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July 03, 2018 at 04:56 PM
(Photo: John Disney/ALM)
Two insurers agreed to pay close to $2.5 million in restitution and penalties on Monday for failing to provide information required by law to policyholders in New York state.
The American Family Life Assurance Co. of New York, or Aflac, and Transamerica Financial Life Insurance Co. violated more than a dozen of the state’s insurance laws and regulations between 2006 and 2014, the New York State Department of Financial Services said.
Monday’s action by the New York department was the second in as many weeks against life insurance companies that did not follow the state’s insurance regulations when contacting customers. Athene Life Insurance Co. and First Allmerica Financial Life Insurance Co. entered into similar agreements with the New York department last week after the agency found those companies did not communicate with their policyholders as required by law.
(Related: New York Regulators Impose $15 Million Fine Over Life Notice Problems)
Aflac’s violations involved both its communication with customers and its marketing practices.
The company’s agreement with the New York department listed several violations of the state’s laws and regulations from 2009 to 2011. The agreement said Aflac did not give potential customers information that’s required by law before an application for a policy is taken. That information is not detailed in the agreement.
Aflac also failed to mention in ads for policies with accelerated death benefits that receiving those benefits could affect someone’s eligibility for public assistance programs, the DFS said. It also left out that those benefits might be taxable.
The company also did not train its agents to follow the state’s regulations about replacement life insurance policies, the New York department said.
Aflac made restitution totaling $961,478 to New York consumers as part of the agreement. The company also paid a civil penalty of $176,890 to the agency.
The agreement with Transamerica detailed violations from 2006 to 2009 and 2010 to 2014.
