Op-ed: New York ruling will hurt life insurance companies


What’s worse, the standard for violating the rule is vague: It does not clearly define “best interest.” An insurer or agent might violate the rule if the annuity or policy is not “suitable” for the consumer, whatever that means. Regulation 187 also requires insurers to supervise agents and brokers to ensure they comply with this best-interest standard. But insurers have little control over independent brokers and agents.

Regulation 187’s arbitrary application to in-person sales creates more confusion. Given the proliferation of online and TV insurance sales pitches, it misses many New Yorkers. It also bogs down direct agents and brokers with regulatory burdens that their electronic and TV competitors do not have.

Ironically, the regulation’s unintended consequences will hurt consumers. The pandemic focused consumers on financial security, leading to a boom in life insurance sales across the nation—but not in New York. According to the Life Insurance Market Research Association, New York saw the smallest growth in life insurance sales during the pandemic. That’s because many market participants preemptively changed their practices, despite the Department of Financial Services’ staying enforcement during the litigation.

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