The “Best Interest Rule” is an amendment to existing New York State suitability standards for annuity transactions. Prior to this change, annuity recommendations producers had to be suitable for the client. The amendment raises the bar in that it requires recommendations to be in the best interests of the consumer. These requirements also apply to life insurance recommendations.Since the DOL Fiduciary Rule was vacated, regulatory bodies and states have been seeking other ways to hold insurance producers, brokers, and financial companies to the same standards. Amending Regulation 187 is New York’s answer to the issue.
The New York DFS official announcement states that the rule “requires insurers to establish standards and procedures to supervise recommendations by agents and brokers to consumers with respect to life insurance policies and annuity contracts issued in New York State so that any transaction with respect to those policies is in the best interest of the consumer and appropriately addresses the insurance needs and financial objectives of the consumer at the time of the transaction.” On August 1, 2019, the best interests rule went into effect for annuities; for insurance, the effective date is February 1, 2020.