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Adrienne Harris (Photo: New York State Department of Financial Services)

Life Health > Running Your Business > Marketing and Lead Generation

Offering Multiple Product Versions May Discriminate, N.Y. Official Warns

By Allison Bell

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A New York state life insurer with more than one similar life insurance or annuity product may have to work hard to convince Empire State regulators that its product menu is fair.

The New York Department of Financial Services sent out a circular letter warning that “offering multiple versions of the same product” could be discriminatory.

Mona Bhalla, the deputy superintendent in charge of the department’s Life Bureau, signed the letter, and Adrienne Harris, the department’s superintendent, announced it.

Harris said insurers have a responsibility to ensure fairness in their products. “The complexity of insurance products should not be used to exploit vulnerable groups,” she added.

What It Means

Knowing just what products are on a New York state life insurer’s life and annuity shelves could get tricky over the next few months.

The Circular Letter

Bhalla acknowledged in the circular letter that life insurers may have developed separate products to fit different distribution channels, or to reflect how certain types of distributors are paid.

Although those reasons may make sense to insurers, “consumers have no way of knowing that there are other versions of the product — versions that may be more suitable for them — that are offered and sold to other consumers with identical needs, goals, or circumstances, and that may be cheaper,” Bhalla said. “These sales practices result in unfair and unlawful discrimination among similarly situated individuals.”

In some cases, Bhalla said, even the producers are unaware that different versions of the same product exist.

She suggested that insurers may still be able to sell different versions of a product if the insurer can “demonstrate a distinction that is reasonable, equitable, non-discriminatory, and based on sound actuarial principles.”

But Bhalla recommended that an insurer review its product menus carefully before its next New York state market conduct examination.

Adrienne Harris. Credit: New York State Department of Financial Services

Allison Bell

Think_Allison

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