New York State
FILING GUIDANCE NOTE
James J. Wrynn Superintendent of Insurance 25 Beaver Street New York, N.Y. 10004
|GUIDANCE DATE: 08/08/2008 Updated 11/01/2010||FOR IMMEDIATE RELEASE|
The use of variable material in individual annuity and life insurance policy forms is limited. Insurers should comply with the following guidelines when filing for approval individual annuity and life insurance policy forms that include variable material.Please note that effective April 15, 2008 all fund changes will need to be filed for approval. We will no longer accept informational filings for fund changes after that date. See Section II. B. 11 below.
A. Prior Approval
The Memorandum of Variable Material reflecting the variable material needs to be submitted for approval. Please refer to the guidance currently available on the Department website entitled “New Procedure and Filing Guidance for Approval of Memorandum of Variable Material.”
B. Bracketing/Underlining of Variable Material
All variable material needs to be bracketed, underlined or boxed to denote variability. Shading of material to denote variability is not acceptable. The Memorandum of Variable Material must indicate how variable material is denoted.
Each item of variable material, together with a detailed explanation of how and when the item may vary, needs to be set forth in the Memorandum of Variable Material. See section I. F. below.
If brackets are used, there needs to be a beginning and ending bracket for each variable item. It is permissible to show variations within variations. For example, an outer set of brackets may indicate that the provision may either appear or be omitted. Inside these brackets may be another set of brackets that indicates that there may be some specified variation within the provision when it appears. For denoting this variable material there should be two beginning brackets and two ending brackets.
Other methods of denoting variable material may be used only if such method is found acceptable by the Department prior to use.
C. Caption of Memorandum of Variable Material
The Memorandum of Variable Material needs to contain a caption at the top of the first page which indicates by form number each form to which it applies. (The use of “et al.” to reference forms in the caption is not acceptable.)
The Memorandum needs to contain a current date (the revision date) in the caption to distinguish it from past or future versions.
The Memorandum needs to also set forth the company name in or above the caption.
D. No Form Number
The Memorandum of Variable Material does not have its own Department form number. If you choose to give the Memorandum its own form number the Department will consider it to be only for your internal use. Any form number you choose to give to the Memorandum must not appear in the lower left corner.
E. Hypothetical “John or Jane Doe” material.
Hypothetical “John or Jane Doe” material does not require a Memorandum of Variable Material to be submitted for prior approval because this information is considered illustrative. However, such illustrative material needs to still be bracketed or underlined in the policy form. Examples of illustrative material include the name of insured, name of owner, face amount, premium amount, issue age, issue date, and policy date. The actual numbers in the table of cash values or the actual guaranteed cost of insurance rates shown which are particular to the hypothetical insured’s issue age and classification in the policy are considered to be illustrative and also need to be bracketed.
F. Contents of the Memorandum of Variable Material
The Memorandum of Variable Material must be drafted in sufficient detail to determine the nature and scope of variation for each variable item. Where text is variable, the memorandum should include the exact language of any alternate text and/or an explanation of when the bracketed text will be omitted from the form. Similarly, variable numerical items should include the range (i.e. minimum and maximum) of variation. All ranges must be reasonable. Identification of the variable field is not sufficient. It should be clear which explanation in the memorandum corresponds to which variable item in the form. One recommended option would be to number the explanations in the memorandum and place the number of the explanation next to the corresponding variable item in the form.
If variable items are related, then the Memorandum of Variable Material needs to detail their interaction. For example, annuity contracts may have different guarantee periods each with a different surrender charge schedule. The Memorandum of Variable Material needs to explain which set of surrender charges would be applicable to each guarantee period.
A statement in a Memorandum of Variable Material that a variable item or language required by federal law may change in the future to comply with federal requirements is not acceptable unless the explanation also provides that any such change will be submitted to the Department for prior approval in a revised Memorandum of Variable Material and that any such change will apply to all new issues of the policy or contract form as applicable.
A statement in a Memorandum of Variable Material that a variable item may be modified, restructured or changed is not acceptable unless the explanation also provides that any such change will be submitted to the Department for prior approval in a revised Memorandum of Variable Material and that any such change will apply to all new issues of the policy or contract form as applicable.
A. Cover Page (Both Annuity Contract and Life Policy)
B. Specification or Data Pages
Please note the guaranteed minimum interest rate for life insurance policies may not be variable.
The variable subaccounts available under a life insurance policy or annuity contract may be designated as variable text. When this is done a separate memorandum of variable material is required, that deals exclusively with the variable funds and related material. Related material would be such things as the names of fund families and identifying numbers for funds. This memorandum of variable material will need to be identified as a “List of Funds” for purposes of the “Re” of the cover letter and any applicable certifications. This memorandum must reference all the policy forms including applications that reflect the variable subaccounts. This list will allow changes to be made to the variable subaccounts without having to re-file the entire Memorandum of Variable Material that pertains to other provisions of the policy forms including applications. The List of Funds will need to indicate that any change in the subaccounts will be submitted for informational purposes in a revised List of Funds. The fixed account may not be bracketed unless your company is restricting the availability of the fixed account in accordance with the guidance provided on the Department website. If that is the case, then the submission letter for the annuity product will need to provide a complete explanation and reference such guidance.Any changes in subaccounts should be filed on an informational basis only. A paper submission that involves only fund changes should include the wording “FUND CHANGES ONLY” in bold in the RE of the submission letter. A SERFF submission that involves only fund changes should select a requested Filing Mode of “Other” and then indicate “Fund Changes Only”. A certification is not required to be submitted for a “Fund Changes Only” submission.
For life insurance policies surrender charges that vary due to such things as issue and rate class, do not need a complete set of surrender charges to appear in the Memorandum of Variable Material. Instead the Memorandum should indicate that basis for the variation (e.g. issue Age, underwriting class). However when the applicant is given the choice between different surrender charge schedules, then this must be reflected in Memorandum of Variable Material. Again, we draw your attention to Section 4224 of the Insurance Law.
An informational filing should be identified in the Re of the submission letter. All informational filings will be acknowledged by the Department indicating that the information submitted has been placed on file with the Department for informational purposes only. You will need to wait for the acknowledgement from the Department that the information has been filed prior to its use.
When submitting variable material via SERFF the variable material needs to be submitted under the “Forms Schedule” tab. It should not be submitted under the “Supporting Documentation” tab. Please see the SERFF General instruction.
Return to the Insurers/Life Index