NYSDFS

Confused about designing annuities in NY?

If the answer is yes, then our Demystifying NYS Annuity Nonforfeiture course is your go-to source. This course will teach you everything you need to know about NYS nonforfeiture law and what you need to do to design a product that complies.

This course, authored by Tom Hartman, Senior Compliance Actuary (formerly with NYSDFS), clarifies the requirements in detail so you know exactly which product designs will and will not work.

When it comes to understanding these requirements, few are as knowledgeable as Tom. This course will help you develop products with confidence, determine an appropriate filing method, and achieve an approval quickly.

ACT NOW and purchase Demystifying NYS Annuity Nonforfeiture for only $1499/single user access or $2998/unlimited access.

Download this free white paper to learn some basic and common drafting issues.

If you would like more information about the Demystifying NYS Annuity Nonforfeiture course, please email Glenda Bean or call her directly at (518) 512-0172.

Electronic Applications in NY

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Electronic applications seem to be reviewed in a much more expansive way by New York than are paper applications.

We get questions about replacement, about how consumers get to review their answers, and about follow-up from underwriting. These aren’t bad questions, but they generally only come up when an application is electronic.

In an electronic application, the NYSDFS policy form reviewers want to know what happens when it’s determined that the policy being applied for is a replacement. Fair enough. But what happens when a replacement occurs with an agent? Is the electronic situation mysterious, and the agent situation obvious? I tend to think both situations are fairly obvious and don’t need to be explained in a policy form filing. NY rules about what needs to happen in a replacement are clear. And every company already has to explain its Regulation 60 (replacement) procedures, but that’s done in a separate, broad-scope Reg 60 filing. A company’s Reg 60 procedures have to be rehashed on an electronic-application form filing, but not on a paper-application form filing.

NY is very concerned that consumers get a chance to review and change their answers. Fair enough. But how does NY know that an agent gives a consumer that opportunity? The how-consumer-gets-to-review issue is big on electronic-application filings, but non-existent on paper-application filings.

And then there’s underwriting, aka Reflexive Questions. When follow-up (reflexive) questions are electronic and could appear on the application in the “blank” Additional Information section, along with the answers, NY requires they be filed for approval. In the in-person situation, the agent can say most anything, ask any question, or give directions. On a paper application, only the consumer’s answers would appear as Additional Information.

NY also usually has comments on any “extra” text that appears on the electronic screenshots, text that is instructional or definitional or navigational help. It’s usually allowed, if it’s innocuous enough, in the individual reviewer’s opinion. But the extra text is definitely read and reviewed, unlike everything that an agent says when a consumer is filling out an application.

Maybe this is just the nature of the beast. Regulators are able to review what’s written, so they do. They are not able to review conversations between agents and consumers, so they don’t. And maybe, as we move into an increasingly electronic world, where everything is reviewable, we’ll have to get used to more review. But does that really make sense?

Tom Hartman

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Tom Hartman, formerly a senior actuary with NYSDFS, is now able to work with you at LONG last!

Most, if not all of you know Tom Hartman from his days as a senior actuary with NYSDFS. He had a reputation of doing a tremendous volume of work and doing it well. Tom was always helpful to companies trying to figure out how to comply with some of NY’s byzantine rules and regulations. Guess what? He can do that for you again!

Since he left DFS, all of us – and none more than Tom himself - have been counting the days until he could come out of his basement and work directly with you. More than once he has mused in the two years since leaving DFS while barred from appearing before the Department, that it was hard not to be able to do the things he is best at and has the strongest reputation for, but now he can! 

He has learned about the compact and other states and he has done important and great work since joining us, and now he is free to do what he and so many of you want him to do . . . the work he is best at and has the strongest reputation for: New York product work. 

Please welcome Tom to the industry in his new and full capacity as senior compliance actuary at CCS. We are thrilled he is with us and we know you will be too!

Proposed Regulation 187 (Suitability in Life Insurance and Annuity Transaction)

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I am sure by now most of you have read the proposed revision to NY’s suitability regulation – or at least a news article about it. There have been quite a few. Because the comment period is still open, it is not too late to make your views known to NYSDFS. 

I have many opinions and thoughts about this proposal – some of which I wrote about in an earlier blog post. The longer I sit with it, the more thoughts and opinions I have. Here is one that I did not write about in my earlier post and that I have been ruminating on the last couple of weeks… 

Many of us who are involved in annuity filings, and have made DOL-related fee-only or reduced-commission filings, have heard from DFS in recent months that the DOL compliance obligations of producers should not impact what products are offered, by those producers, to consumers. They have pulled out a circular letter from 1955 and are once again focused on all individual products being “generally available.” They are adamant that they will not approve products that are developed for one distributor. Where they will allow some flexibility by distribution channel, they have stated in objection letters that a distribution channel means, for example, all banks in NY, not all Citizen Banks in NY. Absent a recognized distribution channel, our clients have been told, the product must be “generally available.” 

