The New York State Department of Financial Services (DFS) has fined The Signal, LP, an Assurant Company, $2.8 million for failing to comply with New York insurance laws.
A DFS press release alleged that The Signal provided inadequate consumer disclosures for insurance offerings for mobile phones, tablets and other wireless communication equipment and improperly bundled wireless insurance with the sale of a service contract or other non-insurance benefit. The release also contended that Assurant offered identity theft insurance underwritten by an unauthorized insurer.
Assurant is a New York-licensed insurance producer that assists wireless communications equipment vendors by packaging insurance programs and designing brochures and other materials. The company is an indirect subsidiary of Assurant Inc.
“Licensees must make proper disclosures so that New York consumers can effectively assess the offering,” said DFS Superintendent Linda Lacewell in the release. “Assurant failed to provide these disclosures while also offering a product that included unauthorized insurance. These types of failings can cause serious harm to consumers.”
Indeed, DFS stated in the release that Assurant provided brochures that failed to properly disclose, among other things, how Assurant was compensated and how consumers could receive a premium discount that put third-party service contacts on the same footing as first-party offerings.
Additionally, the release explained that Assurant bundled wireless insurance with the sale of a service contract or other non-insurance benefit because of a failure to properly disclose the availability of a discount. Assurant also offered a program that contained group identity theft insurance underwritten by an unauthorized insurer. These violations continued after DFS issued guidance that addressed these shortcomings, the release stated.
An Insurance Circular Letter issued by DFS identified six improper practices in the industry, including failure to provide required notices and disclosures and tying insurance with non-insurance. The letter advised wireless communications equipment vendors and their producers that all companies selling this type of insurance must disclose to consumers, in brochures or other written materials, information like how the producer is compensated, the availability of premium credits for holders of third-party service contracts and fees imposed upon failure to return a device after replacement.
As part of the settlement, Assurant has agreed to continue complying with all laws and regulations addressed in the circular letter.
Source: New York State Department of Financial Services
Topics New York
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