Speed to market is a perennial hot topic as insurers hasten to meet pent-up product demand in key markets. New York, Texas, Illinois and several other states are responding by accelerating product approvals through “certified filings.”
The theory behind certified filings goes something like this: If a company officer certifies that the forms comply with state insurance laws, the usual forms filing and approval processes may be abbreviated or, in some cases, even waived based on that certification.
Illinois only recently adopted the use of certified filings. Other states, including New York and Texas, have had such procedures in place for years. Here is a roundup of their key initiatives:
New York: New York created several speed to market initiatives in the past 10 years. In 2004, it introduced Circular Letter #6. CL6 form approvals are based on the department’s acceptance of a unique compliance certification signed by a company officer. The officer certifies that the filed forms comply with state insurance laws, regulations and circular letters, including nonforfeiture laws.
About 70% of all life insurance and annuity form submissions in New York are now filed via CL6. However, a high percentage of CL6 filings are rejected, often due to improperly completed certifications and cover letters, certification forms, and other procedural issues. After resolving these issues, most CL6 submissions are approved.
The New York Department started a post approval audit of CL6 submissions to determine whether these submissions are actually in compliance with actuarial requirements. As a result of post-approval reviews, the department contacted a number of insurers about their CL6 filings. Such reviews may generate comment letters from the legal and actuarial divisions. Response is required within 15 calendar days for each comment letter.
It behooves companies to respond thoroughly and promptly to the comment letters. CL6 noncompliance can result in “corrective and disciplinary action including retroactive modification, as authorized by law” against the company and officer completing the certification.
Practicing safeguards before filing is the best way to avoid significant post-approval review comments. These safeguards may include assuring that published product guidelines are always reviewed, and giving particular care and attention to the state’s actuarial requirements.