NEW YORK (Thomson Reuters Regulatory Intelligence) - New York has revised its proposed regulation for a best-interest standard to spell out the duties of sellers of life insurance and annuity products in the state and included a requirement for insurers to establish protocols to ensure that any advice given to consumers is in their best interest.
The proposed amendment(here) is intended to ensure that all sales of life insurance and annuities in the state meet the best-interest standard that the state seeks to enforce, irrespective of whether the recommendations are made during a new sale or the renewal of an existing plan, a statement from the department said.
The department plans to have the proposed regulation go into effect on March 1, 2019, after which insurers will have six months to comply with the requirements of the amendment.
“This updated proposal allows an appropriate period of time for regulated entities to review the rule before it becomes final and to put in place protocols for ensuring these important consumer protections,” the New York Superintendent Maria Vullo said in a statement on Friday.
The department had first proposed(here) the best-interest standard for sellers of life insurance and annuity products in December 2017. The amendment to the proposed regulation was made on Friday after taking into consideration all comments submitted regarding the prior proposed regulation in a public comment period that ended in February, the department said.
The latest proposed amendment is now subject to a 30-day notice and public comment period following publication in the New York State Register before its final issuance, the department added.
If the best-interest standard being proposed by the state of New York comes into force in the near-term, it will be the first such rule applicable to insurers after the 5th Circuit Court of Appeals in March vacated the fiduciary rule by the Obama administration that required financial advisors — including those selling annuity products — to put clients interests ahead of their own while providing retirement advice.
The Securities and Exchange Commission this month has also proposed(here) a best-interest standard to replace the Department of Labor’s Fiduciary Rule but has emphasized on the standard being applied to brokers who will now be required to clearly explain the fees paid by investors and commissions earned by brokers when providing financial advice.
(Antonita Madonna is a correspondent for Thomson Reuters Regulatory Intelligence, based in New York.)
This article was produced by Thomson Reuters Regulatory Intelligence and initially posted on May. 1. Regulatory Intelligence provides a single source for regulatory news, analysis, rules and developments, with global coverage of more than 400 regulators and exchanges. Follow Regulatory Intelligence compliance news on Twitter: @thomsonreuters