The Independent Insurance Agents and Brokers of New York filed an appeal Monday challenging a New York Supreme Court ruling upholding the state’s new regulations governing annuity and life insurance sales.
Acting Albany County Supreme Court Justice Henry Zwack ruled July 31 that the New York Department of Financial Services was within its authority when it issued Regulation 187. The regulations establish a best interest sales standard and include rigorous training and documentation rules.
Regulation 187 took effect Aug. 1 for all annuity sales in New York.
The National Association of Insurance and Financial Advisors - New York also sued to stop Regulation 187. But the NAIFA chapter opted not to join the appeal, sources said.
The IIABA, known as The Big I, released the following statement:
“Big I New York has filed notice of our intent to appeal the Albany Supreme Court's recent ruling upholding the amendment to Regulation 187. Independent agents and brokers believe strongly in protecting the customers who put their trust in us. However, we remain concerned that the amended regulation will not meaningfully advance this goal. Instead, it will restrict open, honest discussions with clients and weaken the market for life insurance and annuities products, ultimately harming consumers.
“Our concerns about the impact of this regulation are already being borne out. Since the regulation went into effect on August 1st, multiple carriers with significant market share have announced the suspension of the sale of annuities and life insurance products in the state. We believe this concerning trend is likely to continue.
“From the outset, we recognized that this legal challenge would likely be appealed to a higher court, regardless of the trial court's decision. We remain confident in the merits of our claims, and resolute in our belief that this is the appropriate course of action.”
Just weeks after Regulation 187 took effect, two major insurers pulled their business from the state:
• Jackson National suspended the sale of fee-based annuities. In a statement, a Jackson spokesman termed the suspension “temporary” until the company sorts out compliance issues.
• Penn Mutual suspended all annuity applications, effective August 30. The Pennsylvania-based insurer will cease accepting life insurance applications in New York on Dec. 31, 2019.
The Penn Mutual timeline reflects part two of Regulation 187. The rules will be extended to life insurance on Feb. 1, 2020. That is just one area where rule borrows heavily from the late Department of Labor fiduciary rule.
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.
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