In that context, what does the definition of suitable mean? “Suitable means in furtherance of a consumer’s needs and objectives under the circumstances then prevailing, based upon the suitability information provided by the consumer and all available products, services, and transactions” (emphasis added). Does “all available products” mean all generally available products? Read with §224.5(c)(1)(i) of the Reg., it appears they do mean only those products, services, and transactions of a single company because that paragraph states that an insurer shall provide consumers with “all relevant policy information with respect to evaluating any transaction or proposed transaction, including a comparison, in a form acceptable to the superintendent, of all available policies of the same product type offered by the insurer; …”

Presumably the intent is for the information provided by the insurer to line up with the products considered by the producer for recommendation to the consumer. Leaving aside the question of how many insurers’ products must be considered and therefore how many disclosures must be provided to each individual consumer, what about all the distributor-specific products that one insurer might have? Is part of the intent of the regulation to bring us back to the days before the 2000 OGC opinion on class distinctions by making an onerous disclosure and suitability standard? Is this a way to go back to what the DFS has often waxed nostalgic for? That time when one company had only one UL policy or one FPDA because the DFS felt having two, unless the second fell into a small number of clearly recognized distribution channels, was unfairly discriminatory? Perhaps not, but the more I think about it the more it seems so to me. How else can these compliance burdens be met? And more than anything, doesn’t that limit product availability to consumers based on producer and insurer compliance burdens? 

Spring Conferences - on the road again!

I have been to three different conferences in three weeks. They show me just how diverse our industry is, while also sharing much in common. The three conferences were organized around three different elements: Geographical Location, Product Type, and Organization Type

Geographical Location: New England Chapter of AICP

On May 12, the New England Chapter of AICP held its Education Day (E-day) at the Nathan Hale Inn in Storrs, CT – right on the UConn campus, which is an unusual type venue for an industry event. It has seemed to me that AICP is getting slightly more P & C focused in the last few years, and that appeared to be true at this event as well. Those of us who focus on life, annuity, and health need to attend these programs and the AICP national conference. This year the national conference is in Seattle – who doesn’t want to go to Seattle? That said, back in Storrs, CT there was lively participation in the two sessions I presented: Managing Compliance Risk and Corporate Governance (With Kathy Donovan of Wolters Kluwer) and New York Developments, where we focused on proposed regulation 210, Circular Letter 1 (2017), deferred to immediate annuity replacements and recent policy form filing experience.

The New England Chapter of AICP is holding a joint meeting with the Mid-Atlantic Chapter in August to meet NYSDFS staff – it is sure to be informative and interesting, so if you are a member and want to join us, feel free to contact me.

Product Type: Group Annuity and Pension Compliance Association (GAPCA)

On May 18th and 19th, GAPCA met in Omaha. Unfortunately, the weather did not cooperate, so I did not do as much exploring of Omaha as I had intended. I was only in Omaha once before and it was also for a conference and I didn’t stray far from the hotel. I love GAPCA conferences and I highly recommend it if you do any group annuity work. I again spoke about developments in NY, however since we were talking about group annuities, this time the developments were primarily of the policy form filing experience type. Many commiserated about experiences of different reviewers providing different reviews. This may be because the group annuity outlines are among the oldest and the most difficult to use. They are organized in a way that does make it easy to determine which applies to what product(s). Perhaps the Life Bureau will reach out to GAPCA for some input when those outlines get picked up for refreshing. GAPCA has tremendous experience to help that effort.

Organization Type: American Fraternal Alliance Spring Symposium

This was the biggest of the conferences I attended and the most different from the typical conferences I attend because it was not limited to compliance. Held in Chicago, the AFA had multiple tracks happening at the same time, so attendees could spend the whole time attending compliance track programming, but they could also pop into a session held by the business operations or investments actuarial tracks. I spoke on cybersecurity from a compliance perspective, not an IT perspective. That said, because of all the different folks that AFA gathered, there were multiple perspectives on the issue and we had a great discussion after we walked through the NY regulation and talked about what might or might not make it into a NY-based NAIC model regulation.

Altogether, these three events reminded me why I love what I do. I met lots of different people in distinct parts of the niche of the industry we occupy. I was able to talk about issues and hear reactions from people who I normally don’t interact with or only communicate with via email or social media. The three weeks I spent at industry events were a bit tiring, but so worth it. Thank you to all the great folks who put these events on – I know it is a lot of work! Thank you to all who spent a few moments with me and shared your wisdom and experience. It is one of the best parts of this work and I value it tremendously.