NYDFS Issues Final Amendments to Regulation 187

On July 18, 2018, the New York Department of Financial Services (“NYDFS”) issued its final amendments to Regulation 187 which will be applicable to annuity as well as life insurance products.

The new Regulation 187 will become effective for annuity products on August 1, 2019 and six months thereafter, or February 1, 2020, for life insurance products.

The new Regulation 187 will now be called “Suitability and Best Interests in Life Insurance and Annuity Transactions.”

The revisions to Regulation 187 introduce a best interest standard applicable to both annuities and life insurance products.  The introduction of suitability and best interest standards applicable to life insurance products will require life insurers to develop appropriate compliance strategies to address these new requirements.

The NAIC is exploring development of revisions to its NAIC Suitability in Annuity Transactions Model Regulation which, as of this writing, applies suitability standard solely to annuity products.  New York serves on the NAIC Annuity Suitability (A) Working Group.  Nevertheless, the NYDFS elected to finalize its amendments to Regulation 187 to address issues that were deemed to be state specific to New York’s interests.

CEFLI will continue to monitor developments pertaining to Regulation 187 compliance strategies over the months ahead.