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Financial Services Superintendent Maria T. Vullo today announced that the Department of Financial Services (DFS) has entered into a consent order with Clements & Company, Underwriters at Lloyd’s of London, and the United Nations Federal Credit Union (UNFCU) for offering, marketing and underwriting an unlicensed credit and debit card-based life insurance program for UNFCU members. The order requires the parties to pay a total of $1.47 million in fines for unlicensed life insurance business and to establish an insurance program with a DFS-licensed insurer. The insurance program offered guaranteed-issue term life insurance to UNFCU’s members in more than 210 countries and territories. A total of more than 4,300 policies were sold, including to 804 members listing New York as their primary location.
“DFS is taking this action to ensure that consumers receive the unparalleled protections provided by New York Insurance Law,” Superintendent Vullo said. “This case is emblematic of how licensing and regulatory oversight is necessary to protect consumers from improper schemes. We appreciate that these companies have now committed to maintaining coverage for U.N. employees and alumni, and are especially pleased that DFS licensee, Monitor Life Insurance Company of New York, has stepped up to take on these policies.”
The insurance offered and sold to UNFCU members did not meet New York standards for policies sold by insurers approved by DFS. For example, the policies did not provide for the mandatory “conversion privilege” under which insurers are required to update or renew a policy regardless of the insured’s health; nor were the policy rates sufficient to support the program, as required by New York Insurance Law. To bring the program into compliance and ensure that U.N. workers and alumni maintain their coverage for years to come, DFS is requiring the parties to transfer the business over to a New York-licensed insurer, Monitor Life Insurance Company of New York. Prior to this settlement, the program had been running at a severe loss and was unsustainable.
To ensure a smooth transition of consumers to the new program, DFS is requiring that the parties provide numerous notices to affected certificate holders, as well as reporting to DFS on the number of certificate holders that have transitioned to the new program.
UNFCU members who purchased unlicensed life insurance through this program and have questions should contact Clements at 800-693-1087 or CPS2@clements.com; or DFS at 800-342-3736 or UNFCU-Settlement@dfs.ny.gov.
