Press Release 

April 10, 2020


Three Insurers to Pay $1,084,407 in Restitution Collectively to New York State Consumers, Plus $934,000 in Penalties

DFS’ Ongoing Industry-Wide Investigation Continues to Protect Consumers

Financial Services Superintendent Linda A. Lacewell today announced that the Department of Financial Services (DFS) has entered into consent orders with three life insurance companies: Lincoln Life & Annuity Company of New York, MassMutual Life Insurance Company, and Pacific Life & Annuity Company for violations of New York Insurance regulations in deferred to immediate annuity replacement transactions.  The insurers, collectively, will pay $1,084,407 in restitution to New York State consumers, plus $934,000 in penalties. 

“The Department is committed to protecting the families of New York, especially our vulnerable seniors, from being misled as they seek a safe and stable retirement income,” said Superintendent Lacewell.  “Today’s settlements provide a measure of monetary restitution, especially important during the COVID-19 pandemic, and are a reminder that all New York’s life insurers must comply with DFS regulations and act in the consumer’s best interest.”

DFS' investigation found that the three carriers failed to properly disclose to consumers income comparisons and suitability information, causing consumers to exchange more financially favorable deferred annuities with immediate annuities.  Many New York consumers received incomplete information regarding the replacement annuities, resulting in less income for identical or substantially similar payout options.  DFS issued a final regulation that ensures recommendations related to life insurance and annuities are in the best interest of the consumer and appropriately address the insurance needs and financial objectives of the consumer at the time of the transaction.

Today’s settlements are the result of DFS’ ongoing industry-wide investigation into deferred to immediate annuity replacement practices in New York State.  To date, the investigation has resulted in settlements with ten carriers, totaling $3,275,483 in restitution and $1,847,000 in penalties.  

Below are the estimated consumer restitution and penalty amounts for each carrier:


Consumer Restitution


Lincoln Life & Annuity Co. of NY






Pacific Life







As a result of the settlements, many New York consumers will receive additional restitution going forward in the form of higher monthly payout amounts for the remainder of their contract terms.  The insurers have agreed to take corrective actions, including revising their disclosure statements to include side-by-side monthly income comparison information and revising their disclosure, suitability, and training procedures to comply with regulations.

Annuities are contracts between life insurance companies and consumers that provide guaranteed payments for the remainder of an individual’s lifetime or for a specified period.  Immediate annuities provide periodic income payments that begin within thirteen months after the annuity is issued, while deferred annuities allow consumers to earn interest on their premium before receiving payments at a future date.  Annuitization is the conversion of the amount of a deferred annuity into a series of payments to the annuitant.  Recommending that consumers replace existing deferred annuities with immediate annuities without proper disclosures may cost consumers substantial lifetime income.

Investigations into additional life insurance carriers licensed by the Department remain ongoing. 

Read copies of the three consent orders on the DFS website.