RESOURCE CENTER – REGULATION 187
The Department of Financial Services’ (DFS) Reg. 187 imposes a “best interest” standard on all transactions related to life insurance and annuities. NAIFA-NYS weighed in through in-person meetings with DFS regulators and via extensive official comments, as well as partnered with other associations to express concerns and recommend alternatives. Below is information and related documents regarding the regulation. The annuities requirements took effect on August 1, 2019; the life insurance requirements kick in on February 1, 2020.
BACKGROUND MATERIALS –
In November 2018, NAIFA-NYS filed what is called an Article 78 legal challenge to invalidate Regulation 187. On August 1, 2019, after various legal proceedings, the judge issued his decision, dismissing our case and ultimately giving deference to the DFS. Below is an August 1 statement from NAIFA-NYS President Phillip Held, LACP in response to the judge’s decision, as well as a September 18 statement from the NAIFA-NYS President regarding the Board’s decision not to appeal.
Statement of NAIFA-NYS President Phillip Held Regarding Regulation 187 Litigation
In regard to the litigation NAIFA-NYS v. Vullo (so-called Regulation 187), we are gratified that the Court acknowledged the high standards by which NAIFA-NYS members conduct themselves in their profession, and the accountability already in place through the NAIFA Code of Conduct that assures its members act in the best interest of clients. We have never differed with the Department on the best interest objective of the regulation as that has always been the mission of NAIFA-NYS’ members; we differed primarily on its approach to the regulation itself.
That said, we are clearly disappointed with today’s decision of the Court to dismiss this matter, without any hearing on the important issues we raised. We have always believed that there are serious flaws in how the regulation was promulgated and are concerned that the Court did not appreciate those points of our argument.
We remain confident that we will continue to constructively engage with the DFS to assure good faith compliance with the regulation that goes into effect today and to address the many other issues of interest to the life agent and financial advisor community and their clients in a collaborative and constructive manner.
Phillip Held, LACP
Statement of NAIFA-NYS President Phillip Held Regarding Appeal of the Regulation 187 Decision
As we reported to you last month, our lawsuit against the New York Department of Financial Services relating to Regulation 187 (the new suitability and best interest regulation for life insurance and annuities products) was defeated in the trial court. Our options from that decision were to either appeal the court’s determination that the regulation was lawful, or let the court’s decision stand.
The NAIFA-NYS Board has decided to not proceed with an appeal. This decision, made after significant deliberation, ends our litigation with the DFS on this matter. Hopefully, it will restore routine and heretofore collegial and constructive ongoing relations with our primary regulator, and we can work towards providing the best guidance to our members for implementation.
Litigation is expensive, and this case was no exception. While we strongly believe that there is merit to an appeal, we as a Board had to determine the most reasonable approach in light of the high expense associated with appeals and potentially another round of trial-court level litigation.
NAIFA-NYS is an important voice in the public discussion on cutting-edge insurance public policy and agency practice issues. Being in litigation has stifled some of that voice (necessarily and worth it given the need to raise our collective challenge to Regulation 187). By waiving our right to go forward with an appeal, we return our voice and the strength of our membership to the public discourse on the many issues before us.
On behalf of the Board of Directors, I want to thank you for your support of this litigation, and your continuing support for NAIFA-NYS.
Phil Held, LACP
To read the court’s decision, click HERE.
If you are interested in reading key documents associated with the case, including the initial NAIFA-NYS filing and the Attorney General’s response, please click on the box below (NAIFA-NYS members-only password required).