NY Announces New Consumer Protections for Life Insurance Sales
02/16/18—The New York Department of Financial Services has proposed a new best interest consumer protection standard for the sale of life insurance and annuity products.
The proposed regulations create a new rule that would require licensed sellers of life insurance and annuities to offer products that best reflect a customer’s financial interest. The proposed amendments would provide for a best interest standard of care for all sales of life insurance and annuity products. A transaction is considered in the best interest of a consumer when it is in furtherance of a consumer’s needs and objectives and is recommended to the consumer without regard to the financial interest of the product seller. Insurers would also be required to develop and maintain procedures to prevent financial exploitation of consumers.
The proposed regulations are meant to supplement existing consumer protections, including setting reasonable limits on compensation and compensation transparency for the sale of a life insurance or annuity product in New York State.
The proposed amendments are subject to a 60-day notice and public comment period following the December 27, 2017, publication in the New York State Register before its final issuance.