What Is Regulation 187?
The Department of Financial Services has issued a final regulation, adopting a best interests standard for those licensed to sell life insurance and annuity products in New York. Amendments to 11 NYCRR 224 (Insurance Regulation 187) will ensure that all recommendations related to the sale of these products will be in the consumer’s best interests. On July 31, 2019, the New York State Supreme Court issued a decision to uphold the constitutionality of the regulation. That was one day before the regulation, as applicable to variable annuity products, went into effect. (The effective date for life insurance products is February 1, 2020.
Titled “Suitability and Best Interests in Life Insurance and Annuity Transactions”, the regulation clarifies the duties and obligations of insurers and producers, requiring them to establish a best interests standard of care and a program of supervision to ensure compliance by both the insurer and the producers recommending its products. Compliance includes the insurer’s responsibility to ensure that every producer is adequately trained to make the recommendation.
What Is The Training Requirement?
The amended regulation imposes new training and supervisory obligations on insurers. More specifically, it requires insurers to adequately train their insurance agents on an insured’s policies when making a recommendation. “An insurer shall be responsible for ensuring that every producer recommending any transaction with respect to the insurer’s policies is adequately trained to make the recommendation in accordance with the provisions of this Part.”
For many insurers, this training requirement might not impose an additional material obligation. However, to the extent that an insurer does not already provide this training (i.e., the insurer requires the producer to self-educate on the insurer’s products) the regulation may now require affirmative action on the part of the insurer to provide this training.
How Do I Comply?
While the regulation does not specify how the training must be provided, many insurers are teaming up with popular NAIC continuing education vendors in the industry to deliver this requirement. For example, Quest CE has a course available titled, “New York’s Best Interest Amendment to Regulation 187,” which provides an essential understanding of Regulation 187 and associated implementing acts for selling annuities in New York. Broker-dealers who take the course will benefit from guidance on the amendment, exempt transactions and affected sales transaction recommendations.
The course, which is approximately 1-hour in length, is currently available online within Quest CE’s Annuity Suitability Platform. Producers have the option to take the course for 1-hour of continuing education (CE) credit, or take the training without CE credit (where a NY Approved Monitor is not required, unlike the CE-version). Quest CE also hosts the carrier’s appointed product training.
This regulation carries important obligations – and penalties for noncompliance – for affected organizations. For more information on Quest CE’s course, please contact us at (877)593-3366 or email firstname.lastname@example.org.