New York's Department of Financial Services has ordered certain underwriters at Lloyd's of London to pay a civil money penalty of $920,000 for underwriting an unlicensed credit and debit card-based life insurance program.
The program was run with Clements & Co., a D.C.-based, New York-licensed insurance agent and broker and Lloyd's coverholder, and catered to members of Long Island City, N.Y.-based United Nations FCU.
The department ordered Clements to pay $300,000 and United Nations FCU to pay $250,000.
Under the program, the parties sold more than 4,300 policies, including to 804 members listing New York as their primary location. The parties had ceased offering insurance under the program by December 2014, but continued to run it. They self-reported their potential violations, and the regulator began its investigation in 2015. It found that, among other violations, the policies did not provide the state's mandatory "conversion privilege" and that policy rates were insufficient to support the program.
The Department of Financial Services has ordered that the underwriters' coverage be replaced by Monitor Life Insurance Co. of New York coverage. The parties must establish a trust of $8 million dollars, or 102% of Monitor's ceded liabilities, whichever is greater, and pay Monitor a fee of 5% of gross premium.