DECEM
MARKET CONDUCT REPORT ON EXAMINATION
OF THE
HARTFORD LIFE AND ACCIDENT INSURANCE COMPANY
AS OF DECEMBER 31, 2019
EXAMINER: FLORA EGBUCHULAM
DATE OF REPORT: OCTOBER 2, 2020
TABLE OF CONTENTS
ITEM
PAGE NO.
1.
Executive summary
2
2.
Scope of examination
3
3.
Description of Company
4
A. History
4
B. Territory and plan of operation
5
4.
Market conduct activities
7
A. Advertising and sales activities
7
B. Underwriting and policy forms
7
C. Treatment of policyholders
10
5.
Summary and conclusions
12
February 2, 2023
Honorable Adrienne A. Harris
Superintendent of Financial Services
New York, New York 10004
Dear Adrienne A. Harris:
In accordance with instructions contained in Appointment No. 32071, dated
March 27, 2020, and annexed hereto, an examination has been made into the condition and affairs
of Hartford Life and Accident Insurance Company, hereinafter referred to as “the Company”. The
Company’s home office is located at One Hartford Plaza, Hartford, CT 06155. The examination
was conducted remotely because of the COVID-19 pandemic.
Wherever “Department” appears in this report, it refers to the New York State Department of
Financial Services.
The report indicating the results of this examination is respectfully submitted.
2
1. EXECUTIVE SUMMARY
The material findings and violations contained in this report are summarized below.
• The Company violated Section 3201(b)(1) of the New York Insurance Law by using
unapproved forms to issue individual term life policies, and short-term and long-term
disability income insurance coverages under group plans. (See item 4B of this report.)
• The Company violated Section 4224(c) of the New York Insurance Law by offering
inducements in the form of non-insurance services in connection with group insurance
policies issued to New York policyholders it used in New York without these inducements
being specified in such group policies and group certificates. (See item 4B of this report.)
3
2. SCOPE OF EXAMINATION
This examination covers the period from January 1, 2013, to December 31, 2019. As
necessary, the examiner reviewed matters occurring subsequent to December 31, 2019, but prior
to the date of this report (i.e., the completion date of the examination).
The examination comprised a review of market conduct activities and utilized the National
Association of Insurance Commissioners’ Market Regulations Handbook or such other
examination procedures, as deemed appropriate, in such review.
This report on examination is confined to comments on matters which involve departure
from laws, regulations or rules, or which require explanation or description.
4
3. DESCRIPTION OF COMPANY
A. History
The Company was incorporated as a stock life insurance company under the laws of the
State of Connecticut, licensed and commenced business on February 14, 1967; the Company was
licensed and commenced business in the State of New York on October 1, 2013.
The Company is a wholly-owned subsidiary of Hartford Holdings, Inc. (“HHI”), which is
directly owned by The Hartford Financial Services Group, Inc. (“The Hartford”).
The Company was incorporated on February 14, 1967 under the name of Hartford Life
Insurance Company of Connecticut with 100,000 shares of authorized and issued common stock
at the par value of $2.50 for a total authorized capital of $250,000. On March 29, 1967, it changed
its name to Hartford Life and Accident Insurance Company.
On August 3, 1984, the Company amended the par value of its shares of common stock to
$250 and reduced the number of authorized common stock to 80,000 for a total authorized capital
of $20,000,000.
On June 17, 2003, the Company changed 100% stockholder to Hartford Life, Inc (“HLI”)
with the issuance of 10,000 shares of common stock at a par value of $250.
On October 20, 2006, the Company became the surviving corporation from merger with
Hartford Life Group Insurance Company.
On December 3, 2017, HHI’s issued and outstanding equity was sold to a group of investors
that subsequently formed a limited partnership that acquired HLI and its subsidiaries, Hartford
Life Insurance Company and Hartford Life and Annuity Insurance Company.
On May 31, 2018, 100% stockholder ownership of the Company was transferred to
Hartford Holdings, Inc. with the issuance of 10,000 shares of common stock at a par value of $250.
Effective December 18, 2019, Hartford Life Ltd., a direct wholly-owned insurance affiliate
of Hartford Group Benefits Holdings Company (“HGBHC”), was dissolved; and effective
December 23, 2019, HGBHC, a direct wholly-owned affiliate of the Company, was also dissolved.
5
B. Territory and Plan of Operation
The Company is authorized to write life insurance and accident and health insurance as
defined in paragraphs 1 and 3 of Section 1113(a) of the New York Insurance Law.
