Home » 2013 Issues » February 20, 2013 » DFS-34-12-00005-A Use of Senior-Specific Certifications and Professional Designations in the Sale of Life Insurance and Annuities
DFS-34-12-00005-A Use of Senior-Specific Certifications and Professional Designations in the Sale of Life Insurance and Annuities
2/20/13 N.Y. St. Reg. DFS-34-12-00005-A
NEW YORK STATE REGISTER
VOLUME XXXV, ISSUE 8
February 20, 2013
RULE MAKING ACTIVITIES
DEPARTMENT OF FINANCIAL SERVICES
NOTICE OF ADOPTION
I.D No. DFS-34-12-00005-A
Filing No. 145
Filing Date. Jan. 31, 2013
Effective Date. Feb. 20, 2013
Use of Senior-Specific Certifications and Professional Designations in the Sale of Life Insurance and Annuities
PURSUANT TO THE PROVISIONS OF THE State Administrative Procedure Act, NOTICE is hereby given of the following action:
Action taken:
Addition of Part 225 (Regulation 199) to Title 11 NYCRR.
Statutory authority:
Financial Services Law, sections 201 and 302; and Insurance Law, sections 301, 2103, 2104, 2110, 2403 and 4525
Subject:
Use of Senior-Specific Certifications and Professional Designations in the Sale of Life Insurance and Annuities.
Purpose:
To protect consumers from misleading use of senior-specific certifications and designations in the sale of life insurance.
Text or summary was published
in the August 22, 2012 issue of the Register, I.D. No. DFS-34-12-00005-P.
Final rule as compared with last published rule:
No changes.
Text of rule and any required statements and analyses may be obtained from:
Ruth Gumaer, New York State Department of Financial Services, 25 Beaver Street, New York, NY 10004, (212) 480-4763, email: ruth.gumaer@dfs.ny.gov
Assessment of Public Comment
The purpose of the proposed addition of a new Part 225 to 11 NYCRR (Regulation 199) is to protect consumers from misleading and fraudulent marketing practices with respect to the use of senior-specific certifications and professional designations in connection with the solicitation of, sale or purchase of, or giving of advice regarding, a life insurance policy or annuity contract. The regulation prohibits the use of a senior-specific certification or professional designation by an insurance producer in a manner that would mislead a purchaser or prospective purchaser into thinking that the insurance producer has special certification or training in advising or providing services to seniors in connection with the sale of life insurance and annuities. In 2008, the National Association of Insurance Commissioners adopted a new Model Regulation on the Use of Senior-Specific Certifications and Professional Designations in the Sale of Life Insurance and Annuities (“the NAIC Model”). The standards and procedures in this rule are substantially the same as those already set forth in the NAIC Model. While more than 15 states have implemented some form of the NAIC Model, New York has no statute or regulation that specifically provides this consumer protection by prohibiting the use of misleading senior-specific certifications or professional designations by an insurance producer in the sale of life insurance and annuities.
The Department received one comment during the public comment period, sent by the National Association of Fixed Annuities (“NAFA”), which approved of the proposed regulation. NAFA is “a national trade association dedicated exclusively to promoting the awareness and understanding of fixed annuities and educating regulators, legislators, consumers, members of the media, industry personnel, and distributors about fixed annuities and their benefits to retirees and those planning retirement,” with a “membership of fixed annuity carriers and independent marketing organizations (or field organizations) represent[ing] over 200,000 agents and registered representatives selling fixed annuities.”
NAFA commented that it is “pleased that consumer complaints related to annuities have declined significantly over the past four years due in part to the enhanced suitability standards established by the NAIC Suitability in Annuity Transactions Model Regulation (revised in 2010) and the more rigorous oversight on the use of senior-specific designations established by the NAIC’s 2008 Model Regulation on the Use of Senior-Specific Certifications and Professional Designations in the Sale of Life Insurance and Annuities.” NAFA noted in its comments that NAIC Complaint Data through August 2012 shows that complaints of misrepresentation and unsuitable sales declined approximately 80% between 2008 and 2011.
The NAIC Model Regulation, upon which this proposal is based, has brought forth significant improvements in the marketing and sales of annuities. Thus, this regulation is being adopted as proposed.
