Having lived through the "will they, won't they" back and forth of the DOL's Fiduciary Rule, we were all looking forward to some quiet on the regulatory front. Sadly, with New York's finalization of the "Suitability and Best Interest in Life Insurance and Annuity Transactions" regulation (Reg 187), our brief moment of quiet is over.
New York's Department of Financial Services was also frustrated by the uncertainty over the DOL's Fiduciary Rule, so in December 2017, they began the process of creating their own Best Interest Standard for life insurance and annuities. That initial proposal went through several iterations and a comment period to reach the finalized version that took effect on August 1, 2019, for annuities and will be effective February 1, 2020, for life insurance.
Read our summary of the key provisions of Reg 187 for more insight.
In taking over where the DOL was forced to leave off, New York becomes the first state to fill what is seen as a gap in protections to its citizens engaging in financial transactions. It's expected that several states are likely to follow New York's lead, including: Massachusetts, New Jersey, Nevada, Maryland, California, and Illinois. None of those states are as far down the road to finalized regulations as New York, but it's important to know that New York is not alone in establishing a Best Interest standard.
AALU was instrumental in helping to shape the final version of Reg 187 and they will continue to work with the insurance departments of states considering their own Best Interest standards to craft regulation that protects both consumers and our industry.