The Company is licensed to transact business in all 50 states, and the District of Columbia.
In 2019, 4.73% of life premiums and 8.64% of accident and health premiums were received from
New York. Policies are written on non-participating basis.
The following tables show the percentage of direct premiums received, by state, and by
major lines of business for the year 2019:
Accident and Health
Life Insurance Premiums Insurance Premiums
California
8.4%
New York
8.7%
Texas
6.3
California
7.8
Massachusetts
5.3
Texas
7.3
New York
4.8
Florida
5.2
Illinois
4.8
Subtotal
29.6%
Subtotal
29.0%
All others
70.4
All others
71.0
Total
100.0%
Total
100.0%
The principal lines of business sold during the examination period were traditional group
life and disability coverage. The products offered included retiree health insurance, critical illness,
accident, hospital indemnity, and participant accident coverages. In addition, the Company offered
a single-company leave management solution, which integrated work absence data from the
insurer’s short-term and long-term group disability and workers’ compensation insurance business
with its leave management administration services. The Company generated most of its premium
income (60%) from accident and health products, which accounted for approximately 81% of the
Company’s total policy benefit reserves as of December 31, 2019.
The Company’s agency operations are conducted on a general agency and branch office
basis. The Company’s distribution system consists of 4,286 appointed and subagent producers as
of December 31, 2019. Group life, group long-term disability, group short-term disability,
statutory disability and paid family leave products are sold primarily through independent
6
producers and consultants, who are appointed by the Company and utilized by affiliated
companies. A limited amount of business is done with independent general agents. The Company
also has an online platform for producers to generate small business quotes and plan information,
and for employers to purchase master policies and maintain their employee eligibility data online.
Statutory disability and paid family leave products are offered by direct sales. In addition, a
producer self-service tool is used for the sale of cases under 50 lives. The Company’s primary
markets include all employer groups.
7
4. MARKET CONDUCT ACTIVITIES
The examiner reviewed various elements of the Company’s market conduct activities
affecting policyholders, claimants, and beneficiaries to determine compliance with applicable
statutes and regulations and the operating rules of the Company.
A. Advertising and Sales Activities
The examiner reviewed a sample of the Company’s advertising files and the sales activities
of the agency force including trade practices, solicitation and the replacement of insurance policies.
Based upon the sample reviewed, no significant findings were noted.
B. Underwriting and Policy Forms
The examiner reviewed a sample of new underwriting files, both issued and declined, and
the applicable policy forms.
Section 3201 of the New York Insurance Law states, in part:
“(a) In this article, ‘policy form’ means any policy, contract, certificate, or evidence of
insurance and any application therefor, or rider or endorsement thereto, affording
benefits of the kinds of insurance specified in paragraph one, two, three or twenty-four
of subsection (a) of section one thousand one hundred thirteen of this chapter, . . .
(b)(1) No policy form shall be delivered or issued for delivery in this state unless it has
been filed with and approved by the superintendent as conforming to the requirements
of this chapter and not inconsistent with law. . . . ”
When reviewing the Company’s underwriting and rating practices, the examiners
discovered that during the examination period, the Company allowed employers and policyholders
to use unapproved proprietary forms as evidence of insurance, instead of enrollment or insurance
application forms for individuals that applied for supplemental contributory coverage under group
plans.
The examiner reviewed samples of group policy files and noted that the Company required
enrollees to complete and sign group insurance enrollment forms in order to enroll for contributory
coverage. However, in response to the examiners’ requests for completed enrollment forms or
applications for individual insurance coverages for sampled enrollees and individual claim files,
8
the Company provided copies of proprietary, employers’ and policyholders’ systems-generated
screen prints, and informed examiners that when individual underwriting is required, the applicant
must complete a Personal Health Application (“PHA”) form as evidence of insurability that is used
to determine acceptance or rejection of insurance application for supplemental coverage under a
group plan. However, the sampled individual enrollees underwriting and claim files revealed that
even the PHA forms were generally not completed in several of the files; this includes underwriting
and claims files for supplemental coverages (short-term disability, long-term disability,
supplemental life or dependent life coverage) in which the premium is paid fully or partially by
the individual applicant. The Company allowed the use of employers’ system-generated
proprietary forms to capture selection of benefits in 70 individual insurance coverages summarized
below:
• In 11 of 182 long-term disability underwriting, and claim policy files reviewed
(6.0%)
• In 40 of 227 short-term-disability underwriting, and claim policy files reviewed
(17.6%) and
• In 19 of 153 life paid, denied, and litigated claims files reviewed (12.4%).
