The instructions for Form 1099-R only say that no reporting is required for surrender of the policy if the insurance company reasonably believes that none of the distribution is includible in income. If they know that there is $3,617.96 of taxable gain (implying that it is includible in income), it seems that they must issue a Form 1099-R. It seems that they would also have been required to withhold 10% of the taxable amount for taxes unless you instructed that there should be no tax withholding. If taxes were withheld, they must issue a Form 1099-R.
