New York regulators say a life insurer failed to meet state disclosure requirements when selling life insurance policies and annuities in their state.

The New York State Insurance Department has imposed a $1.25 million fine in connection with the allegations on Allstate Life Insurance Company of New York, a unit of Allstate Corp., Northbrook, Ill.

The New York department also is requiring the company pay $17 million in restitution to about 6,500 current and former customers.

New York department examiners found evidence that Allstate Life had failed to provide complete and accurate disclosures, or had failed to document the fact that it had provided such disclosures, for about 4,500 annuity customers and 2,000 life insurance policy customers who did business with the company from Jan. 1, 2001, to Dec. 31, 2003, officials say.

The disclosure problems were violations of New York Regulation 60, which requires insurers to inform customers who are thinking about replacing existing annuity contracts or life insurance policies about the potential costs and risks of replacing the existing products, officials say.

Allstate Life agreed to the findings and the fine but has stipulated that the violations “were not the result of any conscious company policy to evade the requirements of the insurance law and [New York] department regulations,” officials say.

Allstate Life has issued a statement of its own emphasizing the company’s efforts to improve Regulation 60 compliance.

Allstate Life is consolidating handling of Regulation 60 disclosures in one office, using imaging technology to document Regulation 60 disclosures, and increasing its Regulation 60 documentation staff, the company says.

Allstate Life also is developing a Regulation 60 file quality check program and new Regulation 60 educational tools for products, the company says.

“We are making direct contact with our impacted customers of Allstate Life Insurance Company of New York and are committed to the enhancements we have made to our processes,” the company says.