New York Introduces Best Interest Standard for Annuity Sales

Individual states continue to introduce their own rulings, following the SEC Regulation Best Interest ruling. The new requirements under Regulation Best Interest and the disclosure requirements on broker-dealers and investment advisors will take effect on September 10, 2019.

As of August 1, New York financial professionals have another set of requirements to comply with, as New York has implemented its own best-interest standards for annuity sales.

Amended Regulation 187

The new rule, Amended Regulation 187, requires broker-dealers, insurance agents and insurance brokers licensed to sell insurance products in New York consider only the interests of a consumer when recommending an annuity. They must not be influenced by financial compensation or incentives.

The regulation also says:

  • The consumer must be informed on compensation for the sale, the various features of the policy and any potential consequences of the sales transaction.
  • The differences in fee-based and commission-based versions of the policy must also be disclosed
  • The broker-dealer or insurance agent selling the annuity cannot use the title or designation of financial planner or financial advisor unless they are properly licensed.

Multiple industry groups sued the New York State Department of Financial Services to have the regulation overturned, but the New York State Supreme Court dismissed the petition on July 31.

The rule took effect August 1 for annuity sales and will apply to life insurance sales on February 1, 2020.

Take Action

Whether or not you live in New York, RIAs, broker dealers and life agents need to act. With the new state rulings, consumer awareness and general confusion surrounding fiduciary rule, there is a lot of uncertainty in the industry.

One simple way to protect yourself and career is to ensure your Errors & Omissions Insurance contains fiduciary coverage

With an Errors & Omissions policy from Lockton Affinity Advisor, you receive fiduciary coverage automatically. This coverage meets ERISA standards, including services as an ERISA 3(21) and 3(38) advisor. It also ensures any fiduciary duties you perform are covered.


Don’t risk going without the right coverage. Contact Lockton Affinity Advisor to learn more about our E&O insurance with fiduciary coverage.