Is there room for innovation?
I recently posted about a very specific issue that has come up recently on an annuity product. But I have also been involved in efforts by a few companies recently to develop and get approval for innovative annuity products in New York. The response has been a resounding "No" from the Department. It was said very nicely, but firmly. No, these products are not permitted in New York. These are products that were designed to meet very real needs of New Yorkers for longevity protection. They are new and different - in order to meet the demand of consumers to provide a new and different array of benefits.
There is no question that the new products carry different risks than old, traditional products. Perhaps the risk is greater, but perhaps, it is just different. Does that difference mean they can't be approved and offered in NY? Even if the risk is truly greater, does that mean the products can't be offered? Is there no room for real innovation? Is it not possible to have meaningful regulation of these innovative products? Isn't it worth having that discussion?
In the Department's Annual Report, on page 14, they had this boxed statement on innovation: "Risks inherent in some new innovative products require sophisticated risk management systems. The Bureau is working closely with industry to develop appropriate risk management standards." While we applaud the willingness to work with industry to develop these standards, the question remains what is the timeline and what happens to innovation during that time?