Suitability and senior designation standards for the sale of investment products have been tightened by the New York Insurance Department under new regulations finalized last month.

According to Marc Tract, a partner at Katten Muchin Rosenman LLP, the regulations first became effective on an emergency basis on Dec. 30, 2010, and were re-adopted on an emergency basis as of March 25.

Regulation No. 187 prohibits sales of annuities that are unsuitable for the insurance needs and financial objectives of consumers.

The regulation also requires that purchasers of annuities be informed of the features of the annuity being sold. Among these are surrender periods, charges, fees and the tax implications if the consumer sells, surrenders or annuitizes the contract and death benefits.

Regulation No. 199 prohibits insurance producers from using misleading titles, such as “certified elder planning specialist,” to gain seniors’ trust to sell them life insurance policies and annuities.

The regulation also bans the use of fraudulent marketing practices connected to the use of such titles in the solicitation or sale of life insurance policies and annuities.

According to Tract, the regulations are based on the National Association of Insurance Commissioner’s Suitability in Annuity Transactions Model Regulations and the Financial Industry Regulatory Authority’s NASD Rule 2310 for securities.

More than 30 states have adopted the NAIC Model. NASD Rule 2310 has been in effect nationwide for nearly 20 years and applies to the sales of variable annuities.

Tract said that, rather than “demonizing” the insurance industry as does the NCOIL Proposed Beneficiaries’ Bill of Rights, “I believe that New York’s regulations exemplify the search for broadly applicable uniform consumer protection standards that appropriately balance the needs of the insurance and securities industries with the needs of consumers.”