New York Financial Services Department Issues Emergency Measure On Suitability in Annuity Transactions; Updates Prelicensing Filing Documents
Mar 29, 2012
New York Department of Financial Services (“Department”) Superintendent Benjamin Lawsky has issued Insurance Regulation 187, an emergency measure dealing with Suitability in Annuity Transactions. The measure adds Part 224 of Title 11 of the Official Compilation of the State of New York, which will require insurers to set forth standards and procedures for recommendations to consumers with respect to annuity contracts, so that insurance needs and financial objectives of consumers are appropriately addressed at the time of transaction.
These standards are similar to the National Association of Insurance Commissioners’ Suitability in Annuity Transactions Model Regulation for annuities, and the Financial Industry Regulatory Authority’s current National Association of Securities Dealers Rule 2310 for Securities.
In 2009, life insurance companies wrote an overall $17 billion in annuity premiums in New York alone. The addition of Part 224 was spurred by aggressive marketing of unsuitable annuities to New York senior citizens by life insurance companies. Due to the increased complexity of annuities and the significant risk assumed by purchasers, this measure was issued to provide critical consumer protections in all annuity sales transactions.
In addition, under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, state agencies that promulgate suitability regulations are eligible for federal grants toward enhanced protection of seniors in connection with the sale and marketing of financial products.
To view the complete text of Part 224, click here.
Pre-Licensing Education Provider Documents Updated
The Department has updated its pre-licensing filing documents for those applying to become providers of pre-licensing education for the New York State Insurance Licensing Examination.
To access the documents, click here.
Should you have any questions or comments, please contact Colodny Fass.