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COVER STORY

Suitafiduciary? Where Insurance Regulation Is Going

New York’s Regulation 187 has many in the insurance industry worried about a tighter regulatory grip. But is there a middle way? By Steven A. Morelli and John Hilton

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ew York’s Regulation 187 inspires dread in many insurance professionals who don’t even operate in that state. The rule represents greater momentum toward tighter restrictions spreading nationally. Insurance companies have pulled products from New York in advance of the rule, and agents are reshaping their practices because of the new requirements, which went into effect this month for life insurance. Annuities fell under the reg in August. Andy Villa of 1789 Wealth Strategies in

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Rochester said he expects fellow New York insurance agents will be leaving the business. But he is OK with that. In fact, he is a rare insurance advisor admitting publicly that he is looking forward to the reg. “I think 187 is great because it forces insurance professionals to actually act in the best interest of the client,” Villa said, “but also to be educated globally on all the products that are in the space.” Villa put his finger on one of the issues for many insurance companies, marketing organizations, broker-dealers, agents and advisors. The rule treats insurance sales as something resembling a fiduciary standard where sellers must look at a wide

InsuranceNewsNet Magazine » February 2020

range of options for clients. Because independent agents tend to sell a small number of products they know well, the best-interest model is a fundamentally different way of doing business. In New York, agents would be required to show that they recommended a product because it was in the best interest of their client. How do agents show they acted in the client’s best interest? That is not entirely clear. How many products should an agent consider? And if they expanded that scope of products, would their independent marketing organization or broker-dealer sell it? If they are company agents, how

Profile for InsuranceNewsNet

InsuranceNewsNet Magazine - February 2020  

Suitafiduciary? New York’s Regulation 187 inspires dread for many insurance professionals who don’t even operate in that state. Will agents...

InsuranceNewsNet Magazine - February 2020  

Suitafiduciary? New York’s Regulation 187 inspires dread for many insurance professionals who don’t even operate in that state. Will agents...

Profile for innm