Axa also failed to use product comparisons that lower the surrender and death benefit value by the investment fund charges when considering hypothetical rates of return.
Axa Equitable Life Insurance Co. has paid a $1.9 million fine for making improper disclosures when consumers bought replacement annuities and life insurance policies, the New York State Insurance Department announced March 26.
Surprisingly, the improper disclosures did not come to light as a result of consumer complaints. Instead, the department uncovered the problem through a market conduct examination of Axa Equitable that took place beginning in 2005. The findings were released in 2007.
The examination found that between Jan. 1, 2001, and June 30, 2006, Axa violated New York insurance laws when it failed to use product comparisons that adhere to the state's requirements.
Also, when considering hypothetical rates of return, Axa failed to use product comparisons that lower the surrender and death benefit value by the amount of the investment fund charges.
Among other violations, the regulator alsofound that the carrier failed to provide the appropriate disclosure statements when multiple existing policies were being replaced, .
In doing so, Axa violated New York's Regulation 60, which requires insurers to give consumers complete and accurate comparative product information when they decide to replace one contract with another.
Axa also broke other state laws between Jan. 1, 2001, and Dec. 31, 2005. In those cases, the company violated insurance statutes by failing to get written and informed consent before subjecting applicants to tests for HIV.
Regulators in New York reviewed 165 applications, including those that were withdrawn and declined. The department found that in 16 of those cases, applicants signed the form after their blood was tested for the disease.
A couple of other violations involved ¬variable annuity claims, according to the examination report. In 15 reviewed accelerated-death-benefit claims, regulators could not determine the date when Axa or agents received the notice of the owner's intent to accelerate benefits.
They could also not figure out whether the company waited the mandatory 14 days after receiving the application for living benefits prior to paying claims on the rider, as per state law.
“This relates to a standard examination that began [more than] four years ago which found no consumer harm,” said Axa spokeswoman JoAnn Tizzano. “We're pleased to put this matter behind us.”
