In a crack down on the
mis-selling of retirement products, the New York State Insurance
Department has extracted a $2m fine out of three insurance agencies
affiliated to Citigroup, the US’ third-largest bank by
assets.

New York State insurance
superintendent James Wrynn explained that an examination of
Citicorp Insurance Agency, Citicorp Investment Services, and SBHU
Life Agency unearthed violation of regulations pertaining to
certain sales practices surrounding life insurance and annuity
sales by the agencies.

The examination was triggered
by consumer complaints to the regulator’s Consumer Services
Bureau.

Wrynn continued that the
violations, which were committed from 2003 to 2007, included
failure to disclose required information comparing policies or
contracts being replaced with their potential replacements, and
inaccurate or incomplete disclosure of policy or contract values or
surrender charges.

In addition, the examination
found that sales of some life insurance policies and annuity
contracts were in violation of the agencies’ own suitability
standards.

“Consumers considering
replacing an annuity or insurance policy should get all the
information they need in order to make an accurate comparison,”
Wrynn said.

“Our regulations require it
and we will enforce it. These are complex products and consumers
may not be able to easily weigh the effects of surrender charges,
interest rate changes or other hidden costs, for
example.

“We insist upon accurate
side-by-side comparisons of these products in order to protect
consumers.”

The investigation also
uncovered issues surrounding complaints filed by consumers after
buying annuities or life insurance policies.

The complaint process was
flawed for various reasons, including that complaints were
sometimes not reported to the insurance company that issued the
annuity or policy and that supervisors with a financial interest in
the outcome of complaints ruled on complaints.