Life Bureau Filing Guidance Note

Guidance Date: May 29, 2019

Procedural Guidance for Insurers Filing Disclosure Pursuant to Sections 224.4(m) and 224.6(h) of Regulation 187 or for adding Producer Attestations or Certifications to Application Policy Forms

I.  Section 224.4(m) – (Proprietary Product Disclosure)

This disclosure is required where an insurer and its producers have a captive relationship (either directly or through performance/sales requirements) but where, under certain circumstances, the producers sell products of other insurers.  The disclosure must reflect actual practices as opposed to just reciting language from a producer agreement.  The Department understands that there are many insurers whose producers are nominally captive, but where the insurer routinely does not enforce the captive relationship and permits producers to sell products of other companies.  Disclosure is required in that setting and must reflect actual practices.

This disclosure is not required where a producer is restricted to offering only products for one insurer and could never, under any circumstances, sell products of other insurers.  This disclosure is also not required for independent producers who sell products of multiple insurers and who do not primarily sell products of any one of them.

  1. Expedited Procedure
    1. Disclosure that uses the sample language below is eligible for the expedited filing procedure. In lieu of filing the disclosure document, the Department will accept a letter stating that the sample language in this guidance note will be used.
    2. The letter needs to be signed by an officer of the company and dated.  If using SERFF, the letter should be attached under the supporting documentation tab.

Sample Language:

“As an agent of [Insurance Company Name], I am able to sell and service various types of [Insurance Company Name] products, such as life insurance and annuities. When offering life insurance and annuities, I am required to principally sell [Insurance Company Name] products.  However, I am able to offer you life insurance and annuity products of certain other insurance companies under the following circumstances:

  • [Insurance Company Name] does not offer a product that meets your needs or objectives,
  • the type of product that is in your best interest is not available from [Insurance Company Name],
  • the underwriting criteria of [Insurance Company Name] are not favorable for you,
  • the offer made by [Insurance Company Name] is not acceptable to you, or
  • [Insurance Company Name] has declined to issue a product to you.”

    Drafting Notes:
    1. The disclosure may include one or more of the above listed circumstances, as applicable.
    2. Where the captive relationship relates to performance/sales requirements, the second sentence of the disclosure should be revised as follows: “When offering life insurance and annuities, I am required to principally sell [Insurance Company Name] products in order to satisfy minimum production requirements established by [Insurance Company Name].”
    3. The sample disclosure may only be used if it reflects the insurer’s actual practices.
  1. Regular Procedure
    1. Disclosure that deviates in any way from the sample language will be reviewed on a case-by-case basis.
    2. The Department requests that in addition to a clean copy of the disclosure document, the filing also include either an explanation or redline version identifying how the disclosure document differs from the sample language in this guidance.  If using SERFF, both the clean copy and any redline version should be attached under the supporting documentation tab.    

II.  Section 224.6(h) – (Commission-Based/Fee-Based Product Disclosure)

This disclosure is required when an insurer offers both a commission-based and a fee-based version of a product.  The disclosure should identify the differences between the features of the two versions of the product (e.g. surrender charges or other fees, crediting rates, availability of features, etc.) as well as the differences in the compensation structure for the two versions of the product (i.e. Commission or Fee). 

  1. The disclosure should be included as supporting documentation in the submission of the policy form(s) to which the disclosure relates.  The filing should also identify any other previously approved policy forms to which the disclosure relates. For example, if the commission-based version of the product was previously approved and the company is now submitting a fee-based version of the product the disclosure should be included as supporting documentation in the submission of the fee-based policy form and the submission should identify the form number of the commission-based policy form and the Department file number in which the commission-based policy form was approved.
  2. The regular SERFF filing instructions applicable to the policy form filing would apply.  Instructions in section III of this guidance do not apply when the disclosure is included in the policy form filing.  Policy form filings that include Section 224.6(h) disclosure may not be made under the Circular Letter No. 6 (2004) process unless the Department had given permission. 
  3. Approval of the policy forms will be conditioned on use of the disclosure and will be further conditioned on the insurer establishing, maintaining, and auditing a system of supervision that is reasonably designed to achieve the insurer’s and producers’ compliance with subdivisions (a) through (k) of section 224.4 of Regulation 187, which are both essential to the Department approving commission-based/fee-based versions of a product.
  4. For a disclosure document that can’t be included in a policy form filing (e.g. future changes to the disclosure document or where both versions of the product were previously approved), please file the document in accordance with the instructions in section III of this guidance.  The filing should identify the form numbers of the previously approved policy forms and the Department file numbers in which they were approved.   

III.  All filings discussed above may be made through SERFF or mail in accordance with the following:

  1. For §224.4(m) filings via SERFF, please use:

    TOI = Life Insurance & Annuity Products
    Sub-TOI = General
    Filing Type = “Proprietary Product Disclosure”
    Requested Filing Mode = Other
    Explanation of Other = “Reg. 187 – 224.4(m)”
     
  2. For §224.6(h) filings via SERFF that are not part of a policy form filing, please use:

    TOI = Life Insurance & Annuity Products
    Sub-TOI = General
    Filing Type = “Commission/Fee Disclosure”
    Requested Filing Mode = Other
    Explanation of Other = “Reg. 187 – 224.6(h)”
     
  3. All filings made by mail should be addressed to:

    Peter A. Dumar, Jr.
    Chief Insurance Attorney, Life Bureau
    New York State Department of Financial Services
    One Commerce Plaza
    Albany, New York 12257

    The Re line should include: “Reg. 187 – 224.4(m)” or “Reg. 187 – 224.6(h)”.

IV.  Producer Attestations or Certifications in Application Policy Forms.

Some insurers have expressed a desire to add producer attestations or certifications to application policy forms related to suitability/best interests.  This is not required by Regulation 187 but is permissible.  To add attestations or certifications to application forms, a new version of the policy form must be submitted for approval.  The new version of the policy form will need a unique form number and the filing should follow the usual substantive and procedural requirements for application policy form filings.  The filing description should note that an attestation or certification is being added to the submitted policy form.

Policy form filings to add attestations or certifications should not be made through the Circular Letter No. 6 (2004) certified process unless the insurer has first shared the proposed attestation or certification language with the Department and the Department has granted the insurer permission to use the certified process.