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ORDER NO. R95-04
WITHDRAWAL OF APPROVAL OF
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION'S EXCHANGE PROGRAM
FOR ANNUITIES
June 23, 1995
The Director of Insurance finds as follows:
American Skandia Life Assurance Corporation
(Skandia) has been offering an "Exchange Program"
in conjunction with the sale of annuities in this state under
which Skandia reimburses a policyholder for the surrender
charge the policyholder incurs when canceling an existing
annuity with another insurance company and placing it with
Skandia.
In response to a complaint received by the
Division of Insurance (Division), the Division requested information
from Skandia regarding this program and how it operates. The
Division also requested copies of the forms with form numbers
of all products containing an exchange program provision that
have been filed in Alaska. To date, Skandia has not provided
copies of such forms to the Division.
The Division has analyzed Skandia's information
regarding the exchange program and has determined that the
benefit conferred under the program constitutes an impermissible
rebate in violation of AS 21.36.100 and unfairly discriminates
against policyholders in violation of AS 21.36.090. The program
also does not meet the requirements of AS 21.36.110(l), which
recognizes an exception to the discrimination and rebate statutes,
because it is not fair and equitable to all policyholders.
Under this program, those who benefit from an exchange receive
a credit that may be partially funded by policyholders surplus
money. Since all policyholders do not realize a similar benefit,
the program fails to treat policyholders equitably. Moreover,
not all policyholders who qualify for the exchange program
will receive a credit because some annuity exchanges will
not be subject to any surrender charge.
The Director hereby orders:
Pursuant to AS 21.42.120 and 21.42.130, any
previous approval of any and all forms containing an exchange
program used by Skandia in Alaska is withdrawn. No forms with
exchange provisions may be used by Skandia in the State of
Alaska unless specific approval of the provision is granted
by the Director at a future time.
This order takes effect July 10, 1995.
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