DeWITT — The group that describes itself as the state’s largest insurance-producer trade association says it still has “concerns” about the state’s final regulation of a standard for those selling life insurance and annuity products in New York. DeWitt–based Big I New York on July 19 reacted to the New York State Department of […]
DeWITT — The group that describes itself as the state’s largest insurance-producer trade association says it still has “concerns” about the state’s final regulation of a standard for those selling life insurance and annuity products in New York.
DeWitt–based Big I New York on July 19 reacted to the New York State Department of Financial Services (DFS) approval of the regulation.
Big I New York is the former Independent Insurance Agents & Brokers of New York, Inc. (IIABNY).
DFS on July 18 issued a news release on the final regulation adopting a “best interest” standard for those licensed to sell life insurance and annuity products The standard seeks to “protect New York State consumers from conflicted advice,” DFS said.
Louis Atti, chair of the board of DeWitt–based Big I New York, issued a statement in response to the DFS’ final adoption of the new rules governing the sale of life insurance and annuities.
“Independent insurance agents and brokers are committed to providing the best possible products and services to their customers every day… I want to acknowledge and thank the department for the efforts it made taking into account some of the issues we raised with earlier proposals. However, we still have concerns about the regulation that the department has adopted. We believe it will make buying life insurance more complicated for consumers and lead to fewer consumers buying these important policies,” said Atti.
He went on to say that Big I New York and its member agents and brokers are reviewing the changes the department has adopted to determine their ultimate impact on consumers.
“We wholeheartedly support the goal of protecting our customers. Our review will seek to determine whether the regulation will further complicate life and annuity sales in New York, resulting in fewer policies sold where the consumer has access to advice and recommendations from an insurance professional.”
Big I New York says it “exists to fulfill the educational, political, and business interests of our more than 1,750 agencies and their 13,000 plus employees.”
About the regulation
The new regulation requires insurers to establish standards and procedures to “supervise recommendations” by agents and brokers to consumers pertaining to life-insurance policies and annuity contracts issued in New York. The rule seeks to ensure that any transaction “with respect to those policies is in the best interest of the consumer and appropriately addresses the insurance needs and financial objectives of the consumer at the time of the transaction.”
The final regulation, which amends New York’s current suitability regulation, provides for a “best interest” standard of care for all sales of life insurance and annuity products, including both in the specific context of retirement planning, when recommendations are made prior to the sale of an insurance product or after the sale but during the servicing of the product for the consumer.
A transaction is considered in the best interest of a consumer when it furthers a consumer’s needs and objectives and “where only the interests of the consumer are considered in making the recommendation.”
A producer’s financial compensation or incentives “may not influence” the recommendation, DFS said. Insurers would also be required to develop and maintain procedures to prevent financial exploitation of consumers.