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DFS Takes Action Against National Integrity Life Insurance

Posted on December 6, 2018 at 11:50 AM
New York's Department of Financial Services announced that National Integrity Life Insurance Company will pay a $240,000 civil monetary penalty for violations of New York Insurance Regulations 187 and 60 that govern practices for replacing deferred annuity contracts with immediate annuity contracts. In addition, National Integrity has agreed to make restitution to individual consumers affected by its former replacement practices. The settlement is part of DFS???s on-going investigation into deferred-to-immediate annuity replacement practices in New York. DFS issued guidance in December 2016 to remind life insurers, producers and distributors of their obligations under New York Insurance Law and regulations to perform an adequate suitability review when recommending the sale or replacement of an annuity. DFS???s investigation found that, between 2011 and 2016, National Integrity did not obtain information to determine the suitability of replacing deferred with immediate annuities, including information about the amount of guaranteed income that would be available if a contract holder???s existing deferred annuity was annuitized. The company also failed to disclose adequate information to enable contract holders to compare the payout amounts available under the deferred annuity and the proposed immediate annuity, and make an informed decision as to whether to replace the deferred annuity. As a result, National Integrity issued immediate annuities without complete annuitization information for the replaced deferred annuity contract. National Integrity cooperated fully with the Department???s investigation and revised its Disclosure Statements after DFS identified the improper replacement practices. Under the terms of the Consent Order, National Integrity has agreed to provide restitution, including interest, to affected New York contract holders who were harmed by the suitability and disclosure failures during the deferred-to-immediate replacement transactions. DFS commends National Integrity???s responsiveness and its revision of its replacement practices, as well as the company???s commitment to providing restitution to contract holders. A copy of the Consent Order between DFS and National Integrity can be found below. Read More: Release https://www.dfs.ny.gov/about/press/pr1812051.htm Order https://www.dfs.ny.gov/about/ea/ea181205_national_integrity.pdf

Categories: Fair Dealing