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New York Regulation 187

What is NY 187?

The New York State Department of Financial Services (NYSDFS) best-interest regulation NY 187 requires a best-interest standard on recommendations to purchase, replace, or alter life insurance and annuity products sold in the state, including post-issuance transactions such as exercising contractual provisions. The regulation went into effect August 1, 2019 for annuity products and takes effect on February 1, 2020 for life insurance products.

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A dominant emphasis in the regulation is written documentation, primarily disclosing the range of products recommended after conducting an evaluation of a client’s needs, risk tolerance, and financial situation.

Steps for NY 187 Compliance

NY 187 dictates that compliance in all life and annuity product transactions falls on both producers and insurers. Best Interests (BI) and carrier-specific training, as well as suitability reviews must be completed.

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1. NY 187 Best Interests (BI) Training Requirement

This is a one-time training for both life insurance and annuity producers offered through NYSDFS-approved vendors. Training must be completed prior to soliciting life business in New York on or after February 1, 2020. 

Training Vendors:

  • RegEd – NY Reg 187 - Suitability and Best Interest of Clients in Life and Annuity Transactions (484_NY), or Best Interest of Clients in Life Insurance or Annuity Transactions: NY Reg 187 1-Hour Course (485_NY)

  • LIMRA – Overview of State Best Interest Requirements

  • Kaplan – NY Suitability and Best Interests in Life Insurance and Annuity, or NY Suitability and Best Interests in Life Insurance Transactions

  • QuestCE – NY Best Interests Amendment to Regulation 187 (NYCS-261350), or NY Best Interests Amendment to Regulation 187 (BI-New York)

  • SuccessCE – NY Regulation 187 & NAIC Suitability

 

2. Carrier-Specific Product Training

Please work closely with your Highland licensing and contracting teams to ensure you’re accessing the correct courses to satisfy carrier-specific product training. Any application packet must be signed and dated on or after the training requirements have been completed.

 

3. Suitability Review

Carriers processing business in New York will ensure that the proper NY 187 BI and carrier-specific training have been completed by the agent prior to application acceptance. Carriers will then validate that the sale is suitable and in the consumer's best interests.

Expectations of NY 187

Agents must be mindful that documentation—including any consumer omission of requested data—is a key component of this regulation.

1. Document necessary consumer data for suitable and best-interest recommendation.

  • Standard Requirements:

    • Age

    • Annual income

    • Financial situation

    • Financial objectives

    • Intended use of the policy

    • Existing assets

    • Risk tolerance, including variability of premiums, death benefit, and fees

    • Any other information provided by the consumer, which in the reasonable judgment of a prudent person is relevant to the suitability of the transaction.

  • Additional requirements for cash-value life insurance:

    • Financial experience

    • Liquidity needs

    • Liquid net worth

    • Risk tolerance

    • Tax status

2. Demonstrate key elements are valid.

3. Present fair and accurate information to consumers (including product, benefits, features, and drawbacks) and consider all available products.

4. Use accurate role description and disclosure.

  • Agents may NOT call themselves Financial Advisor or Financial Planner unless licensed, certified, and able to provide securities and other non-insurance services. Additionally, a recommendation to buy life or annuity products is not considered a financial plan.

5. Adhere to the carrier guidelines and form fulfillment.

Questions? Visit the NYSDFS’ webpage and contact our Advanced Planning team at advancedplanning@highland.com.

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