Superintendent of Insurance Neil D. Levin today announced that the Department would approve bonus annuity products for sale in New York with the requirement that insurers address expense and market conduct concerns prior to approval. The Department issued Circular Letter 13 outlining this position as a part of a continuing effort to protect New Yorks consumers.
"The Department is committed to ensuring that New Yorks consumers are not being misled as to the actual cost of the bonus interest rate or credit. We have directed all insurers selling this product to provide adequate disclosure," said Levin.
The Department has determined that expense and market conduct concerns must be addressed by insurers through consumer disclosure and testing to ensure that each product meets self-support requirements. Disclosure of costs associated with the bonus rate or credit allows consumers to make informed decisions regarding the purchase and/or replacement of a deferred annuity contract containing bonus interest rate or credit. The self-support requirement ensures the insurers financial well being and prevents unfair subsidization by other policyholders of the insurer.
The Department has received several submissions and has approved one bonus annuity product which contains explicit charges and disclosures. The Department recognizes that insurers may be developing a variety of product designs and intends to provide further guidance as more information is developed regarding the scope and diversity of product offerings. Such products will be approved to the extent that the Departments expense, disclosure, and market conduct concerns are adequately addressed.
additional Circular Letter will be issued in the near future to agents and brokers
regarding market conduct concerns relating to bonus annuities and reinforcing the
anti-churning restrictions found in Regulation 60.