Pacific Life fined for unauthorized New York pension risk transfers
Pacific Life Insurance Co. has agreed to pay a $3 million fine after a New York Department of Financial Services (DFS) investigation found the company conducted pension risk transfer (PRT) activities in the state without a license.
This is the third enforcement action taken by DFS against a major insurance company for unlicensed PRT activities. In April 2020, the regulator fined Athene $45 million and in February fined AIG $12 million, both for conducting unauthorized pension risk transfer transactions in New York. .
“This kind of unlicensed insurance business puts New Yorkers’ hard-earned money at risk,” Adrienne Harris, acting superintendent of the New York State Department of Financial Services, said in a statement. . “The department remains committed to protecting the retirement assets of New Yorkers and supporting the financial stability of individuals and families, which is even more critical today as we work to revive New York’s economy amid of the ongoing pandemic.”
In 2019, the DFS issued a circular to insurance companies doing business in New York reminding them that “employees or other representatives of unauthorized life insurers may not solicit, negotiate, sell or maintain group annuity contracts, including terminal financing or liquidation contracts. .” The regulator said it issued the circular after being alerted that insurance companies were conducting pension risk transfer business in the state without a license.
New York State law imposes a penalty of $1,000 for the first violation and $2,500 for each subsequent violation committed by an insurer conducting insurance business in the state without a license. And each instance of solicitation, negotiation or sale of insurance by an unauthorized insurer, including each phone call or email, is considered a separate violation. The DFS said its investigation uncovered hundreds of unauthorized communications between Pacific Life and plan sponsors, to or from New York-based individuals, regarding the solicitation and negotiation of group annuity contracts.
Additionally, the department said it supports a plan proposed by Pacific Life to use a New York-licensed insurer to provide pension benefits to state participants who are part of the pension risk transactions currently administered by the company. DFS also said it is actively investigating other potential violations in the PRT market and working with insurance companies to bring the entire New York industry into compliance with state law. .
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Tags: Adrienne Harris, annuity contract, Department of Financial Services, DFS, New York, Pacific Life Insurance, pension risk transfer, plan sponsor