A life insurance industry association and its research arm have teamed up to offer training for New York’s best interest and suitability regulation, which takes hold Aug. 1.
LOMA’s and LIMRA’s combined online training program, announced Monday, is designed to help both sales agents and producers as well as home office employees understand and comply with the new rule through two comprehensive courses, the groups said.
The courses take about 45 minutes to complete, are interactive and include a mix of education and scenario-based material, the organization said. LIMRA and LOMA, which have a combined membership of more than 1,300 insurance and financial services companies globally, are part of their nonprofit parent, LL Global.
New York State Regulation 187 requires insurance agents, brokers and insurers “to establish standards and procedures” so that any transaction can be demonstrated to be in the “best interest of the consumer.”
The producer training course is based on compliance with the new regulation. The other course teaches the home office personnel about the impact and reach of the best interest rule in every aspect of the business from suitability review to customer service.
These courses will teach the difference between sales transactions and in-force transactions, how a producer can demonstrate that she or he is acting in the best interest of a consumer, the organization states.
Suitability information that may be collected under the new regulation, factors to consider when recommending a replacement product, the insurer’s obligations related to suitability reviews, supervision and prevention of financial exploitation and abuse are also covered.
NAIFA-NY Reg 187 Lawsuit
The LOMA/LIMRA training program starts against the backdrop of a pending lawsuit by the National Association of Insurance and Financial Advisors for New York state challenging Regulation 187.
NAIFA-NY argues that promulgating “unprecedented fiduciary obligations across all participants industrywide, DFS exceeded any statutory grant of rulemaking authority.”
The “DFS failed to justify Regulation 187 with any factual support, showing that it acted without the aid of “special expertise or technical competence,’” the legal action states. The lawsuit adds that the regulator shouldn’t be granted flexibility because it circumvented the state legislature — which rejected broad standards for the life insurance market — in promulgating the statute.
The case, filed in the Supreme Court of the State New York, County of New York, in November, also calls the regulation unconstitutional and an invitation to arbitrary enforcement.
DFS “acted solely on its own ideas of sound policy without any legislative or statutory guidelines,” NAIFA-NY said.
Gary Svirsky, a partner in O’Melveny’s New York office who represents NAIFA NY, told ThinkAdvisor in a Monday email message that “The matter is fully briefed. We’re waiting for the judge to decide if he wants to have the parties come in for oral argument. The Court may also rule without oral argument.”