New York Codes, Rules and Regulations
Title 11 - INSURANCE
Chapter IX - Unfair Trade Practices
Part 224 - Suitability and Best Interests in Life Insurance and Annuity Transactions
Section 224.5 - Duties of insurers and producers with respect to in-force transactions

Universal Citation: 11 NY Comp Codes Rules and Regs ยง 224.5

Current through Register Vol. 46, No. 12, March 20, 2024

(a) In recommending an in-force transaction to a consumer, the producer, or the insurer where no producer is involved, shall act in the best interest of the consumer.

(b) The producer, or insurer where no producer is involved, acts in the best interest of the consumer when:

(1) the producer's or insurer's recommendation to the consumer reflects the care, skill, prudence, and diligence that a prudent person acting in a like capacity and familiar with such matters would use under the circumstances then prevailing. Only the interests of the consumer shall be considered in making the recommendation. The producer's receipt of compensation or other incentives permitted by the Insurance Law and the Insurance Regulations is permitted by this requirement provided that the amount of the compensation or the receipt of an incentive does not influence the recommendation; and

(2) there is a reasonable basis to believe the consumer has been reasonably informed of the relevant features of the policy and potential consequences of the in-force transaction, both favorable and unfavorable.

(c) A producer shall not use a title or designation of financial planner, financial advisor or similar title unless the producer is properly licensed or certified and actually provides securities or other non-insurance financial services. Although a producer may state or imply that a sales recommendation is a component of a financial plan, a producer shall not state or imply to the consumer that a recommendation to enter into a sales transaction is comprehensive financial planning, comprehensive financial advice, investment management or related services unless the producer has a specific certification or professional designation in that area.

(d) Any requirement applicable to a producer pursuant to this Part shall apply to every producer who materially participated in the making of a recommendation and received compensation as a result of the sales transaction, regardless of whether the producer has had any direct contact with the consumer, provided that product wholesaling or product support based on generic client information, or the provision of education or marketing material, does not constitute participating in the making of a recommendation.

(e) A producer shall not make a recommendation to a consumer to enter into an in-force transaction about which the producer has inadequate knowledge.

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