by John Darer CLU ChFC CSSC RSP
Was there a change in New York State Insurance Law on the use of the State Guaranty Fund by a licensed insurance agent in a sales situation?
- Link to January 26, 2009 New York State Insurance Department Office of General Counsel (OGC) OGC Opinion No. 09-01-12: Life Insurance Guaranty Corporation of New York (“LIGCNY”) Advertising | Department of Financial Services; and my post of January 30, 2009,
- Use of NSSTA Financial Security Handout to Solicit Structured Settlement Annuities Aimed at New York Resident Impermissible – Structured Settlements 4Real®Blog January 30, 2009
Subject of Annuity Disclosures Working Group at the Spring 2009 NAIC National Meeting
- NSSTA reported to its members that at National Association of Insurance Commissioners (NAIC) Spring 2009 National Meeting, the Annuity Disclosures Working Group of the Life Insurance and Annuities (A) Committee began considering a proposal by its Chairman, Jim Mumford of the Iowa Insurance Division, to develop “guidelines . . . for more specific disclosure of guaranty fund coverage and limits thereon” that could be made available prior to delivery of an annuity contract.
- As an active participant in the 2008 NAIC Advisory Group on Structured Settlements in the Insolvency Context, NSSTA reported to its members that Jim Mumford is familiar with structured settlements and the importance of Guaranty Association coverage as a safeguard for structured settlement payees.
- NSSTA indicated to its members that it has submitted a comment letter supporting Chairman Mumford’s proposal and agreeing that structured settlement professionals should not be prevented from giving settling claimants the information necessary to make informed decisions about the comparative risks of annuity contracts and other financial products.
- NO ANNOUNCEMENT!
- There has been no announcement about whether or not such rules have been eased specifically for structured settlement solicitors or for all life insurance and annuity transactions or any indication that NSSTA contacted the New York State Insurance Department to have the opinion removed pending the outcome of the NAIC working group.
- This author supports NSSTA’s move and what appears to be the intended result (provide a measure of confidence as did the FDIC when it increased its limits to $250,000 through 12/31/2009), provided such result, if achieved, IS NOT used as a hammer to force plaintiffs into any annuity issuer with shaky financials up to the limits of a guaranty fund and deny diversification where prudent.
Given the veritable “tin cup” funding status that is most state guarantee funds I don’t think it serves the interest of plaintiffs to have the potential for irresponsible agents or consultants implying that the “safety net” is “just like the FDIC”, UNLESS it really is.
Related Reading
Is FDIC Really Backed By The Government? – Structured Settlements 4Real®Blog April 12, 2009
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