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Electronic Applications in NY

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Electronic applications seem to be reviewed in a much more expansive way by New York than are paper applications.

We get questions about replacement, about how consumers get to review their answers, and about follow-up from underwriting. These aren’t bad questions, but they generally only come up when an application is electronic.

In an electronic application, the NYSDFS policy form reviewers want to know what happens when it’s determined that the policy being applied for is a replacement. Fair enough. But what happens when a replacement occurs with an agent? Is the electronic situation mysterious, and the agent situation obvious? I tend to think both situations are fairly obvious and don’t need to be explained in a policy form filing. NY rules about what needs to happen in a replacement are clear. And every company already has to explain its Regulation 60 (replacement) procedures, but that’s done in a separate, broad-scope Reg 60 filing. A company’s Reg 60 procedures have to be rehashed on an electronic-application form filing, but not on a paper-application form filing.

NY is very concerned that consumers get a chance to review and change their answers. Fair enough. But how does NY know that an agent gives a consumer that opportunity? The how-consumer-gets-to-review issue is big on electronic-application filings, but non-existent on paper-application filings.

And then there’s underwriting, aka Reflexive Questions. When follow-up (reflexive) questions are electronic and could appear on the application in the “blank” Additional Information section, along with the answers, NY requires they be filed for approval. In the in-person situation, the agent can say most anything, ask any question, or give directions. On a paper application, only the consumer’s answers would appear as Additional Information.

NY also usually has comments on any “extra” text that appears on the electronic screenshots, text that is instructional or definitional or navigational help. It’s usually allowed, if it’s innocuous enough, in the individual reviewer’s opinion. But the extra text is definitely read and reviewed, unlike everything that an agent says when a consumer is filling out an application.

Maybe this is just the nature of the beast. Regulators are able to review what’s written, so they do. They are not able to review conversations between agents and consumers, so they don’t. And maybe, as we move into an increasingly electronic world, where everything is reviewable, we’ll have to get used to more review. But does that really make sense?