Lessons we can learn from New York state’s Regulation 187

When four in five Americans tell a Wall Street Journal poll they believe the state of the economy is “not so good” or “poor,” an overwhelming share of Americans aren’t confident their children’s lives will be better than their own and we see bank failures such as what happened with Silicon Valley Bank, it’s easy to let pessimism set in.

But at Finseca, our mission is right there in our name: FINancial SECurity for All. And that’s why we will continue to draw attention to New York state’s Regulation 187, which — as the data show — has been problematic for consumers looking for access and more choices.

As was stated in a recent industry trade publication, “New York’s Regulation 187 has added unnecessary time and cost to the life application process. It could also be depressing sales.”

For example, we’ve seen a decline in the number of people covered by individual life insurance. In 2021, the policy count in New York state stood at 362,207, down 15% from the 2018 total, the year before the rule took effect. But over the same period, the policy count nationally increased by 3%.

In addition to this, we’re also hearing about how burdensome it is for advisors to serve their clients.

For example, Bob Eichler, an advisor at CCL Financial Group in New York City, said, “My concern is that the process keeps people from acquiring the coverage that they should have. If you’re planning on having to complete 100 pages of an application, that just tends to make them procrastinate even longer.”

Ben Kronish, an advisor at PartnersFinancial and the insurance broker and consultant NFP in New York City, has publicly noted, “When you add the additional requirement that Regulation 187 imposes, it just becomes a reason to look to do business outside of the state.”

I think we can all agree that putting consumers’ true best interest first is a laudable goal and one we should — and can — achieve. We’ve seen it at the congressional level recently, with SECURE 2.0, and we continue to see it with the adoption of the National Association of Insurance Commissioners’ Best Interest model.

A path forward with laws like these two will ensure middle-income savers have access to the financial advice and tools they need for true financial security, including life insurance, investments and annuities.

With roughly 60 million American households having no or not enough life insurance, that means millions don’t even benefit from the protection of a true financial security plan. Couple this with the roughly $12 trillion protection gap, and our work at Finseca is squarely focused on ensuring consumers have more access and more choices.

Melissa Bova joined the Finseca government affairs team in November 2021 as its first vice president of state affairs. She may be contacted at [email protected].