TARGETED MARKET CONDUCT REPORT ON EXAMINATION
OF
THE GUARDIAN LIFE INSURANCE COMPANY OF AMERICA
AS OF DECEMBER 31, 2020
EXAMINER: JOCELYNE TURENE
DATE OF REPORT: MAY 20, 2022
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
6
A. Advertising and sales activities
6
B. Underwriting and policy forms
6
C. Option to opt-out
7
5.
Summary and conclusions
8
September 1, 2022
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. 32396, dated March 25, 2022, and
annexed hereto, an examination has been made into the condition and affairs of The Guardian Life
Insurance Company of America, hereinafter referred to as “the Company”. The Company’s home
office is located at 10 Hudson Yards, New York, NY 10001. Due to the COVID-19 pandemic,
the examination was conducted remotely.
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 finding and violation contained in this report is summarized below.
• The Company violated Section 3201(b)(1) of the New York Insurance Law by using an
amendment application form that was not approved by the superintendent, and by using
the form in a manner that was not approved by the superintendent. (See item 4B of this
report.)
3
2. SCOPE OF EXAMINATION
This examination covers the period from January 1, 2019, to December 31, 2020.
The examination comprised a review of Company’s electronic application process and
related market conduct activities.
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 New York on April 10, 1860, was licensed on July 10, 1860, and commenced business on
July 16, 1860, under the name The Germania Life Insurance Company. In 1918, the Company
adopted its present name; and in 1924, the Company adopted a plan to convert to a mutual
company. Effective January 1, 1946, the Company adopted and amended its charter and by-laws
and became a mutual company.
On July 1, 2001, the Company consummated a statutory merger with Berkshire Life
Insurance Company (“BLIC”), a Massachusetts mutual insurer, with the Company being the
surviving entity and the policyowners of BLIC becoming the Company’s policyowners. The
statutory merger was approved by New York and Massachusetts insurance regulators.
Healthsource Insurance Company, a then existing subsidiary of BLIC, was renamed Berkshire Life
Insurance Company of America (“BLICOA”). Pursuant to a reinsurance treaty effected between
BLICOA and the Company, BLICOA reinsured 100% of BLIC’s and the Company’s existing
disability income business. Effective July 1, 2001, all new disability income business is written
by BLICOA.
On October 6, 2009, the Company issued 30-year surplus notes with an aggregate principal
amount of $400 million, bearing an interest rate of 7.375% and a maturity date of September 30,
2039. The surplus notes are administered by The Bank of New York Mellon, as fiscal agent, and
interest is scheduled to be paid semiannually on March 31 and September 30 of each year.
On December 31, 2012, the Company acquired 100% of Reed Group, Ltd. (“Reed”), a
company that provides medical leave and disability management services, to expands its disability
and absence management portfolio.
On April 5, 2014, the Company acquired Premier Access Insurance Company (“Premier”).
Premier manages and provides dental coverage and care to employers and individuals. The
acquisition strengthened the Company’s existing Dental Preferred Provider Organization and
Dental Health Maintenance Organization networks in several states including California, Utah,
Nevada, and Arizona. This acquisition also extended the Company’s reach into the state-run
Medicaid and Children's Health Insurance Program markets.
5
B. Territory and Plan of Operation
The Company is authorized to write life insurance, annuities, and accident and health
insurance as defined in paragraphs 1, 2 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 2020, 22.3% of life premiums, 12.8% of accident and health premiums, and 22.7% of annuity
considerations were received from New York. Policies are written on a participating basis.
The following tables show the percentage of direct premiums received, by state, and by
major lines of business for the year 2020:
Life Insurance Premiums Annuity Considerations
New York
22.3%
Georgia
22.9%
New Jersey
10.5
New York
22.7
Florida
7.3
New Jersey
6.9
California
7.1
Louisiana
6.2
Texas
4.8
California
5.7
Subtotal
52.0%
Subtotal
64.4%
All others
48.0
All others
35.6
Total
100.0%
Total
100.0%
Accident and Health
Insurance Premiums
California
14.7%
New York
12.8
Texas
9.0
Florida
8.4
Illinois
4.9
Subtotal
49.8%
All others
50.2
Total
100.0%
The Company markets its individual life and fixed annuities products through an exclusive
general agency system consisting of 46 general agencies located throughout the United States with
2,472 field representatives, 205 full-time agents, 113,234 brokers and 13 financial professionals.
6
4. MARKET CONDUCT ACTIVITIES
The examiner reviewed various elements of the Company’s electronic application
processes for life insurance and annuities 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 sales activities of the agency force
including trade practices, solicitation and the replacement of insurance policies as part of the
Company’s electronic application process review.
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 as part of the Company’s electronic application process review.
The examiners reviewed a sample of 65 individual whole life and 65 individual term life
policies that the Company issued in the year 2020 using the electronic application process. The
examiners noted that the Company used amendment to application form number P89-2011 NY
with both whole and term life applications. This amendment to application form was provided to
the applicant and signed electronically by the applicant on the date the policy was delivered.
The examiners noted that in 24 instances, the Company used amendment to application
form number P89-2011 NY which indicates that the applications were signed electronically before
the approval date of April 6, 2020, which is the date the Department permitted the form to be used
electronically. The Department’s electronic records do not show an extension of approval to use
form number P89-2011 NY electronically prior to April 6, 2020.
Section 3201(b)(1) of New York Insurance Law states, in part:
“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 . . . ”
7
In 4 of 65 (6%) individual whole life policies reviewed, the Company used amendment to
application form number P89-2011 NY electronically during the months of February 2020 through
April 2020, before the form was approved by the Department for electronic use.
In 20 of 65 (31%) individual term life new issues reviewed, the Company used amendment
to application form number P89-2011 NY electronically during the months of January 2020
through April 2020, before the form was approved by the Department for electronic use.
Overall, in 24 of 130 (18%) individual life policies reviewed, the Company used
amendment to application form number P89-2011 NY during an electronic process without
obtaining an extension of approval from the Department to permit the electronic process.
The Company violated Section 3201(b)(1) of the New York Insurance Law by using an
amendment application form that was not approved by the superintendent, and by using the form
in a manner that was not approved by the superintendent.
C. Option to Opt-Out
The examiner verified that the applicants had an opportunity to opt out of the electronic
process as required by Section 309 of the New York State Technology Law.
8
5. SUMMARY AND CONCLUSIONS
The following violation is 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 an amendment application form that was not approved by
the superintendent, and by using the form in a manner that was not
approved by the superintendent.
7
Respectfully submitted,
/s/
Anthony Mauro
Principal Insurance Examiner
STATE OF NEW YORK )
)SS:
COUNTY OF NEW YORK )
Anthony Mauro, being duly sworn, deposes and says that the foregoing report, subscribed by him,
is true to the best of his knowledge and belief.
/s/
Anthony Mauro
Subscribed and sworn to before me
this day of
APPOINTMENT NO. 32396
NEW YORK STATE
DEPARTMENT OF FINANCIAL SERVICES
I, ADRIENNE A. HARRIS, 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:
JOCELYNE TURENE
as a proper person to examine the affairs of the
GUARDIAN LIFE INSURANCE COMPANY OF AMERICA
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 25th day of March, 2022
ADRIENNE A. HARRIS
Superintendent of Financial Services
By:
MARK MCLEOD
DEPUTY CHIEF - LIFE BUREAU
