Why Does New York Think They Are So Special?

[iceco1d]

Always wondered this, but why does the state of New York think they are so special that they are unlike any other state for life insurance and annuities? Heck, maybe P&C insurance too for all I know.

I mean, insurers need to design special products for NY, and even establish separate legal entities to distribute those products in NY.

What gives? How long has it been that way? Think it will ever change?

 

[Arthur Rudnick]

Always wondered this, but why does the state of New York think they are so special that they are unlike any other state for life insurance and annuities?
Heck, maybe P&C insurance too for all I know.
I mean, insurers need to design special products for NY, and even establish separate legal entities to distribute those products in NY. What gives? How long has it
been that way? Think it will ever change?

I'm not sure if NY thinks they're special, but NY has always had a very tough DOI. On the surface, it's that way to protect the consumer.

It always takes NY the longest to approve product and approve rate increases. But, that's a good thing. It's the same for health insurance as well.

As far as establishing a "legal entity" goes, the DOI mandates that if you sell product here, you must also have a place of business here as well. It makes sense and I'm not sure if that rule is limited to NYS.

For LTCi, I do not believe that a rate increase above 15% has ever been approved, in spite of carriers requesting increases of 50%+.

 

[bobson]

Always wondered this, but why does the state of New York think they are so special that they are unlike any other state for life insurance and annuities? Heck, maybe P&C insurance too for all I know.

I mean, insurers need to design special products for NY, and even establish separate legal entities to distribute those products in NY.

What gives? How long has it been that way? Think it will ever change?

Doesn't it have to do with commissions?

 

[iceco1d]

No idea, that's why I asked (I'm not from NY, and I don't have any clients in NY either).

 

[Josh]

It's been that way before and it probably will never change. It's a blue state.

 

[Specialagent]

It's an insurance company state.

 

[Franz Kafka]

Doesn't it have to do with commissions?

They cap life commission at 50 I believe. I heard you couldn't make deals at car deal-ership, either. I think fascist Bolsheviks have taken over that state (but then who am I to criticize living in CA).

 

[Josh]

They cap life commission at 50 I believe.

Sort of. You can still get a nearly 100% contract, but they start calling it something funny like an expense compensation or something goofy like that. The real downer is there aren't many products available. When I first heard of contracts of 120% I thought to myself "I should get the hell out of here". About 8 years later I did, and Virginia is awesome!

 

[VolAgent]

I'm not sure if NY thinks they're special, but NY has always had a very tough DOI. On the surface, it's that way to protect the consumer.

It always takes NY the longest to approve product and approve rate increases. But, that's a good thing. It's the same for health insurance as well.

As far as establishing a "legal entity" goes, the DOI mandates that if you sell product here, you must also have a place of business here as well. It makes sense and I'm not sure if that rule is limited to NYS.

For LTCi, I do not believe that a rate increase above 15% has ever been approved, in spite of carriers requesting increases of 50%+.

Not exactly. After all, Mass and NWM aren't headquartered in NY and don't have NY only subsidiaries. The rule is, if you do business in NY, you must behave as if you were domiciled in NY. That is why Mass and NWM pay NY style commissions nationwide. Why they haven't formed NY only subsidiaries is beyond me. I guess they like the bonus and expense allowance structure, easier to divert money to the GA that way.

 

[Arthur Rudnick]

They cap life commission at 50 I believe.
Sort of. You can still get a nearly 100% contract, but they start
calling it something funny like an expense compensation or something goofy like that.
The real downer is there aren't many products available. When I first heard of contracts of 120% I thought to myself "I should get the hell out of here".

Where do you guys get this stuff from? Yes, the NYS DOI has to approve everything about any insurance product sold in the state, including commissions. I'm licensed in a number of states and the commission rates in NY are no different.

You mention "Expense Compensation", what I think you're referring to is "Expense Reimbursement". That was an overide paid directly to the agent from the GA, based on production levels. That hasn't been around for the last 5-6 years. The amount (I believe it was 10%) is now part of the comp paid by the carrier.

A typical NY DOI issue is the discounts given on policies. (I'm referring to LTCi). Some companies offer a 40% spousal/partner discount, a 15% Preferred Health discount and a 5% association discount, for total discount of 60%! How can a carrier price a product legitimately at 60% off? It's a BS discount and the product has to be over-priced to begin with.

NY limits discounts to 35% maximum. And, for that reason, premiums are usually higher in NY than other states. BUT.............. if rates are higher, total comp is higher as well.

Another example: some states offer a one-pay on LTC policies. A typical one-pay for a 50 year old, with a $2,500 annual premium might be $75,000. The problem is if someone cut a check for $75,000 and died a month later, that $75,000 stays with the insurance company. Now, maybe the states that allow this have no problem with the policyholder being screwed, but the NYS DOI does not allow for a single-pay on therir LTC policies. Bad thing? I don't think so.

So, if you'r looking for a problem with NYS, it may be the traffic in NYC, the socialist political enviornment throughout the state, or the $50,00 parking fee for a couple of hours in a garage in mid-town Manhattan, but it's not the NYS DOI.
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Not exactly. After all, Mass and NWM aren't headquartered in NY and don't have NY only subsidiaries. The rule is, if you do business in NY, you must behave as if you were domiciled in NY. That is why Mass and NWM pay NY style commissions nationwide. Why they haven't formed NY only subsidiaries is beyond me. I guess they like the bonus and expense allowance structure, easier to divert money to the GA that way.

What I was referring to was that as a company, if you sell in NY, you must have a legal residence in the state. If you're headquatered in Ohio, you cannot sell product here unless you have at least an office somewhere in NYS.

As I understnd it (and I may be wrong) the DOI does not tell carriers what commissions they must pay. The carrier files a product for approval which also includes the proposed commission structure. First year comp for LTC products range from 40%-70%, depending upon the company & the age of the applicant. Which is probably pretty much the same throughout the country.