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New York DFS Proposes Consumer Protection Regulation Affecting Life Insurance and Annuities

Client Alert | 2 min read | 01.03.18

On December 27, 2017, the New York Department of Financial Services proposed an amendment to Insurance Regulation 187.  If adopted, New York-licensed life insurers and producers would be subject to a heightened “best interest” standard for virtually all life insurance and annuity products (except for ERISA, 401-K, and similar plans) and insurers would be required to take specific steps to prevent financial exploitation and abuse.   

The proposed regulation requires any recommended life insurance transaction to be in the best interest of the consumer and appropriately address the consumer’s insurance needs and financial objectives at the time of the transaction.  Under the proposed regulation, a producer (or an insurer selling direct with no producer) acts in the “best interest” of a consumer when (1) the recommendation to purchase is based on an evaluation of the consumer’s “suitability information” that reflects the care that a prudent person would use in a similar situation without regard to the financial interests of any other party, (2) the transaction is in furtherance of the consumer’s needs and objectives under the circumstances, and (3) the consumer is reasonably informed of the consequences of the transaction.  “Suitability information” includes, inter alia, a consumer’s age, income, financial needs, financial experience, financial objectives, existing assets and risk tolerance.  “Suitability information” also must include the manner in which the producer is compensated for the sale and servicing of the policy, using the procedures required in the Department’s separate producer compensation regulation.

As amended, the regulation prohibits producers from (1) making a recommendation to purchase unless the producer has a reasonable basis to believe the consumer can meet the financial obligations under the policy, or (2) stating the recommendation is part of financial or investment planning unless the producer has the appropriate professional designation.  Additionally, insurers must (1) establish and maintain procedures to prevent exploitation and abuse, (2) provide relevant policy information to a consumer for evaluating a transaction, and (3) provide relevant policy information (and information required by Insurance Regulation 60) to a producer for evaluating a replacement transaction.

There is a 60-day notice and public comment period for the proposed amendment.

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Eleventh Circuit Hears Argument on False Claims Act Qui Tam Constitutionality

On the morning of December 12, 2025, the Eleventh Circuit heard argument in United States ex rel. Zafirov v. Florida Medical Associates, LLC, et al., No. 24-13581 (11th Cir. 2025). This case concerns the constitutionality of the False Claims Act (FCA) qui tam provisions and a groundbreaking September 2024 opinion in which the United States District Court for the Middle District of Florida held that the FCA’s qui tam provisions were unconstitutional under Article II. See United States ex rel. Zafirov v. Fla. Med. Assocs., LLC, 751 F. Supp. 3d 1293 (M.D. Fla. 2024). That decision, penned by District Judge Kathryn Kimball Mizelle, was the first success story for a legal theory that has been gaining steam ever since Justices Thomas, Barrett, and Kavanaugh indicated they would be willing to consider arguments about the constitutionality of the qui tam provisions in U.S. ex rel. Polansky v. Exec. Health Res., 599 U.S. 419 (2023). In her opinion, Judge Mizelle held (1) qui tam relators are officers of the U.S. who must be appointed under the Appointments Clause; and (2) historical practice treating qui tam and similar relators as less than “officers” for constitutional purposes was not enough to save the qui tam provisions from the fundamental Article II infirmity the court identified. That ruling was appealed and, after full briefing, including by the government and a bevy of amici, the litigants stepped up to the plate this morning for oral argument....

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