A contentious New York State ruling is making life and annuity compensation trickier for insurance agents.
The National Association of Insurance and Financial Advisors is at odds with the New York State Department of Financial Services over a recent rule mandating that agents selling life insurance and annuity products must prioritize “only the interests of the consumer” and not their personal compensations. The rule states that compensation for these products can be earned only if “the amount of the compensation or the receipt of an incentive does not influence the recommendation.”
The NAIFA-NYS has filed suit with the New York Supreme Court to contest the rule. The Independent Insurance Agents and Brokers of New York and the Professional Insurance Agents of New York have also file separate suits contesting the rule.
The NAIFA contests the rule on two counts. First, the organization claims the New York State Department of Financial Services overstepped its authority its bounds by pushing the rule without legislative or constitutional authorization. Second, they claim the new rule contradicts existing New York insurance statutes requiring agents and brokers “act as an agent of an authorized insurer.” NAIFA-NYS representatives claim the two statues cannot co-exist.
A point of contention for the insurance industry is the language of the rule, particularly how the “interests of the consumer” are defined. Interests of the consumer varies from individual to individual. One person may prioritize price, another may prioritize coverage. It’s not always clear.
Proponents of the rule suggest it emphasizes quality coverage for insurance consumers.