MEMORANDUM
REVISED DRAFT: 2/11/2009 2:41:53 PM
March 26, 2002 TO Diane Stuto Senior Vice President Life Insurance Council of New York (LICONY)
FROM Amy M. Anderson Counsel, Government Relations Principal Life Insurance Company RE Suggested Amendments to New York Regulation 60
This memo is in furtherance of the October 25, 2001, LICONY Replacements Task Force conference call. You advised that staff in the Life Bureau indicated that they would be willing to entertain suggestions for amendments to Regulation 60, now that it has been in place for several years. Companies were encouraged during the call to raise suggestions for amendments to the Regulation. Principal Life would like to see one fundamental change in Regulation 60. Our suggestions basically boil down to the following proposal: use all of New York‟s Regulation 60 components, but to use them in a different order. We believe our suggestion for reordering the process will result in a more logical, intuitive, and efficient experience for both prospective purchasers and insurers. We believe that if we are dealing with a replacement, that the first client meeting needs to be maximized more than it is under today's scheme. We need to drill down and address replacement issues using tools such as the Important Notice and the Disclosure Statement (with available and verifiable information) at the first meeting when the application is taken. Then at that second meeting, replacement is again forefront if an amended disclosure statements is available when the producer delivers the policy. The applicant would still have a 60 -day free look period. New York law explicitly embraces the concept that a replacement regulation should not unduly hinder New Yorkers form purchasing insurance products in a time efficient manner. That objective is found in Section 3209 (d)(8) of the New York Insurance Law, which indicates in part that … “no applicant for life insurance shall be prevented or delayed in „effecting or applying‟ for coverage by the requirements of this section.” Again, we do not find fault with the components that make up Regulation 60. We submit that these effects of Regulation 60 can frustrate some prospective purchaser‟s objectives and at the same time, not provide greater protections than what could be accomplished by a reordering of the steps. We think that the process can be significantly improved by reordering the components or steps. The changes recommended in this memo can be made to Regulation 60 without frustrating its purpose and at
Suggested Amendments to New York Regulation 60 Page 2 the same time, lessen the overall transaction time and costs for the insurer and for the prospective purchaser. We think it would be helpful to illustrate this discussion with a barebones exposure of today‟s current replacement components/steps and our suggestions to revise the steps. Currently, under Regulation 60, the process generally is as follows: First meeting with Client 1. Producer and Client meet and complete Definition of Replacement form. If all answers are NO then proceed with normal application process. If one answer is YES then gather application information and complete the Client Authorization form which will be sent to the replaced insurer. (an application cannot be taken at this time). ADMINISTRATIVE DUTIES BETWEEN FIRST AND SECOND CLIENT MEETING 2. Producer mails Client Authorization to the replaced insurer. 3. Wait for response in the prescribed time. Second meeting with Client 4. If response is received, completes the Disclosure Statement and Important Notice and explain to client. Complete and sign application and Sales and Marketing Report. 5. If no response is received, complete the Disclosure Statement with good faith approximations. Complete and sign application and Sales and Marketing Report. ADMINISTRATIVE DUTIES BETWEEN SECOND AND THIRD CLIENT MEETING Send application and all replacement paperwork to the Home Office. Third meeting with Client Deliver the policy. Explain 60-day free look period. 60-day free look period. PRINCIPAL LIFE’S SUGGESTIONS TO REORDER REGULATION 60 COMPONENTS First meeting with Client 1. Producer and Client meet and complete Definition of Replacement form. If all answers NO then proceed with application as usual.
Suggested Amendments to New York Regulation 60 Page 3 If one answer is YES then, complete the Client Authorization, which will be sent to the replaced insurer. Complete the disclosure statement with available and verifiable information (include a copy of the form from which this information has been obtained). Discuss with client. Complete the Sales and Marketing Report process. Complete the Important Notice. Explain to client. Complete the application.
ADMINISTRATIVE DUTIES BETWEEN FIRST AND SECOND CLIENT MEETING 2. Submit application and all replacement paperwork to the Home Office 3. Producer mails Client Authorization to the replaced insurer. 4. Wait for response in the prescribed time. 5. Replacement application processed as usual. 6. If information is received by the producer from the replaced insurer after the application and replacement paperwork has been submitted to the Home Office producer completes an amended Disclosure Statement. Second meeting with Client Explain the amended disclosure statement to the client if applicable. Then deliver the policy. Explain the 60 day free look period. 60-day free look period.
In conclusion, it is New York‟s prerogative and duty to protect its citizens against unwise replacements, we believe that it can be better accomplished with the mechanics outlined in this memorandum in conjunction with New York‟s unique 60-day free look period. Basically, it boils down to three substantive steps. First, discussing the pros and cons of replacement the time the application is taken. Second, reviewing the replacement decision again in a more number focused sense at the time the policy is delivered. Third, giving the customer 60 days to either overturn or confirm their initial decision to replace. This sequence results in the best decisionmaking process for the customer and the most cost-efficient process for the insurance company.
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Jenelle Sarcone Dan Werner NY State File