September 19, 2017
Contact: Richard Loconte, 212-709-1691
DFS ISSUES FINAL REGULATION TO PROTECT NEW YORKERS FROM UNJUSTIFIED LIFE INSURANCE PREMIUM INCREASES
New Regulation Requires Life Insurers to Notify DFS at Least 120 Days Before an Adverse Change in Non-Guaranteed Elements of an Existing Life Insurance Policy
Starting March 19, 2018, Life Insurers Must Now Notify Consumers at Least 60 days Prior to an Adverse Change in Non-Guaranteed Elements of an In-Force Life Insurance or Annuity Policy
Financial Services Superintendent Maria T. Vullo today announced that the Department of Financial Services (DFS) has adopted a new regulation governing life insurance company practices related to increases in the premiums or charges of certain life insurance and annuity policies. The final regulation provides DFS the ability to review increases prior to implementation and ensure compliance with law, by requiring life insurers to notify DFS at least 120 days prior to an adverse change in non-guaranteed elements of an in-force life insurance policy. Annuity issuers must now file annually with DFS to inform the Department of any adverse changes to annuity policies made in the prior year. New York Insurance Law prohibits life insurers from changing non-guaranteed elements in a discriminatory way for members of the same class of policyholders. Only certain enumerated factors, which do not include profit, can be considered when seeking to change non-guaranteed elements.
"This regulation is designed to protect New Yorkers from unfair and inequitable cost increases in in-force policies — particularly the many senior citizens who have dutifully paid premiums for years, and who can least afford increased costs to maintain insurance coverage,” said Superintendent Vullo. “With this new regulation, DFS will have the ability to review increases by life insurers and ensure any increases comply with law, and consumers will be provided advance notice of any adverse changes to their premiums.”
Certain life insurers significantly increased the cost of insurance on older life insurance policies due to decreased profitability stemming from low interest rates and, in some cases, adverse mortality experience. DFS drafted the regulation in response to concerns raised by consumer groups that some insurers have not been implementing these increases in accordance with DFS approved policy provisions and the relevant provisions of the New York Insurance Law.
In addition to notifying DFS, the final regulation requires life insurers to notify consumers at least 60 days prior to an adverse change in non-guaranteed elements of an in-force life insurance or annuity policy.
The new rule adopted by DFS today takes into consideration comments that were submitted by the insurance industry during the two comment periods for the proposed regulation published in November 2016.
A copy of the final regulation can be found here.