Now that New York's tougher rules on the sales of annuities and insurance have gone into effect, insurers are preparing to stop selling the products in the state, according to news reports.
Issued by the New York State Department of Financial Services, Regulation 187, as it’s known, requires financial entities selling annuities to consider their clients’ best interest first, add new disclosures and implement training on the product.
The rule went into effect Aug. 1, and will also apply to insurance policies on Feb. 1, 2020.
On Aug. 12, Jackson National Life suspended sales of fee-based annuities in the state in response to Regulation 187, although it expects the suspension to be temporary, InvestmentNews writes. And the insurance company suspended only its fee-based products while its commissions-based sales are far larger, according to the publication.
"We remain committed to delivering helpful and relevant disclosures to consumers and distribution partners and to resuming sales of our advisory products in New York as soon as possible," a company spokesman tells InvestmentNews.
But other insurers are getting ready to stop the sales of annuities and life insurance in New York as a result of the rule, industry experts familiar with these deliberations tell the publication.
Lawrence Rybka, president and CEO of ValMark Financial Group, tells InvestmentNews that he’s meeting with two financial advice firms that want to keep selling the products in the state after the insurer they’re affiliated with decided to stop offering them in New York because of the state’s new rule.
Rybka didn’t name the insurer, according to the publication.
What’s more, New York’s rule could lead other states to adopt similar measures, InvestmentNews writes.
"I’m looking at New York as a pilot program for the rest of the country," Sheryl Moore, head of insurance consulting firm Moore Market Intelligence, tells the publication. "This is kind of a precursor to what’s to come."
New York’s rule was meant to address a perceived regulatory gap left when an appeals court killed the Department of Labor’s fiduciary rule, which required retirement account advisors to put clients’ interests ahead of their own, New York Financial Services Superintendent Maria Vullo said last year.
Nevada and Connecticut had implemented state-level versions of fiduciary rules before New York, while New Jersey and Massachusetts are working on their own rules.