Over the past several months, we have been noticing a few trends that suggest a move toward a full review of many, if not almost all, product filings in NY.
For quite a while we have been seeing that certified filings under Circular Letter 6 (2004) get more of a review than the standards that the process appears to contemplate by its original terms. The Circular Letter states:
“Submission letters will need to comply with applicable circular letter and product outline guidance available on the Department website. The Department’s approval of policy forms will be based on the acceptability of the certification of compliance. The certification of compliance will certify that the policy form submission is complete and was reviewed for compliance with applicable requirements prior to its submission to the Department.”
Memorandum of Variable Material have long been reviewed in great detail, but more recently questions have been raised in certification filings that go to use and distribution of the forms, application and underwriting processes, and similar matters that go well beyond the analysis of the quote above. The result is that filings under the certified process often end up getting more of a review than they did in the past, though the approval still indicates that it was based entirely upon the certification.
Filings are also now sometimes decertified. This means they are removed from the certified queue and are pulled for full prior approval based on a set of criteria applied at the time of entry into their system, though we are told there is a random component as well. If a file is decertified it gets a full prior approval. These reviews are not noticeably different from any historical prior approval despite the fact that the company did execute the certifications that they had done a review and the filing was in compliance with laws, regulations, circular letters and any applicable outlines.
This evolution of the policy forms approval process has led again to a time when there is little predictability in how much time an approval will take. The certified process can be as short as a couple of hours or it can be protracted by some level of review and regulatory action taken based on it. The decertified reviews can also go fairly quickly or be drawn out.
While I think the NYDFS deserves credit their willingness to continue to look at the processes they have in place, the concurrence of these recent developments means that companies are once again unsure of how long it will take to get a product to market in NY. Any filing in today’s environment has to be planned as if it will be decertified and take an unknown period for approval. Because certified filings, too, are scrutinized, even if the file is not pulled for decertification, it could take much longer than one would expect for a certified filing. Given these two developments, and the resulting lack of predictability regarding what level of review any given filing will receive, it is unclear whether there is any significant across-the-board speed-to-market benefit left in the certification process at all.