211 CMR 95.02 - Qualifications of Insurance Companies to Issue Variable Life Insurance Policies

Current through Register 1466, April 1, 2022

(1) Before any insurance company can qualify to deliver or issue for delivery any variable life insurance policy within the Commonwealth, the company shall obtain authorization to transact life insurance business in the Commonwealth, and shall submit the following information to the Commissioner for authorization to transact variable life insurance business in the Commonwealth:
(a) a description of the kinds and characteristics of variable life insurance policies it intends to deliver or issue for delivery;
(b) a description of the proposed method of operating the separate account or accounts established or to be established with respect to such variable life insurance policies, including a statement that the company's administrative and data processing systems are adequate to support the administration and valuation of such variable life insurance and, in particular, specifying the maximum book of business and monthly volume of variable life insurance business which those systems are capable of sustaining;
(c) biographical data with respect to the officers and directors of the insurer, the members of the committee, board or other similar body of the separate account, and if requested by the Commissioner, any parent, subsidiary, affiliated company or other company under common control therewith;
(d) with respect to a foreign or alien insurer:
1. a copy of any license, certificate or other written evidence of authority to transact variable life insurance issued by its state of domicile; and
2. if requested by the Commissioner, a copy of the statutes and regulations of its state of domicile under which the insurer is authorized to issue such variable life insurance policies;

the state of entry of an alien insurer being deemed its state of domicile for these purposes;

(e) a copy of the insurer's most recent annual statement of the business of its separate account or accounts in such form as may be prescribed by the Commissioner;
(f) a general description of the methods of operation of the variable life insurance business of the insurer, including methods of distribution of policies and the names of those persons or firms proposed to supply consulting, investment, administrative, custodial or distribution services to the insurer;
(g) a description of any investment advisory services contemplated, which shall include a demonstration of the insurer's compliance with 211 CMR 95.04; and
(h) such further information as the Commissioner may require.
(2) If the insurer's surplus and capital are less than $5,000,000.00, the insurer shall also submit the following information to the Commissioner for authorization to transact variable life insurance business:
(a) copies of the insurer's annual statement for each of the last three years of the business of its separate account or accounts, or for any lesser period that the insurer has transacted variable life insurance business, in such form as may be prescribed by the Commissioner;
(b) such further information as the Commissioner may require.
(3) Every insurer seeking authorization to transact variable life insurance business in the Commonwealth shall file with the Commissioner and thereafter maintain a statement specifying the insurer's standards of suitability. Such standards shall be binding on the insurer, its insurance producers, and any others involved in any way with the promotion, sale, marketing, and advertising of the insurer's variable life insurance products. These standards shall, at a minimum, specify that:
(a) no recommendation shall be made to an applicant to purchase a variable life insurance policy, and that no variable life insurance policy shall be issued, in the absence of reasonable grounds to believe that the policy is suitable for such applicant;
(b) this suitability determination shall be based on reasonable inquiry of the applicant concerning the applicant's insurance and investment objectives, financial situation, and needs, as well as any other information known to the insurer or to the insurance producer making the recommendation; and
(c) no recommendation shall be made to an applicant to purchase a variable life insurance policy until the applicant has been provided with a reasonably accurate, explicit, and comprehensive explanation of the product, including any oral explanation by an insurer, or insurance producer and delivery of appropriate written materials. The Commissioner may disapprove any such written materials that he or she deems to be inadequate or inappropriate. This provision in no way limits the Commissioner's authority to impose other sanctions as permitted by law.
(4) Every insurer seeking authorization to transact variable life insurance business in the Commonwealth shall adopt by formal action of its board of directors, and shall file with the Commissioner, a written statement specifying the standards of conduct of the insurer, its officers, directors, employees, affiliates, and investment advisors with respect to the purchase or sale of investments of separate accounts. Such standards of conduct shall be binding on the insurer and those to whom it refers. A code or codes of ethics meeting the requirements of 15 U.S.C. § 80a - 17(j) and applicable rules and regulations thereunder shall be sufficient to comply with this requirement.
(5) Any material contract between an insurer and suppliers of consulting, investment, administrative, sales, marketing, custodial, or other services with respect to variable life insurance operations shall be in writing and shall provide that the supplier of such services shall furnish the Commissioner with any information or reports in connection with such services which the Commissioner may request in order to ascertain whether the variable life insurance operations of the insurer are being conducted in a manner consistent with 211 CMR 95.00 and any other applicable law or regulations.
(6) In determining the qualifications of an insurance company to issue variable life insurance policies in the Commonwealth, if such company is a parent, subsidiary, affiliate of, or under common control with, another company, the Commissioner shall also consider its relationship with such other company and the degree to which the requesting insurer, as well as the other company, meets these standards.
(7) The Commissioner will grant authorization to an insurer to transact variable life insurance business in the Commonwealth only after he or she has found that all of the following have been met:
(a) the plan of operation for the issuance of variable life insurance policies is not unsound;
(b) the general character, reputation, qualifications, and experience of the management and those persons or firms proposed to supply consulting, investment, administrative, or custodial services to the insurer are such as to reasonably assure competent operation or the variable life insurance business of the insurer in the Commonwealth; and
(c) the insurer's past, present, and foreseeable future financial condition and method of operation in connection with the issuance of such policies is such that the insurer's operation is not likely to be hazardous to the public or its policyholders in the Commonwealth.

In determining whether these standards have been met, the Commissioner shall consider, among other things, the applicable law and regulations under which the insurer is authorized in its state of domicile to issue variable life insurance policies (the state of entry of an alien insurer being deemed its state of domicile for this purpose), and, where relevant, the extent to which affiliates of the requesting insurer would also meet the standards set forth in 211 CMR 95.02(7).

(8) Any person qualified in the Commonwealth to sell or offer to sell variable life insurance shall immediately report to the Commissioner:
(a) the initiation of any disciplinary action by, the imposition of any disciplinary sanction by, any suspension or revocation of his or insurance producer's license by, or any consent decree or agreement entered into with, any federal, state or territorial regulatory, investigatory or prosecutorial authority;
(b) the initiation of any disciplinary action by, the imposition of any disciplinary sanction by, including suspension or expulsion from membership, suspension, or revocation of or denial of registration imposed upon such person by, or any consent decree or agreement entered into with, any national securities exchange, national securities association, or any federal, state, or territorial agency with jurisdiction over securities or variable life insurance; or
(c) any judgment or injunction, including a preliminary injunction, entered against such person on the basis of conduct involving fraud, deceit, misrepresentation, or violation of any insurance or securities law or regulation.
(9) If the Commissioner determines that an insurer transacting variable life insurance business in the Commonwealth does not meet the standards set forth in 211 CMR 95.00, he or she may institute proceedings to revoke or suspend that insurer's authorization to transact variable life insurance business in the Commonwealth in accordance with M.G.L. c. 175, §§ 5 and 132G. 211 CMR 95.00 in no way limits the Commissioner's authority to impose other sanctions as permitted by law.
(10) Any material submitted to the Commissioner under 211 CMR 95.02 will be disapproved if it is found to be false, misleading, deceptive, or inaccurate in any material respect and, if previously distributed, the Commissioner may require the submission of amended material. Any material required to be filed with and approved by the Commissioner shall be subject to disapproval if at any time it is found by him or her not to comply with the standards established in 211 CMR 95.00. This provision in no way limits the Commissioner's authority to impose other sanctions as permitted by law.

Notes

211 CMR 95.02

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