STATE OF NEW YORK
ONE COMMERCE PLAZA
ALBANY, NEW YORK 12257
NOTE: WITHDRAWN EFFECTIVE FEBRUARY 22, 2008
|Printable version of Circular Letter No. 7 (2007) (PDF Format)|
Circular Letter No. 7
|TO:||All authorized life insurers, retirement systems, and fraternal benefit societies|
|RE:||Disaster Planning, Preparedness and Response|
|STATUTORY REFERENCE: Sections 301, 305, and 308; and Articles 42, 45, and 46 of the New York Insurance Law|
This circular letter replaces and repeals Circular Letter No. 4 (2006). Authorized life insurers, retirement systems and fraternal benefit societies hereafter referred to as "life companies" in this circular letter and its attachments. Disaster planning, preparedness, and response for health insurers and property/casualty insurance industries are covered by separate circular letters.
On May 10, 2001, the Department issued Circular Letter No. 11 (2001) (CL 11(2001)) to all property/casualty insurers licensed to do business in New York State. CL 11 (2001) established the New York State Insurance Disaster Coalition (Insurance Disaster Coalition), a public/private partnership created to identify and organize specific Insurance Department and insurance industry resources to serve victims of natural disasters and other state emergencies. In addition, the circular letter provided for the creation of the Insurance Emergency Operations Center (IEOC), to be staffed by selected insurance industry disaster liaisons and representatives of the Insurance Department in order to coordinate disaster response.
Questions concerning any
aspect of this circular letter should be directed to Senior Insurance Examiner Ashbert
Carrington of the Disaster Preparedness and Response Bureau, by phone at (212) 480-5340,
by e-mail to firstname.lastname@example.org,
or by mail to State of New York Insurance Department, Disaster Preparedness and Response
Bureau, 25 Beaver Street, New York, NY 10004.
Insurance Company Disaster Liaisons
Your cooperation in furnishing timely and accurate responses is essential to the success of the New York State Insurance Disaster Coalition and is appreciated by the Insurance Department and the people of New York State.
Additional Guidance on Formulating/Maintaining a Disaster Response Plan
"LIFE COMPANIES"(As noted earlier, the term "life companies" as used in this document refers to all authorized life insurers, retirement systems and fraternal benefit societies.)
If your Disaster Response Plan provides answers to the following questions, it will generally have met the Disaster Preparedness and Response Bureaus best practices standards for a "Life Companys" Disaster Response Plan (Plan).
Your Plan should describe how you intend to provide your policyholders, certificateholders, claimants and beneficiaries (herein "customers"), with the assistance they will need to maintain coverage, seek assistance from the company, file claims, and obtain loans and other policyholder services in a disaster situation that affects customers.
The Department recognizes that the size, lines of business, corporate structure and location of life companies operations in New York varies greatly, as does their particular need for and capacity to implement Plans. Therefore, this Appendix describes, "best practices", some of which may be appropriate only to certain companies, but which all companies should evaluate as they construct and assess their Plans. The Department will evaluate the Plan of each "life company" on its own merits, using Circular Letter No. 4 (2006) and this Appendix as a guide.
The Department fully expects each "life
company" to perform a risk-based analysis of its capacity to serve its customers in
the event that a disaster affects large numbers of its customers. The Department expects
each company to establish, maintain and update a Plan that responds to the
risk-based analysis performed as required above. If a company already has a Plan or
Plans, it should be prepared to explain the elements of its Plan in terms of
the risks perceived by the company and how the Plan responds to those risks.
The Department is aware that certain of its
"life companies" are wholly owned subsidiaries of other "life
companies" or are members of groups composed of other than "life
companies". This tier of companies may be included in the Plan of the parent
company. In such cases, the subsidiary should be prepared to demonstrate to the Department
1) the parents Plan specifically provides for the needs of the subsidiary and its customers,
2) the parents Plan has specific application to the subsidiary in the case where only the subsidiary is affected by a disaster, and
3) the parents Plan provides for the continued operation and service to customers of the subsidiary in the event that the operations of the parent, and not the subsidiary, are affected by a disaster.
If the parents Plan does not cover the subsidiary, or if in the Departments judgment the parents Plan, as applied to the subsidiary, is inadequate, the subsidiary is required to develop and implement its own Plan in compliance with Circular Letter No. 4 (2006).In addition, smaller companies located in one geographic area of the state may find it cost effective to pool their resources in establishing shared Plan facilities, such as communications equipment, and alternate worksites. The Department encourages this kind of innovative and cooperative approach, and such an approach would be acceptable provided that:
1) the separate management and operational conduct of each company is maintained,
2) no confidential customer, policyholder or claimant financial or health information is disclosed to another party without appropriate consent, and
3) the security of all company information is separately protected, in compliance with Regulations 152, 169 and 173.
Sharing of administrative or processing systems is not contemplated by this paragraph.
