF guidelines for life product submissions on their website.   This new guidance is particularly helpful in completing the NAIC Transmittal form specifically for NY requirements. 

It should be noted that the Life Bureau has not historically given priority to SERFF filings and that does not appear to change with this guidance.   If a certified filing is clean, it will move VERY quickly through the Life Bureau whether it is submitted by paper or via SERFF.   We would be happy to discuss the pros and cons of each method with you! 

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As many regular readers probably know, our business has grown dramatically over the last year!  The work has poured in and quickly outpaced what I could handle on my own.  So I added first one paralegal, Suzanne Seay, and then another, Stephanie Copeland.  The added staff meant I also needed an IT person and an Office Manager, so those were next!  I hope you will never speak with my IT guy, Chris, but you will probably talk to Anna when you call the office.  Together we form a great working unit offering top quality services to our clients in the most cost-effective way possible.  It is fun to work with people who I hand-selected for this work and who come in every morning happy to be here and enjoying each other's company and the work we do. 

While this growth is good for the firm and good for our clients, it meant we had outgrown the space I started in all by myself a year ago.  So... we have just moved down the street to new, bigger space with a much more advanced computer and phone system and great new offices for us all to work in.  Best of all, there is lots of room here for more growth!  So please make note of our new location!

The Currin Law Office, LLC; 14 Main Street, Suite 200, Greenwich, NY 12834.  The phone is the same:  518-692-2494.  ccurrin@currinlawoffice.com

I look forward to working together in 2008! 

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On Monday, the Iowa Insurance Division issued a Press Release and Bulletin announcing the Annuity Disclosure Template Pilot Program for Fixed Annuities, Including Indexed Annuities, Sold in Iowa.  This pilot program, using ACLI disclosure templates, began on 1/28/08, but companies can begin whenever their system modifications are complete, according to the Bulletin.  Current disclosure forms can be used until those system modifications are complete and the new ACLI template disclosure forms are available. 

The Bulletin specifically states that it is not necessary to use the template forms for all products sold in Iowa. 

The Iowa Insurance Division must be notified of participation and they have set up a dedicated e-mail for this purpose.  The address is annuity.project@IID.state.ia.us. 

The Iowa Division and the ACLI have indicated that the templates will be evaluated during the one-year pilot project and modifications may be made to the templates, if necessary, during that time. 

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Posted recently on the NYSID's website is long-awaited revised guidance on variable material.  For those that have attended industry meetings lately, it will be no surprise that the Department has been reviewing their earlier guidance.  But there may be some surprises on the new guidance. 

There has been a lot of confusion, in particular, over fund changes and officer changes recently.  While I might have preferred some of these issues come out differently, I think it is most important that we all know the rules and know what we need to do to get our files in and out - stamped APPROVED - quickly. 

This guidance helps with that effort and provides much needed answers to common questions in drafting and submitting Statements of Variable Material. 

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