New York Gov. Andrew Cuomo has proposed new consumer protections for life insurance sales, which would adopt a "best interest" standard for licensed sellers of life insurance and annuity products.
The proposed Department of Financial Services regulation would require brokers to sell the product that best reflects the customer's interest rather than what is most profitable to the seller. Additionally, the proposed regulation requires insurers to develop and maintain procedures to prevent financial exploitation of consumers.
The proposed amendments to New York's current suitability regulation would provide for a best-interest standard of care for all sales of life insurance and annuity products, according to the regulator. The state regulation is aligned with the recently delayed Conflict of Interest Rule, according to the department. The U.S. Labor Department's best-interest standard is scheduled to go into effect July 1, 2019.
The proposed amendments are subject to a 60-day notice and public comment period following the Dec. 27 publication in the New York State Register before its final issuance.
The Life Insurance Council of New York in a statement said it is conducting a detailed review of the proposed regulation. The group said it has serious concerns about implementing any regulation that will result in an "unfair playing field for New York's life insurance companies."
"Any implemented regulation should be uniform across the country, so companies do not face different standards in different states," the group said.
The Council also urged the Department of Financial Services to proceed in a deliberate manner and work with the industry to ensure that New York's life insurers are not put at an "unfair disadvantage" related to other financial services providers, while still protecting consumers.
In a separate statement, the American Council of Life Insurers urged the New York regulator to work with other states and the Labor Department to create a national best-interest standard.
"A collaborative and harmonized regulatory approach would ensure all consumers receive retirement savings information and related financial guidance from financial professionals acting in their best interest," the ACLI said.