NAIFA Files Second Lawsuit Against NY Best-Interest Rule – InsuranceNewsNet

InsuranceNewsNet — Your Industry. One Source.™

Sign in
  • Subscribe
  • About
  • Advertise
  • Contact
Home Now reading Top Stories
Topics
    • Life Insurance News
    • Annuity News
    • Health/Employee Benefits
    • Property and Casualty
    • Advisor News
    • Washington Wire
    • Regulation News
    • Sponsored Articles
    • Monthly Focus
  • INN Exclusives
  • NewsWires
  • Magazine
  • Webinars
  • Free Newsletters
Sign in or register to be an INNsider.
  • Exclusives
  • NewsWires
  • Magazine
  • Webinars
  • Free Newsletters
  • Insider Pro
  • About
  • Advertise
  • Editorial Staff
  • Contact
  • Newsletters

Get Social

  • Facebook
  • Twitter
  • LinkedIn
Annuity News
Top Stories RSS Get our newsletter
Order Prints
November 26, 2018 Top Stories No comments
Share
Share
Tweet
Email

NAIFA Files Second Lawsuit Against NY Best-Interest Rule

By John Hilton

The National Association of Insurance and Financial Advisors' New York chapter filed a lawsuit to stop the state's controversial best-interest rule slated to take effect in August.

New York finalized its best-interest standard in July for both annuity and life insurance sales. The state's best-interest regulation is considered one of the toughest in the country, one that New York officials are lobbying the National Association of Insurance Commissioners to endorse.

The NAIFA-NY lawsuit claims the New York Department of Financial Services acted in defiance of the state legislature, which failed in two separate attempts to regulate the life insurance industry.

Related stories

  • Study: Does pessimism really suppress annuity sales?
  • Sweet streams of income: ChatGPT, the bard of annuities

"It is well settled that the Legislature may not delegate to an agency its responsibility to set policy," the lawsuit reads. "To the extent the Legislature empowers an agency to promulgate regulations implementing a policy, the Legislature must place limits and safeguards to ensure that the agency is merely carrying out legislative policy—not making new policy."

In addition, NAIFA-NY claimed the best interest amendment does not include any factual basis and that DFS "refused to consider evidence from parties commenting on the proposed regulation."

"DFS acted solely on its own ideas of sound policy without any legislative or statutory guidelines, choosing to favor consumers at the insurance industry’s expense—which ironically harms consumers as much as insurers, brokers, and agents," the lawsuit reads.

In a statement, DFS Superintendent Maria Vullo touted the support the agency has received from "New York's nation-leading life insurance industry" for the regulation.

"Given the vital role that insurance products play in providing financial security to New Yorkers, it is essential that providers not be influenced by a producer’s financial incentives, adhere to a higher standard of care and only recommend insurance and annuity products that are in the consumer's best interests," the statement reads.

NAIFA-NY filed its lawsuit in New York County and is asking the court for a declarative judgment and an injunction preventing the best-interest amendment from taking effect.

'Unfair Playing Field'

The NAIFA-NY lawsuit includes an affidavit from Donald Damick, a 39-year insurance agent doing business in Geneva, N.Y. The New York regulations exempts life insurance and annuity products sold directly to consumers, he pointed out.

"The direct sales exemption creates an unfair playing field as it gives those insurers a competitive advantage over producers, who must meet Regulation 187' s compliance burden for each sale," Damick said. "I believe that over time more insurers will continue the trend of moving more products to their direct sales platform simply to avoid Regulation 187's burdens, thus driving more producers from this business.

The losers from such a move would be "low-income, less sophisticated consumers who would benefit most from in-person agent advice about other available products or options," Damick added.

The Big I and the Professional Insurance Agents of New York filed their own lawsuit against the best-interest rule.

Big I NY and PIANY called the new standard "wildly subjective" and said it fails to instruct agents/brokers whose best interest they must consider; be it the policyholder, beneficiary, or owner of a policy.

"The new standard will not protect consumers, but instead be detrimental by potentially driving business out of the state and leaving the insurance-buying public with reduced access to affordable coverage," the press release reads.

The New York rules come with an effective date of Aug. 1, 2019, for annuity contracts, and six months afterward for life insurance contracts.

InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected]. Follow him on Twitter @INNJohnH.

© Entire contents copyright 2018 by InsuranceNewsNet.com Inc. All rights reserved. No part of this article may be reprinted without the expressed written consent from InsuranceNewsNet.com.

Older

Another Record-Setting Quarter For Index Annuities, Wink Reports

Newer

FIAs Smash Sales Record For Second Straight Quarter

Advisor News

  • Fed slows rate hikes even as Powell says there's more work to do
  • Mortgage rates in U.S. fall again, hit 6.09%
  • 1 in 3 Americans struggling financially but goal-setting is a game-changer
  • Advisors bet on US stocks to outperform in 2023 amid tech rebound
  • Investors want more ESG information from companies
More Advisor News

Annuity News

  • Study: Does pessimism really suppress annuity sales?
  • Sweet streams of income: ChatGPT, the bard of annuities
  • F&G Annuities & Life announces equity investment in life IMO SYNCIS
  • Investors scrambling to lock in rates propel annuity sales to record highs
  • North American and Annexus launch new fixed index annuity
Sponsor
More Annuity News

Health/Employee Benefits News

  • State: all insurers failed to comply with Oregon Reproductive Health Equity Act
  • Will plan fix California health care?
  • Insurance giant Elevance to move into 15th state
  • Medicare card scam targets seniors for personal info
  • Yes, states are re-checking Medicaid and CHIP eligibility starting in April
More Health/Employee Benefits News

Life Insurance News

  • Maid's son tells judge Alex Murdaugh took $4M for her death
  • Chris Wilson tells court former friend Murdaugh confessed he was ‘stealing money’
  • State's motive testimony could prolong Alex Murdaugh murder trial
  • Equitable expands portfolio in VUL market
  • New date set for billionaire suspect accused of bribing state cabinet member
More Life Insurance News

- Presented By -

Top Read Stories

  • Chicago news roundup: PPP fraud uncovered in Chicago, informant reveals $100K bounty on FBG Duck and more
  • Gov. Carney: Enrollment on Delaware's Health Insurance Marketplace for 2023 Reaches All-Time High
  • 25 people charged in fake nursing diploma operation
  • Connecticut addressing broker shortage amid The Great Unwinding
  • Pennsylvania woman sentenced in elderly fraud case
More Top Read Stories >

FEATURED OFFERS

Meet Encova Life
We know agents matter. You can count on our life team to be high tech, high touch and responsive.

How to Write For InsuranceNewsNet

Find out how you can submit content for publishing on our website.
View Guidelines

Topics

  • Life Insurance News
  • Annuity News
  • Health/Employee Benefits
  • Property and Casualty
  • Advisor News
  • Washington Wire
  • Regulation News
  • Sponsored Articles
  • Monthly Focus

Top Sections

  • Life Insurance News
  • Annuity News
  • Health/Employee Benefits News
  • Property and Casualty News
  • AdvisorNews
  • Washington Wire
  • Insurance Webinars

Our Company

  • About
  • Editorial Staff
  • Magazine
  • Write for INN
  • Advertise
  • Contact

Sign up for our FREE e-Newsletter!

Get breaking news, exclusive stories, and money- making insights straight into your inbox.

select Newsletter Options
Facebook Linkedin Twitter
© 2023 InsuranceNewsNet.com, Inc. All rights reserved.
  • Terms & Conditions
  • Privacy Policy
  • AdvisorNews

Sign in with your Insider Pro Account

Not registered? Become an Insider Pro.