* Article 78 proceeding started, as agents see harmful "vague standard" and worse.
Not sure how the seemingly nonexistent balance of power in Albany will affect an insurance agents petition to stymie proposed Regulation 78 initiated by the PIANY and the Big I together, but the consent of an insurer segment won't help much.
It looks to us as if DFS Supt. Maria Vullo may well have the last word on the controversial Regulation. Following the press releases and arguments of the PIANY and Big I of New York, she issued a statement that expresses the solidarity of the life insurance industry with the Reg. "The Department of Financial Services (DFS) is pleased to have the support of New York's nation-leading life insurance industry for our Regulation 187, which sets a best interest standard for the recommendation of life insurance and annuity products. The industry agrees with DFS that it is prudent, fair and reasonable--and just simply the right thing to do--to act only in the consumer's best interests and obtain necessary financial and risk information from their clients in order to recommend a specific policy based on that data. Given the vital role that insurance products play in providing financial security to New Yorkers, it is essential that providers not be influenced by a producer's financial incentives, adhere to a higher standard of care and only recommend insurance and annuity products that are in the consumer's best interests."
It appears that the agents' have an uphill battle--not unusual for them; it's the kind they have won in the legislature historically, but then there are the courts.
To fight back against what they call "overreach" by the Department the two groups, which represent the vast majority of independent agents and brokers in New York, filed a legal challenge to the recently adopted amendment to Regulation 187 that imposes, they hold, "a vague standard of best interest on the sale of life insurance and annuities". The suit seeks to have the amendment voided in full.
This new standard, they reason, would significantly alter the agent/broker-customer relationship. The agents argue that the amended regulation would require agents and brokers to obtain detailed financial and risk information about their customers, and then recommend a specific policy based on that data--similar to the way financial investment products are offered. This would overturn decades of well-established case law that holds agents and brokers have no...