9
proof of receipt by the applicant of the ‘IMPORTANT Notice Regarding
Replacement or Change of Life Insurance Policies or Annuity Contracts’. . . .”
The examiner reviewed a sample of replacement files consisting of 170 new annuity
contracts and 191 new life policies issued during the examination period. The sample included
both internal and external replacements. The review revealed several deviations from Insurance
Regulation No. 60, and significant inconsistencies in following or adhering to the Company’s own
replacement guidelines and procedures.
In 5 (2.6%) of the 191 life insurance policy replacements reviewed and in 6 (3.5%) of 170
annuity contract replacements reviewed, the examiner noted that the IMPORTANT Notice was
either not provided to the applicant, or it was provided to the applicant later than at the time of
application. The examiner also noted that in each instance, the Company failed to require with or
as part of the application a proof of receipt by the applicant of the “IMPORTANT Notice”.
The Company violated Insurance Regulation No. 60 (2
nd
Amendment), 11 NYCRR Section
51.5(c)(3) and Insurance Regulation 60 (3
rd
Amendment), 11 NYCRR Section 51.5(c)(4) as well
as Insurance Regulation No. 60 (2
nd
Amendment), 11 NYCRR Section 51.6(b)(2) and Insurance
Regulation No. 60 (3rd Amendment), 11 NYCRR Section 51.6(b)(2) by failing to require with, or
as part of the applications, proof of receipt by the applicants of the “IMPORTANT Notice”.
Insurance Regulation No. 60 (2
nd
Amendment), 11 NYCRR Section 51.6(b) states, in part:
“Where a replacement has occurred or is likely to occur, the insurer replacing the
life insurance policy or annuity contract shall: . . .
(3) Examine any proposal used, including the sales material used in the sale of the
proposed life insurance policy or annuity contract, and the ‘Disclosure Statement’,
and ascertain that they are accurate and meet the requirements of the Insurance Law
and this Part. . . . ”
Insurance Regulation No. 60 (3
rd
Amendment), 11 NYCRR Section 51.6(b) states, in part:
“Where a replacement has occurred or is likely to occur, the insurer replacing the
life insurance policy or annuity contract shall: . . .
(4) examine the sales material, including any proposal, used in the sale of the life
insurance policy or annuity contract, and the ‘Disclosure Statement’, and ascertain
that they are accurate and meet the requirements of the Insurance Law and
regulations . . . ”
In 129 (67.5%) of the 191 life insurance policy replacements reviewed and in 132 (77.6%)
of 170 annuity contract replacements reviewed, the examiner noted various inconsistencies on the