August 20, 2020
DFS SUPERINTENDENT LINDA A. LACEWELL ANNOUNCES SETTLEMENT WITH GLOBAL PROVIDER OF MOBILE INSURANCE
Assurant Subsidiary Failed to Comply with New York Insurance Laws After DFS Issued a Circular Letter Advising Companies of their Duties
Company to Pay Penalty of $2.8 Million to DFS
Superintendent of Financial Services Linda A. Lacewell today announced the Department of Financial Services (DFS) has fined The Signal, LP, an Assurant Company, (“Assurant”) $2.8 million for providing inadequate consumer disclosures for insurance offerings for mobile phones, tablets, and other wireless communication equipment and improperly bundling wireless insurance with the sale of a service contract or other non-insurance benefit. Assurant also offered identity theft insurance underwritten by an unauthorized insurer.
Assurant is a New York-licensed insurance producer that assists wireless communications equipment vendors, by packaging insurance programs and designing brochures and other materials. The company is an indirect subsidiary of Assurant, Inc.
“Licensees must make proper disclosures so that New York consumers can effectively assess the offering,” said Superintendent Lacewell. “Assurant failed to provide these disclosures while also offering a product that included unauthorized insurance. These types of failings can cause serious harm to consumers. DFS will continue to protect New Yorkers against unauthorized insurance and help ensure that consumers receive the information they need to make an informed choice.”
Assurant provided brochures that failed to properly disclose, among other things, how Assurant was compensated and how consumers could receive a premium discount that put third-party service contacts on the same footing as first-party offerings. Assurant also bundled wireless insurance with the sale of a service contract or other non-insurance benefit because of a failure to properly disclose the availability of a discount. These violations continued after DFS issued guidance that addressed these shortcomings. Assurant also offered a program that contained group identity theft insurance underwritten by an unauthorized insurer.
Insurance Circular Letter No. 1 (2018) identified six improper practices in the industry, including failure to provide required notices and disclosures, and tying insurance with non-insurance. The letter advised wireless communications equipment vendors and their producers that all companies selling this type of insurance must disclose to consumers, in brochures or other written materials, information like how the producer is compensated, the availability of premium credits for holders of third-party service contracts, and fees imposed upon failure to return a device after replacement. As part of the settlement, Assurant has agreed to continue complying with all laws and regulations addressed in the circular letter.