The Time is Now for New York to Join the Interstate Insurance Product Regulation Compact

By Mary A. Griffin, President and CEO of the Life Insurance Council of New York

Life insurers offer a wide array of products, including many designed to provide financial security to people who are planning for retirement. In today’s rapidly evolving world, life companies are continuously working to bring new products to the marketplace. To do so, each new product needs regulatory approval.

Insurance companies can get these products approved and into the market in 44 states and Puerto Rico through a single point of contact called the Interstate Insurance Product Regulation Compact (Compact). The Commission operates a streamlined system of product form filing that allows insurers to have a single point of filing for approval of insurance policy forms.

It was created several years ago by the National Association of Insurance Commissioners (NAIC), the national organization that establishes standards and best practices for the insurance industry.

Unfortunately, New York is not one of the states that participates in the compact. That means that for an insurance company to sell a new product in New York, companies must go through an entirely separate approval process.

Simply put, it means companies need to invest more time, more money and more effort to get the same product that is offered in other states, to New Yorkers.

To make matters more pressing, these long-term, investment-oriented insurance products compete directly with other retirement and estate planning instruments that are sold by banks and security firms that already use a more streamlined product approval process. Thus, an unlevel playing field has been created in the financial products market place.

By joining the Compact, New York consumers would clearly benefit, however, they would also remain protected. States that enact the Compact appoint a member to the Commission, which has, and continues to, develop standards to review life insurance products. States with large premium volume, like New York, also become part of the Management Committee of the Commission, ensuring New York has a strong voice on the Commission. In addition, the system allows a state to opt-out of authorizing the sale of any product in NY that they might not fully endorse.

Joining the Compact is one of LICONY’s top legislative priorities for 2017 and legislation has been introduced in both houses of the State Legislature to make it a reality. Senator James Seward is sponsoring a bill in the Senate (S.426) and Assembly member Aravella Simotas is carrying the same bill in the Assembly (A.4973). The bill has passed the Senate for seven consecutive sessions, under both Republican and Democratic leadership.

LICONY will advocate for passage of both bills because this bill is a win for consumers, insurers and regulators.

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Mary A. Griffin is the President and Chief Executive Officer of the Life Insurance Council of New York, Inc. LICONY is the principal voice of the life insurance industry in New York. LICONY works to create and maintain a legislative, regulatory, and judicial environment that encourages its members to conduct and grow their life insurance businesses here in New York State. For stories about New Yorkers who have benefitted greatly from purchasing the products of life insurers, go to www.licony.org, and click on “Published Articles” in the NEWSROOM box on the homepage.