October 29, 2019
New York DFS Regulation 187 Overview
Effective February 1, 2020, for life insurance policies sold in NY.
The New York Department of Financial Services (NY DFS) released the final version of best-interest Regulation 187. The final regulation, now called Suitability and Best Interest in Life Insurance and Annuity Transactions, will require producers and insurers to implement a process ensuring they’re acting in the consumer’s best interest when recommending an annuity or life insurance policy issued in New York.
The new regulations take effect on
- August 1, 2019, for annuity contracts
- February 1, 2020, for life insurance policies
How this affects you
Under NY Reg 187, you have a duty to recommend products and post-issue transactions that are in the consumer’s best interest. In addition, you are required to complete two training courses:
- NY Reg 187 Best Interest training which is offered through RegEd (our vendor of choice)
- Life Insurance Product training which will be available via our website for existing agents and via eContracting for new agents (similar to annuity product training)
To avoid delays in processing, both training courses must be completed prior to submitting New York business once the regulation goes into effect.
New Application Requirements:
Illustrations / Statement of Policy Cost and Benefit Information
A signed and dated illustration is required at the time of application submission for all Whole Life and Universal Life products.
For Term Life products there is a new requirement for the Statement of Policy Cost and Benefit Information. This must be signed and dated and submitted with an application.
Financial Questionnaire form 1392
A new requirement of the regulation is that the home office conduct a suitability review, above and beyond our traditional Underwriting review. This Financial Questionnaire form is being modified to include suitability information. The form will be required for all cases issued in New York as well as post issue transactions that are reviewed by Underwriting. Suitability of Life Insurance will be conducted within our Underwriting department.
Disclosures
20660 – New York Suitability Disclosure (favorable and unfavorable features)
20659 – Career (full-time benefited agents) Agent Disclosure
Producers are required to inform applicants of various features of the life insurance product and potential consequences of the recommended transaction. A New York Suitability Disclosure Checklist (form 20660) has been created as an option to comply with this disclosure requirement. This form will be included with NY application kits as well as MerrillConnect.
Full-time Agents (Career Agents) have a second disclosure requirement. Disclosure Pursuant to New York Insurance Department Regulation 187 (form 20659) was created to satisfy this portion of the regulation. This form will be included in NY application kits as well MerrillConnect.
Note that these Disclosures do not need to be submitted to the Home Office, but should be retained in your Agent File and available upon request from the National Life Group home office, or from the NY DFS.
Our New Business, Underwriting, Contracting, Compliance and Legal partners have been working together to determine the impact of the regulation as well as potential solutions. We’ve also been participating in discussions with other carriers and industry trade groups.
