Checklist Shows Impact of N.Y. Best Interest Rules
A New York state producer will have to document every client interaction.
A carrier has distributed new guidelines for agents and brokers that show what producers will have to do to comply with the new New York Regulation 187 product suitability and best interest standard regulations.
(Related: Valmark Reworks Life Sales Tool for N.Y. Best Interest Era)
Any time a producer interacts with a client, the producer will have to document
- Any new recommendations.
- Whether no recommendation was made.
- The client’s decisions about the recommendations.
- The basis for the recommendations.
- Comparisons of any products considered, including a comparison of the non-guaranteed elements.
- Compensation.
- The possible effects of any product replacements proposed.
A producer will also have to keep documentation, including a customer profile and needs analysis, for any interaction that leads to a sale.
The producer will have to give the client a carrier product summary and any relevant disclosures, including product limitation disclosures and a New York compensation disclosure notice. If a sale leads to the replacement of an existing product, the producer will have to provide disclosures related to the product replacement.
To prepare to comply with the new New York Regulation 187 rules, a producer will have to take a New York Regulation 187 training course from Reg Ed, Kaplan or LIMRA.
In addition, producers who sell life insurance from Nationwide will have to take a Nationwide Regulation 187 course designed for producers who sell specific types of Nationwide life insurance products.
Nationwide’s Nationwide Life Insurance Company developed the guidance for agents and brokers who are appointed in New York state, according to a copy of the guidance obtained by ThinkAdvisor.com.
The Background
New York state has had annuity product suitability regulations in place for years. Producers and insurers have had to verify whether products offered appeared to suit the purchasers’ needs.
The new New York state Regulation 187 update now requires sellers of life insurance and annuities to work in the clients’ best interest, and to document that they have acted in the clients’ best interest.
New York developed its Regulation 187 update in response to efforts by the U.S. Department of Labor to develop a fiduciary rule regulation. implementation of the original DOL fiduciary rule was blocked by the federal courts, after the administration of President Donald Trump declined to defend the rule.
The U.S. Securities and Exchange Commission has tried to set national standards for securities with its Regulation Best Interest project.
The U.S. Department of Labor is believed to be working on a new version of its fiduciary rule.
The National Association of Insurance Commissioners is working on a sales standards update based on its annuity suitability model.
Several states other than New York, including Maryland, Massachusetts and Nevada, have been developing their own state-level sales standard updates.
— Read New York State Final Best Interest Regs Cover Life As Well As Annuities, on ThinkAdvisor.
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