In addition, enrollment form PA 9604(NY) was filed with and approved by the Department
for the Company’s use when an employee is not automatically enrolled for optional coverage but
is instead required to apply for supplemental and dependent coverage under a group contributory
plan. The Company has not required individual enrollees to complete and sign this approved
enrollment form.
The Company did not seek or obtain the superintendent’s approval to use proprietary or
employer-generated screen prints in place of an insurance application, or an enrollment form that
was approved to be used when an enrollee is required to complete a form for supplemental
insurance coverage under a group plan.
The Company violated Section 3201(b)(1) of the New York Insurance Law by using
unapproved forms to issue individual term life policies, and short-term and long-term disability
income insurance coverages under group plans.
9
The examiner recommends that the Company submit a corrective action plan to the
Department, for review and approval, to show how it will submit enrollment forms and get the
enrollment forms completed and signed by future enrollees for contributory coverage.
Section 4224(c) of the New York Insurance Law states, in part:
“Except as permitted by section three thousand two hundred thirty-nine of this
chapter or subsection (f) of this section, no such life insurance company . . . and no
officer, agent, solicitor or representative thereof and no such insurer doing in this
state the business of accident and health insurance and no officer, agent, solicitor
or representative thereof, and no licensed insurance broker and no employee or
other representative of any such insurer, agent or broker, shall pay, allow or give,
or offer to pay, allow or give, directly or indirectly, as an inducement to any person
to insure, or shall give, sell or purchase, or offer to give, sell or purchase, as such
inducement, or interdependent with any policy of life insurance or annuity contract
or policy of accident and health insurance, any stocks, bonds, or other securities, or
any dividends or profits accruing or to accrue thereon, or any valuable consideration
or inducement whatever not specified in such policy or contract other than any
valuable consideration, including but not limited to merchandise or periodical
subscriptions, not exceeding twenty-five dollars in value; nor shall any person in
this state knowingly receive as such inducement, any rebate of premium or policy
fee or any special favor or advantage in the dividends or other benefits to accrue on
any such policy or contract, or knowingly receive any paid employment or contract
for services of any kind, or any valuable consideration or inducement whatever
which is not specified in such policy or contract.”
The Department’s Policy Forms Unit, Albany office, reviewed the Company’s filed forms
and discovered that the Company offered inducements in the form of non-insurance services in
connection with group insurance policies issued to New York policyholders it used in New York
without these inducements being specified in such group policies and certificates. These services
include Beneficiary Assist, Estate Guidance, Funeral Concierge, and Travel Assistance & ID Theft
Protection.
The Company violated Section 4224(c) of the New York Insurance Law by offering
inducements in the form of non-insurance services in connection with group insurance policies
issued to New York policyholders it used in New York without these inducements being specified
in such group policies and group certificates.
10
C. Treatment of Policyholders
The examiner reviewed a sample of various types of claims, and policy cancellations and
reinstatements. The examiner also reviewed the various controls involved, checked the accuracy
of the computations and traced the accounting data to the books of account.
Section 243.2 of 11 NYCRR 243 (Insurance Regulation 152) states, in part:
“Records required for examination purposes and retention period
(a) In addition to any other requirement contained in Insurance Law Section 325,
any other Section of the Insurance Law or other law, or any other provision of this
Title, every insurer shall maintain its claims, rating, underwriting, . . . and producer
licensing records, and such other records subject to examination by the
superintendent, in accordance with the provisions of this Part. . . .
b) Except as otherwise required by law or regulation, an insurer shall maintain:
(1) A policy record for each insurance contract or policy for six calendar years after
the date the policy is no longer in force or until after the filing of the report on
examination in which the record was subject to review, whichever is longer. . . . A
separate copy need not be maintained in an individual policy record, provided that
any data relating to a specific contract or policy can be retrieved pursuant to Section
243.3(a) of this Part. A policy record shall include: . . .
(4) A claim file for six calendar years after all elements of the claim are resolved
and the file is closed or until after the filing of the report on examination in which
the claim file was subject to review, whichever is longer. A claim file shall show
clearly the inception, handling and disposition of the claim, including the dates that
forms and other documents were received.
