Life insurers and producers should stop trying to sell unapproved insurance policies and contracts to residents of New York state.

Mitchel Gennaoui and Michael Maffei, deputy assistants in the New York State Insurance Department, makes that point in a draft 2011 circular letter posted on the department website.

The New York department has found “several” cases of agents and brokers helping unauthorized insurers sell annuity contracts and life insurance policies to New York residents in New YorkNew York, the officials write in the draft circular letter.

“In many instances, these producers submitted applications on behalf of New York residents that falsely stated that the transactions had taken place outside of New York, even though the producers in fact solicited applicants, completed applications, or delivered the policies or contracts in New York,” the officials write.

Unauthorized insurers issued policies and contracts to the applicants even though they knew or should have known about patterns of irregularities, the officials add.

The policies and contracts sold are not subject to New York guaranty fund protection, and they may not meet New York standards for account values, cash surrender values, and death benefits or annuity income benefits, the officials say.

New York Insurance Law Section 1102 prohibits unauthorized insurers from doing businesses in New York state, and authorized insurers and producers have a responsibility to help prevent the sale of unapproved life insurance policies and annuity contracts in the state, the officials say.

“An unauthorized insurer that notices repeated transactions from specific producers involving New York residents should question the legitimacy of those transactions,” the officials say.

More New York State Insurance Department coverage from National Underwriter Life & Health: