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New York Issues Final Version of Best Interest Rule for Life and Annuities
20 July 2018
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NYDFS has issued the final version of Regulation 187, which mandates that only the best interest of the consumer can be considered in making recommendations regarding purchase or in-force transactions for life and annuity products. Much uncertainty remains as to how NYDFS will interpret and enforce the new rule, which appears to retain some problematic aspects of the prior version.
The final version provides some limited additional flexibility in the best interest standard, setting forth broader criteria which may be considered and making clear that incentive compensation is permissible so long as it does not influence the recommendation to a consumer.
The final regulation also makes several other important revisions, including deletion of proposed language that would have required insurers to implement procedures to prevent recommendations based on incentive-based compensation and eliminating a provision that would have provided a private right of action.
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