Friday, May 7, 2021

No. 420: The New York State Department of Financial Services Suffers a Setback on Regulation 187

Regulation 187 (Reg 187), issued by the New York State Department of Financial Services (DFS), relates to the marketing of life insurance policies and annuity contracts. On July 27, 2018, DFS issued an amended Reg 187. The Independent Insurance Agents and Brokers of New York and other entities and individuals (collectively, the petitioners) challenged the amended Reg 187 in the New York State Supreme Court (the state's trial court).

The Two Court Rulings
On July 31, 2019, the trial court judge found in favor of DFS. He ruled that the amended Reg 187 is not unconstitutional. The trial court ruling is here.

The petitioners appealed the trial court ruling in the Appellate Division (Third Department) of the New York State Supreme Court. On April 29, 2021, an appellate division judge, with the concurrence of several other judges, reversed the trial court's ruling by finding that the amended Reg 187 is unconstitutional. The appellate division ruling is here.

General Observations
The appellate division ruling is a setback for DFS. Reading the two rulings is necessary to understand the significance of the case. According to news reports, DFS is reviewing the appellate division ruling. I plan to provide updates on this case.