The New York State Department of Financial Services has fined three parties, including a credit union, a total of $1.47 million for offering, marketing and underwriting an unlicensed credit and debit card-based life insurance program to credit union members.
Specifically, DFS superintendent Maria T. Vullo said the regulator entered into a consent order with Clements & Co., certain underwriters at Lloyd’s of London and United Nations Federal Credit Union, a $5 billion institution based in Long Island City, N.Y. The order requires the parties to pay the aforementioned fine and to establish an insurance program with a DFS-licensed insurer (Monitor Life Insurance Company of New York).
DFS explained that the prior insurance program offered guaranteed-issue term life insurance to UNFCU’s members in more than 210 countries and territories. A total of more than 4,300 policies were sold, including to 804 members listing New York as their primary location. But that insurance did not meet New York standards for policies sold by insurers approved by DFS. For example, said DFS, the policies did not provide for the mandatory “conversion privilege” under which insurers are required to update or renew a policy regardless of the insured’s health; nor were the policy rates sufficient to support the program, as required by New York Insurance Law.
Prior to this settlement, DFS added, the program had been running at a “severe loss and was unsustainable.”
“DFS is taking this action to ensure that consumers receive the unparalleled protections provided by New York Insurance Law,” Vullo said in a statement. “This case is emblematic of how licensing and regulatory oversight is necessary to prevent consumers from improper schemes. We appreciate that these companies have now committed to maintaining coverage for U.N. employees and alumni, and are especially pleased that DFS licensee, Monitor Life Insurance Company of New York, has stepped up to take on these policies.”
According to the consent order, Clements is a New York-licensed insurance broker and agent with offices in London and Washington. The Lloyd’s underwriters named in the case are managed by managing agents Tokio Marine Kiln Syndicates and Beazley Furlonge Ltd. (which are not licensed to sell insurance in New York).
Monitor Life is a wholly owned subsidiary of AmFirst Insurance Co., which has its main office in Jackson, Miss.
