The New York life insurance industry is slowly moving the state toward what it feels is more equitable treatment of its industry, with efforts spread across years rather than seasons.
Thomas E. Workman, right, president and CEO of the Life Insurance Council of New York (LICONY) wants to make sure the life industry in New York moves ahead and is able to stay competitive while working amicably with state regulators.
As of February, LICONY has been threading this needle for 45 years.
During an interview in mid-March, Workman outlined some key legislative initiatives designed to update to NAIC model law standards and remove various regulatory strictures in the state.
One initiative that has advanced this session is a bill to amend the state insurance law governing replacement of life insurance policies or annuity contracts to remove what LICONY calls an expensive cost comparison and shore up the regulation, known a Reg. 60, with the NAIC model law on replacements.
This replacements bill, S. 3065, introduced by Senate Insurance Committee Chairman James L. Seward, R-N.Y., is broken, as people at the state Department of Financial Services (DFS) have even said, Workman notes.
“Agents are anxious to solve this. [They] are going crazy with the paperwork,” Workman said. Workman, a seasoned insurance lawyer in the Ohio firm of Bricker & Eckler LLP since 1969, has been with LICONY for 13 and a-half years.
Since its 1998 promulgation, Reg. 60 “has not worked so well, so much so that some companies have made the determination to discontinue offering their products in this state, if another policy is being replaced to finance their product,” LICONY stated.
DFS does not support the scrapping of Reg. 60, as one person there noted, and LICONY’s lobbyist Diane D. Stuto agrees. She said that DFS no longer takes positions on legislation, and LICONY continues to work with the DFS Life Bureau on the substance of the bills “in the hopes that they will offer no objections to the bills if they pass both houses.”
The DFS press office said it had no comment.
“The New York Department, under the leadership of Superintendent [Benjamin] Lawsky, is filled with sophisticated professionals at both the executive and operating levels. They are highly responsive to requests for information and for opportunities to discuss regulatory issues. We believe effective regulation of a complex industry requires ongoing collaboration and trust between the regulator and the regulated. Accordingly, we appreciate the open door policy and professionalism of the officials at the New York Department,” Workman states.
Seward, a 2009 past president of the National Conference of State Legislatures (NCOIL) said LICONY is a “very effective trade association for life insurers” because through it, they are able to speak with a “unified, single voice in New York State.” The property casualty and health industries are more “splintered” in their advocacy, Seward says.
And, while Seward gives the DFS high praise for keeping the insurance industry safe during the financial crisis and spoke of how people are proud of their insurance regulators, he acknowledges that it is an “ongoing challenge” trying to change the so-called “49 and 1 rule.”
That’s the shorthand for the fact that policies and products are often accepted in all states except New York, according to lawmakers.
Seward has been trying to “streamline and modernize” insurance regulation for a while, notably with legislation to enable New York to join 41 other states in the Interstate Compact for product regulation.
It has passed the state Senate several times with bipartisan support, but cannot get through the Democratic-controlled state assembly.
Workman says that the DFS has issues with the Compact legislation, the old S. 2895, which would provide for a new Article 88 of the insurance law, and has said, “let’s make our policies and procedures better.”
Seward noted “it is no secret that we get resistance from the DFS on various issues,” as New York regulators try and preserve their uniqueness.
Seward said he believes New York should set high standards but be more uniform with the rest of the country for the good of consumers, the domestic industry and for the state as a whole.
One stymied wish of LICONY that involves an issue that now has national regulatory attention is the amending of Regulation 17 to eliminate the “mirror reserving requirement.”
The Dodd- Frank Act precludes the DFS from denying reinsurance credit claimed by nondomestic ceding insurers in accredited states or similar financial solvency requirements, and that recognize credit for reinsurance.
Other states do not require the mirror reserving for reinsurance cessions, putting New York companies at a disadvantage, LICONY argues.