New York is the latest state to attempt to pass its own "best-interest" standard for anyone selling life insurance and annuity products.
The proposal would cover "all sales of life insurance and annuity products, beyond the types of advice covered by the DOL rule," Gov. Andrew Cuomo announced.
The proposed amendments are subject to a 60-day notice and public comment period. If adopted, New York would become the second state to pass its own best-interest standard. Nevada passed a law that Gov. Brian Sandoval signed in June.
Both states cited the lengthy delays of the Department of Labor fiduciary rule. While parts of the rule went into effect June 9, provisions strictly regulating the sale of variable and fixed indexed annuities are delayed until July 1, 2019. Analysts expect the DOL to weaken those provisions in the interim.
"As Washington continues to ignore and roll back efforts to protect Americans, New York will continue to use its role as a strong regulator of the financial services and insurance industries to fight for consumers and help ensure a level playing field," said Cuomo, a Democrat. "With these common-sense reforms we are working to protect everyday New Yorkers and give them peace of mind when purchasing these products."
The DOL rule only applies to the sale of products using retirement dollars, whereas the New York proposal would extend to all sales of life insurance and annuities.
That is one of many problems with fragmented best-interest standards, said Andrew Rush, director of communications for the Life Insurance Council of New York.
"We do have serious concerns about implementing any regulations that will result in an unfair playing field for New York’s life insurance companies," he said. "Any implemented regulation should be uniform across the country, so companies do not face different standards in different states."
A transaction is considered in the best interest of a consumer when it is "in furtherance of a consumer's needs and objectives and is recommended to the consumer without regard to the financial interest of the product seller," the governor's press statement said.
Insurers would also be required to develop and maintain procedures to prevent financial exploitation of consumers, the release added.
InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at firstname.lastname@example.org. Follow him on Twitter @INNJohnH.
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