The New York 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 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.
According to the DFS, the insurance offered and sold to UNFCU members did not meet New York standards for policies sold by DFS-approved insurers.
Also, prior to the settlement, the insurance program was operating at a severe loss and was unsustainable.
DFS is requiring the parties to transfer the business over to a New York-licensed insurer, Monitor Life Insurance Company of New York.
The consent 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.
According to the consent order, UNFCU will pay a civil penalty of $250,000.
Additionally, UNFCU will no longer receive "commissions, fees, and other compensation related to coverage offered New York Certificate Holders." The credit union will pay one-third of the first $100,000 cost associated with hiring a third-party vendor to design and build a web portal. UNFCU will be responsible for paying all merchant credit card fees.
Read the press release.
Read the consent order.
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