New York State Seal
STATE OF NEW YORK
INSURANCE DEPARTMENT
25 BEAVER STREET
NEW YORK, NEW YORK 10004

The Office of General Counsel issued the following informal opinion on October 2, 2001, representing the position of the New York State Insurance Department.

RE: Disclosure Statements for Life Insurance Policies and Annuity Contracts and the Prior Approval Process.

Question Presented:

Are disclosure statements relative to life insurance and annuity products part of policy forms that must be submitted for prior approval under N.Y. Ins. Law § 3201 (McKinney 2000)?

Conclusion:

No. Disclosure statements are not part of policy forms that must be submitted for prior approval under N.Y. Ins. Law § 3201(McKinney 2000). However, such disclosure statements must be retained by insurers as part of the policy record and are subject to examination by the Department. N.Y. Ins. Law §§ 308 and 309 (McKinney 2000) and N.Y. Comp. Codes R. and Regs. tit. 11, § 243.2 (2001) (Regulation 152).

Facts:

No specific facts were provided relative to the above question.

Analysis:

N.Y. Ins. Law § 3201(McKinney 2000) provides in pertinent part:

(a) In this article, "policy form" means any policy, contract, certificate, or evidence of insurance and any application therefor, or rider or endorsement thereto, affording benefits of the kinds of insurance specified in paragraph one, two, three or twenty-four of subsection (a) of section one thousand one hundred thirteen of this chapter, a group annuity certificate . . . and a funding agreement . . . The term "policy form" shall not include an agreement, special rider, or endorsement relating only to the manner of distribution of benefits or to the reservation of rights and benefits used at the request of the individual policyholder, contract holder or certificate holder.

(b)(1) No policy form shall be delivered or issued for delivery in this state unless it has been filed with and approved by the superintendent as conforming to the requirements of this chapter and not inconsistent with law.

A disclosure statement is not a policy form within the meaning of N. Y. Ins. Law § 3201 (McKinney 2000). The purpose of a disclosure statement is to provide explanatory information regarding the significant features of the insurance policy to enable the insured to make an informed decision regarding purchasing the insurance policy. Disclosure statements do not provide evidence of insurance, nor do they afford insurance benefits to the insured. Disclosure statements do not change the terms, provisions or benefits of the insurance policy or contract. Nor can they be viewed as an application for insurance, which is essentially a request for insurance made by the insured. However, it should be noted that disclosure statements contained in the application, which clearly is a policy form within the meaning of N. Y. Ins. Law § 3201 (McKinney 2000), would be subject to prior approval under this statute.

Although a disclosure statement is not subject to prior approval under section 3201, a company’s compliance with applicable disclosure requirements will be subject to examination in the course of the Department’s examinations of a company or in the investigation of any complaints or market conduct abuses brought to the Department’s attention. N.Y. Ins. Law §§ 308, 309 (McKinney 2000), as well as other relevant provisions of the Insurance Law, give the superintendent broad authority to require that these disclosure statements are submitted as part of the examination process.

N.Y. Ins. Law § 308 (a) (McKinney 2000) provides in pertinent part that:

(a) The superintendent may also address to . . . any authorized insurer or its officers any inquiry in relation to its transactions or condition or any matter connected therewith. . . (emphasis added)

N.Y. Ins. Law § 309 (McKinney 2000) provides in pertinent part:

(a) The superintendent may make an examination into the affairs of any insurance corporation or other insurer doing or authorized to do any insurance business in this state or, of any pension fund, retirement system or other organization which is required by law to make reports to, or is subject to examination by, the department as often as he deems it expedient for the protection of the interests of the people of this state, in addition to examinations authorized by other provisions of this chapter.

Further, insurers are required to retain such disclosure statements for a period of six years after the date the policy is no longer in force or until after the filing of the report on examination, whichever is longer. N.Y. Comp. Codes R. and Regs. tit. 11, § 243.2 (2001) (Regulation 152) provides in pertinent part:

[E]very insurer shall maintain its claims, rating, underwriting, marketing, complaint, financial, and producer licensing records, and such other records subject to examination by the superintendent, in accordance with the provisions of this Part. (emphasis added)

(b) Except as otherwise required by law or regulation, an insurer shall maintain:

(1) A policy record for each insurance contract or policy for six calendar years after the date the policy is no longer in force or until after the filing of the report on examination in which the record was subject to review, whichever is longer. Policy records need not be segregated from the policy records of other states as long as they are maintained in accordance with the provisions of this Part. A separate copy need not be maintained in an individual policy record, provided that any data relating to a specific contract or policy can be retrieved pursuant to section 243.3(a) of this Part. A policy record shall include:

(i) the policy term, basis for rating, and return premium amounts, if any;

(ii) the application, including any application form or enrollment form for coverage under any insurance contract or policy;

(iii) the contract or policy forms issued including the declaration pages, endorsements, riders, and termination notices of the contract or policy. Binders shall be retained if a contract or policy was not issued; and

(iv) other information necessary for reconstructing the solicitation, rating, and underwriting of the contract or policy. (emphasis added)

. . .

(8) Any other-record for six calendar years from its creation or until after the filing of a report on examination or the conclusion of an investigation in which the record was subject to review.

Essentially identical requirements for retention of required disclosure statements are contained in Regulation 60, regarding replacement of life insurance policies and annuity contracts, and Regulation 74, regarding life and annuity cost disclosure and sales illustrations. N.Y. Comp. Codes R. and Regs. tit. 11, § 51.6 (b)(6) (2001), N.Y. Comp. Codes R. and Regs. tit. 11, § 53-1.4 (a) and § 53-3.5 (e) (2000). Accordingly, insurers must retain disclosure statements relative to life insurance and annuity products on file and provide them upon request.

In conclusion, disclosure statements are not part of policy forms that must be submitted for prior approval under N.Y. Ins. Law § 3201(McKinney 2000). However, pursuant to N.Y. Ins. Law §§ 308 and 309 (McKinney 2000) and N.Y. Comp. Codes R. and Regs. tit. 11, § 243.2 (2001) (Regulation 152), insurers are required to retain these disclosure statements on file and submit them upon request.

For further information, you may contact Attorney Pascale Joasil at the New York City office.