Circular Letter No. 4 (2006) applies to all authorized "life companies" that sell or administer: individual or group life insurance, individual or group annuities, long term care insurance, or individual or group disability income insurance. Circular Letter No. 23 (2005). applies to companies selling medical or health care insurance policies only. Companies that sell both life and medical/health care insurance should respond to the questions in the relevant portions of the Appendix to Circular Letter No. 23 regarding medical insurance and this Appendix with regard to life insurance and related products. Companies selling both life and medical/health care insurance are encouraged to contact the Department if they have questions on how to prepare or report on their combined or separate Plans.
The elements of a Plan are contained in the
answers to the following questions in this, Appendix which is attached to and which is a
part of Circular Letter No. 4 (2006). The Department expects each company to establish and
maintain a Plan that considers and is responsive to all of these elements, subject
to the qualifications described in this Appendix with regard to "best practices"
and the distinctions that can be made for certain subsidiaries and smaller companies.
ELEMENTS OF DISASTER RESPONSE PLANS
1. What is the company/groups license status (domestic, foreign etc.)?
2. Does the company/group share or participate with an affiliate, parent company or another companys disaster response Plan?
3. What is the company/groups most recent premium volume? (See Exhibit 1, line 20.1, Col 1total direct premiums and annuity considerationsof the Companys Annual Statement.)
4. Where is the companys main administrative office location?
5. Where are the companys administrative offices which handle the following claims, requests and payments for New York residents located? (Please specify county and state of office and specify individual or group, where applicable)
a. death claims;
b. cash value surrenders/withdrawals;
c. policy loans;
d. changes to annuity payouts or separate account transfers;
e. other policy or contract changes;
f. premium payments
6. What types of products are sold or administered by the company/group?
1. Does the Company have a Plan?
2. Is it a written Plan?
3. Has the Plan been reviewed and approved by:
a) Senior Management?
b) Board of Directors or a committee thereof?
4. Has a resolution been adopted by the Board of Directors, or a committee thereof, attesting to the approval of the Plan?
5. Has Management identified additional, or alternative, dedicated resources that may be needed during a disaster? (For example, telephones, server capacity and staff.)
6. Is there a person/titled position or positions designated and charged with responsibility for formulating, activating and coordinating the conduct of the Plan?
7. Is there a person/titled position named as being responsible for monitoring and testing the Plan?
8. Is there a person/titled position named as being responsible for terminating the activation of the Plan following a disaster?
1. Does the company/group have a methodology for identifying a disaster, and the levels thereof, that require activation of all or parts of the Plan?
2. Are there guidelines that help to determine the need for activation of one or more parts of the Plan?
3. Has the company/group formed a disaster response team?
4. Are the responsibilities of the disaster response team members defined in order to establish areas of responsibility and reporting authority?
5. Does the Plan provide for training of staff in order to prepare them in their responsibilities in the case of varying levels of disasters that activate various parts of the Plan?
Policyholder and Claimant (Customer) Services:
1. Does the Plan explain what steps the company has taken to ensure timely responses to customers for such requests as:
a. death claims;
b. lost policy or contract;
c. cash value surrenders/withdrawals;
d. policy loans;
e. changes to annuity payouts or separate account transfers;
f. extended grace periods for payment of premiums;
g. temporary or permanent changes of contact information;
h. access to an agent or policyholder representative?
2. Has Management provided for additional or alternative claims and policyholder service handling capacity and procedures (system or personnel) that might be needed during the activation of the Plan?
3. If the company/group uses a Third Party Administrator (TPA), Managing General Administrator (MGA), etc. for claims processing; has that TPA, MGA, etc. made plans to provide for additional or alternative claims and policyholder service handling capacity and procedures (system or personnel) that might be needed during the activation of the Plan?
1. Does the Plan explain what steps will be taken to notify, in a timely manner, its customers of any procedural changes?
2. Does the Plan describe how your company communicates with, and responds to, employees of a group located in state, when the employer is out of state during a disaster (for example, the employer is in New Orleans, and the employee is in NY)?
3. Does the Plan describe how your company communicates with, and responds to, employees of a group located out of state, when the employer is in state during a disaster (for example, the employee in New Jersey, and the employer is in NY)?
1. Does the Plan explain what steps will be taken to notify, in a timely manner, the companys producers of any procedural changes made in response to a disaster?
2. Does the Plan provide for alternative communication links with producers affected by the disaster?
3. Does the Plan provide for alternative facilities/equipment for producers (who are normally supplied with facilities and equipment by the company) who are affected by the disaster?
4. Does the Plan provide for backup record keeping systems for producers (whose records are normally maintained by the company) who are affected by the disaster?
1. Does the Plan include any additional procedures for detecting fraud in the event that normal antifraud programs are unavailable or impaired by the disaster?
2. Does the Plan include specific additional procedures to detect and prevent fraud that may be attempted as a result of the disaster?
3. Does the Plan include procedures for reporting fraudulent activity to the appropriate regulatory authorities?
Testing of Plan:
1. Has the Plan been tested?
2. Does the Plan indicate how often the Plan will be tested?
3. Did the testing include the use of an alternate site for information technology (IT) systems?