(5) A licensing record for six calendar years after the relationship is terminated for
each Insurance Law licensee with which the insurer establishes a relationship. . . .”
The examiner’s review of samples of 153 life insurance and 164 short-term disability claim
files revealed that in 18 instances, the Company failed to retain or reproduce file records, as
described below.
1) In 3 of 31 life paid claim files reviewed (9.7%), a copy of the Living Benefit Option
(“LBO”) decision letter was not maintained. The LBO is the Company’s version of
the benefit payment explanatory letter that normally accompanies a claim payment and
shows, among other details, information concerning interest paid on the claims and
how the total paid amount was calculated.
11
The Company violated Section 243.2(b)(4) of 11 NYCRR 243 (Insurance Regulation 152)
by failing to retain letters that explained the payment of life insurance benefits for three life claims.
2) In 15 of 30 inactive or terminated producer files reviewed (50.0%), copies of the signed
pages of the General Insurance Producer Agreement (“GIPA”) were not maintained or
provided to the examiners for review. The signed GIPA page is a key part of a
producer’s agreement because, as explained by the Company, signatures on a
declarations page of the GIPA reflects a confirmation of the agreement to the GIPA at
the time of the agency’s appointment of the producers, and consent to the terms of the
GIPA is also effectuated upon acceptance of commissions paid pursuant thereto.
The Company violated Section 243.2(b)(5) of 11 NYCRR 243 (Insurance Regulation 152)
by failing to retain copies of signed key pages of GIPA producer agreements for 15 inactive and
terminated producers.
The examiner recommends that all claims and active, inactive or terminated producers
records be retained in accordance with the requirements of Sections 243.2(b)(4) and 243.2(b)(5),
or be reproduced for examinations pursuant to Section 243.2(a) of 11 NYCRR 243 (Insurance
Regulation 152).
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5. SUMMARY AND CONCLUSIONS
Following are the violations and recommendations contained in this report:
Item
Description
Page No(s).
A
The Company violated Section 3201(b)(1) of the New York Insurance
Law by using unapproved forms to issue individual term life policies, and
short-term and long-term disability income insurance coverages under
group plans.
8
B
The examiner recommends that the Company submit a corrective action
plan to the Department, for review and approval, to show how it will
submit enrollment forms and get the enrollment forms completed and
signed by future enrollees for contributory coverage.
9
C
The Company violated Section 4224(c) of the New York Insurance Law
by offering inducements in the form of non-insurance services in
connection with group insurance policies issued to New York
policyholders it used in New York without these inducements being
specified in such group policies and group certificates.
9
D
The Company violated Section 243.2(b)(4) of 11 NYCRR 243 (Insurance
Regulation 152) by failing to retain letters that explained the payment of
life insurance benefits for three life claims.
11
E
The Company violated Section 243.2(b)(5) of 11 NYCRR 243 (Insurance
Regulation 152) by failing to retain copies of signed key pages of GIPA
producer agreements for 15 inactive and terminated producers.
11
F
The examiner recommends that all claims and active, inactive or
terminated producers records be retained in accordance with the
requirements of Sections 243.2(b)(4) and 243.2(b)(5), or be reproduced
for examinations pursuant to Section 243.2(a) of 11 NYCRR 243
(Insurance Regulation 152).
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Respectfully submitted,
/s/
Courtney Williams
Principal Insurance Examiner
STATE OF NEW YORK )
)SS:
COUNTY OF NEW YORK )
Courtney Williams, being duly sworn, deposes and says that the foregoing report, subscribed by
him, is true to the best of his knowledge and belief.
/s/
Courtney Williams
Subscribed and sworn to before me
this day of
APPOINTMENT NO. 32071
NEW YORK STATE
DEPARTMENT OF FINANCIAL SERVICES
I, LINDA A. LACEWELL, Superintendent of Financial Services of the State of
New York, pursuant to the provisions of the Financial Services Law and the Insurance
Law, do hereby appoint:
FLORA EGBUCHULAM
as a proper person to examine the affairs of the
HARTFORD LIFE AND ACCIDENT INSURANCE COMPANY
and to make a report to me in writing of the condition of said
COMPANY
with such other information as she shall deem requisite.
In Witness Whereof, I have hereunto subscribed my name
and affixed the official Seal of the Department
at the City of New York
this 27th day of March 2020
LINDA A. LACEWELL
Superintendent of Financial Services
By:
MARK MCLEOD
DEPUTY CHIEF - LIFE BUREAU
