Just a quick reminder that the first of the new annual reports of out-of-state filings is due on June 1, 2008. The form, designed by the Life Bureau, is to be used along with the market conduct profile. Because the market conduct profile may be completed by a different area than that which does the form filings, new coordination may be necessary for this year's filing.
Marketing Names have recently become an issue in variable material submissions. If you look to the guidance posted on the Department website in January, you will see the following with respect to marketing names.
Marketing names. If a marketing name is bracketed on the application form to reflect a future change and you do not know what the marketing name may be the Memorandum of Variable Material needs to indicate that any change in the marketing name will be submitted in a revised Memorandum of Variable Material for prior approval.
However, my experience is that it is NOT sufficient to state that if there is a change in the marketing name, a revised Memorandum of Variable Material will be submitted for approval. In fact a file was recently closed when that was exactly what the memorandum stated. The closing letter stated:
Each memorandum of variable material must specifically state the name of each product which may potentially be used with the above applications at this time. (Emphasis added.)
This statement seems totally unnecessary because one and only one marketing name was included in brackets and the required statement from the published guidance regarding future filings if there was a change was included in the SOV. Therefore, no other name could "potentially be used at this time" - or it would undeniably constitute use of an unapproved form! Clearly the company understood this and conveyed their understanding that the approval would cover only the one name provided in brackets on the application. Further the SOV was in full compliance with the published guidance with respect to future filings. But the filing was closed nonetheless and had to be re-submitted with the additional statement that there was no other name that would "potentially be used at this time." It is unclear to me what additional assurance that provides, but I recommend including it to avoid having your file closed!
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.....
Some companies have received "disapproval" letters when they have tried to file for extension of approval under CL6.
There appears to be some challenges when putting this type of submission together appropriately so that it can be approved under the certified process. It cannot be successfully done by merely making the request for an extension of approval in the submission letter for the new forms. However, the Department assures that extensions of approval CAN be accomplished via certification, but the Re of the letter and the certification would need to be correctly prepared and the request clear from the submission package.
The more complicated question though, is determining when a company needs to request an extension of approval to begin with. If a policy and an application form are both approved in the same package, are they approved solely for use with each other? Then if another application is developed for the same policy would an extension of approval for that policy be required or would a mere reference to the policy be sufficient in the submission letter? When I make that determination I look back at the original submission letter and the original approval letter to see what representations and conditions were put forth, but the longer we live in a certified approval world, the less clear it becomes when a real extension of approval is required.
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.
Continue Reading...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.
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.
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.
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.
Continue Reading...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!
Continue Reading...The New York State Insurance Department has announced that they plan to start sending warning letters to companies that submit deficient filings.
Continue Reading...Many life insurance companies are struggling with the evolving standards for filing and receiving approval of variable material. The NY Insurance Department published guidelines for variable material on their website, www.ins.state.ny.us/acrobat/il_fgsvm.pdf, and it is certainly helpful, it does not address many of the problems plaguing companies in recent months.
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.
Continue Reading...
On the New York State Insurance Department's website, there is posted guidance on the procedure for filings to change company names and addresses as well as in situations where there is a company merger. www.ins.state.ny.us/ilifchng.htm. However, the guidance does not suggest time frames for making the required filings. In recent conversations with Ms, Kathleen A. Nelligan, Chief Insurance Attorney for the Life Bureau, she requested that companies file these submissions as early as possible, so as to allow time for unforeseen issues that might arise. Ms. Nelligan indicated that the Department would prefer to receive the submissions early and issue conditional approvals than receive the submissions timed to correspond with the anticipated name change/merger date.
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