On December 8, the DFS released Circular Letter No. 7 (2016), focusing on unsuitable replacements of deferred annuity contracts with immediate annuities, and addressing Betterment of Rate Calculations. The circular letter reminds life insurance agents and brokers and insurers of their obligations under Reg 60 (Replacement of Life Insurance Policies and Annuity Contracts) and Reg 187 (Suitability in Annuity Transactions). Further DFS information is available online.
NAIFA-NYS became aware of the issue during a meeting with senior association staff and the Hon. James Regalbuto, Deputy Superintendent for Life Insurance at DFS, and his staff in August concerning issues of importance to NAIFA-NYS members. The association then issued a statewide alert to its members, cautioning of potential DFS enforcement actions, and submitted a comment letter to reinforce NAIFA-NYS’ dedication to the principles of sound insurance, financial and estate planning, and to commit NAIFA-NYS to assisting DFS to remedy any problems. The DFS is raising red flags as a result of market conduct audits of certain life insurers in 2016.