17 Elk Street - Suite 3 - Albany, New York 12207
518.915.1661 – –
August 30, 2016
Hon. James V. Regalbuto
Deputy Superintendent for Life Insurance
New York State Department of Financial Services
One State Street
New York, New York 10004-1511
Re: NYSDFS proposed Circular Letter concerning
“Unsuitable Deferred-to-Immediate Annuity Contract Replacements
and Betterment of Rate Calculations”
Dear Mr. Regalbuto:
On behalf of the Board of Directors and the entire statewide membership of the National Association of Insurance and Financial Advisors – New York State, Inc. (NAIFA-NYS), I would like to thank you, the Superintendent and staff of the New York State Department of Financial Services (DFS) for the opportunity to review and comment on a draft of the above-referenced Circular Letter. The issue discussed therein is an important one to our members and their clients, the life insurance and annuity product consumers of New York. We are very concerned that DFS has discovered that certain deferred annuity contract holders have lost significant income and other contractual benefits through contract replacements that occurred in contravention of established statutory and regulatory disclosure provisions.
When you and DFS staff informed us of these problems, which came to light as a result of several recent market conduct examinations of life insurers, conducted by the DFS, we issued a statewide notice to all of our members informing them of this problem and reminding them to review the relevant statutory and regulatory obligations and procedures when assessing whether to recommend this type of replacement. We also informed our membership that the DFS would soon be issuing a Circular Letter on the topic.
We believe that the proposed Circular Letter is an important first step to ending the offensive practice.
NAIFA-NYS has always actively promoted the principles of sound insurance, financial and estate planning, and the utilization of best practices by our membership, and indeed, by all life insurance producers in New York. Our trade association was a leading proponent of DFS efforts to enact the much needed recent changes to Regulation 60. Additionally, the association supports suitability in annuity transactions, as addressed in Regulation 187, as essential to a well-functioning market.
We at NAIFA-NYS are committed to assist the DFS and our membership to remediate any existing problems as well as to assist with measures designed to prevent abuses in the future.
Again, thank you for the opportunity to comment. Please contact Peter Molinaro, NAIFA-NYS General Counsel, at 518-915-1661 or with any questions.
Sincerely,
Lawrence Holzberg, LUTCF
NAIFA-NYS President