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MARYLAND INSURANCE ADMINISTRATION

JUNE 24, 2004

LOCAL OFFICE

V. REPLACEMENT FILES

The examiners reviewed the Agency’s procedures for monitoring the replacement of life

insurance and annuities pursuant to COMAR 31.09.05.

The current procedure requires new

applications be reviewed by the agency’s Quality Business Control (QBC) unit.

If the

application indicates a replacement is involved in the sale of the replacement forms have been completed, and that the replacement

insurance, is entered

QBC verifies the into the Agency’s

replacement register according to COMAR 31.09.05.07D. sent to the Home Office for underwriting.

The application is then processed and

At the Home Office the application is subject to another replacement review. A search of the applicant’s name is made in the Company’s policyholder database. All transactions made against existing contracts are noted. If funds have been borrowed from an existing policy to purchase the new policy, or if paid up additions have been surrendered to fund the new policy, the Company requires the agent to complete a replacement form. The Agency is notified when an agent fails to indicate replacement on the application.

Depending upon the circumstances, the Company may require disciplinary action against an agent or retraining of the agent when proper replacement procedures are not followed. See the “Licensing of Agents and Agent Files” Section III. of the report for additional comments on replacements.

The Company provided the examiners a listing of all replacement activity in Maryland, indexed by agent name, for the period January 1, 1998 through December 31, 2000. The examiners reviewed this listing in order to identify agents involved in replacement activities. These agents will be discussed in the Company portion of the report.

_____________________________________________________________________________________________

MET LIFE REPORT NO. 786-01

PAGE 10

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