The New York State Department of Financial Services ("DFS") has issued guidance to life insurers and insurance producers in a stated effort to protect New York pension holders from unlicensed activity in New York's pension risk transfer market.
In a prepared statement, the DFS said that it has learned that unauthorized life insurers, as well as insurance producers and unlicensed individuals representing unauthorized insurers or pension plan sponsors with offices in New York, have been soliciting, negotiating, selling, and servicing group annuity contracts related to transferring pension risk, including terminal funding or close-out contracts issued by companies not licensed in New York and in violation of New York Law.
Group annuity contracts are used to transfer a portion or all of the liability related to pension plans to an insurer.
"We are taking this action to guard against unauthorized activity in the insurance market by or for companies that are not licensed in New York to ensure that New York's pension holders receive the important consumer protections provided by New York Insurance Law," said the DFS superintendent, Linda A. Lacewell. "Consumer protection is our top priority, and we will continue to ensure that unauthorized insurers and individuals do not conduct business in New York State."
In the guidance, the DFS advised all life insurers and insurance producers that an unauthorized life insurer's employees or other representatives may not solicit, negotiate, sell, or improperly service group annuity contracts, including terminal funding or close-out contracts, through in-person meetings, telephone calls, mail, emails, access to web portals, or in any other manner from an office or any other location in or into New York. In addition, an insurance producer and any other individual, whether licensed by DFS or otherwise, may not aid or call attention to an unauthorized life insurer in New York, according to the guidance.
The guidance added that an unauthorized insurer, however, may conduct certain limited activities in New York that constitute "back office" functions, including gathering information about the insurance industry and assembling policies on non-New York risks.
Learn more: DFS Guidance.
Steven A. Meyerowitz
Steven A. Meyerowitz, a Harvard Law School graduate, is the founder and president of Meyerowitz Communications Inc., a law firm marketing communications consulting company. He may be contacted at [email protected].