The New York Department of Financial Services fined Asurion Insurance Services and Asurion Protection Services $4 million for providing inadequate consumer disclosures for insurance offerings.
Asurion was lax on disclosures for mobile phones, tablets, and other wireless communication equipment, and improperly bundled such insurance with other products, DFS said in a news release.
Asurion is a New York-licensed insurance producer that assists wireless communications equipment vendors, by packaging insurance programs and designing brochures and other materials.
“Licensees are expected to follow the Department’s direction,” said Superintendent of Financial Services Linda A. Lacewell. “DFS is committed to ensuring that the New York insurance market is transparent and that consumers receive the disclosures they need to make the best purchasing decisions for themselves.
"When companies fail to comply with laws and regulations, particularly after the Department draws attention to potential deficiencies in compliance, DFS will step in and robustly enforce the insurance law for the benefit of consumers.”
DFS is also the oversight body for Regulation 187, which holds all sales of life insurance and annuities to a strict best-interest standard. Reg 187 went into effect for life insurance sales on Aug. 1, 2019 and for annuities sales on Feb. 1, 2020.
Asurion provided brochures that failed to properly disclose, among other things, how Asurion was compensated, and also bundled insurance with other products at a discount, providing an impermissible inducement to the purchase of the insurance, DFS said.
These violations persisted for over a year following guidance DFS issued that addressed these shortcomings in the industry.
Insurance Circular Letter No. 1 (2018) identified six improper practices in the industry, including failure to provide required notices and disclosures, and tying insurance with non-insurance.
The letter advised wireless communications equipment vendors and their producers that all companies selling this type of insurance must disclose to consumers, in brochures or other written materials, information like how the producer is compensated, the availability of premium credits for holders of third-party service contracts, and fees imposed upon failure to return a device after replacement.
As part of the settlement, Asurion has submitted amended materials to the department and agreed to comply with all laws and regulations addressed in the circular letter.
Asurion is an insurance producer, assisting wireless communications vendors, who offer wireless communications insurance, including but not limited to, mobile phone and tablet insurance. Asurion’s clients include, Sprint, Verizon, AT&T, Cricket, and Metro.