Substandard Annuities in NY
At the recent seminar, a representative of the NYSID set forth the Department's new rules for substandard annuities, as they are now approving them, when they are NOT issued in the structured settlement market. These rules are:
1) Insurers must comply with the requirements of section 99.6 (i)(1) and (4) of Reg 151;
2) Cases must be underwritten individually;
3) Issuance on a substandard basis is limited to those who have serious and acute health impairments based on submitted medical information.
The limitations above are designed to mitigate the anti-selection risks and to avoid adverse impacts on the standard non-rated mortality pool. While the NYSID does permit these products, NY companies will have to accept that NY does not have lower reserve requirements for these annuities and therefore there will be some strain as a result of being in this market.
The Department recognizes the need to revise Reg 151 to specifically accommodate these products.
