Senate Bill S4559

                                
 
BILL NUMBER: S4559

SPONSOR: BRESLIN
 
TITLE OF BILL:

An act to amend the insurance law, in relation to limiting certain regu-
lations or orders promulgated by the superintendent

 
PURPOSE:

To provide an exemption from the superintendent's authority to impose a
suitability, best interest standard or fiduciary duty on licensed life
insurance agents and brokers or life insurers duly licensed to do busi-
ness in the State of New York in conjunction with the provision of coun-
sel, advice or a recommendation to a consumer or potential consumer of
term life insurance when the insured face amount of such life insurance
policy is of one million dollars or less.

 
SUMMARY OF PROVISIONS:

Section 1 of this act adds a new section 42 of the New York Insurance
              

Law which prohibits the superintendent from promulgating any rule, advi-
sory or otherwise imposing any suitability, best interest or fiduciary
standard, or enforcing any such regulation rule, advisory or otherwise,
pertaining to the provision of counsel advice or a recommendation to a
consumer or potential consumer of term life insurance by a licensed
insurance agent or broker, or a life insurance company authorized to do
business in the State of New York in conjunction with the purchase of or
exercise of any right or option with respect to a term life insurance
policy with an insured face amount of one million dollars or less.

The act also renders any regulation promulgated by the superintendent
which provisions are contrary to this act to be null and void and
provides that the superintendent shall amend any such regulation accord-
ingly, particularly 11 NYCRR 224, known as Regulation 187, through the
consensus regulatory process.

Section 2 of this act provides for an immediate effective date.

 
JUSTIFICATION:

Compliance with 11 NYCRR 224 (Reg 187) which imposes a suitability and
best interest standard on all life insurance sales and a best interest
standard on all advice and recommendations with respect to the exercise
of any life insurance policy option or amendment requires extensive
contact and information gathering on the part of life insurance agents,
brokers and life insurers from consumers in order to properly comply
with the regulation's provisions. During the COVID-19 crisis many
consumers have been unwilling to engage in the levels of contact which
may be necessary to accomplish the sale of the more basic forms of life
insurance, known as term insurance. As a result, many consumers have put
off and delayed the purchase of this critically needed form of family
financial protection.

Since the onset of the COVID-19 crisis, there has been much discussion
within the agents' ranks concerning the difficulties in complying with
the provisions of Reg 187 in the remote world. Our members have looked
for wholesale relief from 187 (which was unlikely to occur) but were at
least willing to support some sort of safe haven for small denomination
and relatively inexpensive term life coverage.  Further, surveying done
by NAIFA-NYS is indicating that there has been a significant decline in
the interest in or purchase of life insurance.

This approach is also consistent, we believe, with the general exception
contained within the regulation concerning automated sales or those
sales in which the insured has facilitated the sale, rather than an
agent or broker commencing the sale. The DFS has recognized that there
are opportunities for safe harbors within the regulation.  We believe
our proposal, already proposed to the DFS but not supported by it, is
another logical safe harbor.

 
LEGISLATIVE HISTORY:

New bill.

 
FISCAL IMPLICATIONS:

None.

 
EFFECTIVE DATE:  Immediately.