New York's Regulation 187: the stricter best-interest rule for life insurance and annuities

Our companion pieces on the annuity best-interest standard and its training and oversight counterpart both note, in passing, that New York doesn't run on the national NAIC model. This page is that rule on its own terms: what Regulation 187 (11 NYCRR 224) actually requires, how it diverges from the NAIC framework covered elsewhere in this Library, and the state court fight that decided whether it could stay in force at all.

A New York-only rule, not a state's version of the national model

New York's Department of Financial Services (DFS) adopted the original version of Regulation 187 in 2018, predating the NAIC's own 2020 revision to its Suitability in Annuity Transactions Model Regulation (Model #275) by two years. The amended rule took effect in two separate phases: August 1, 2019 for annuity transactions, and February 1, 2020 for life insurance transactions — a staggered rollout most national-model states didn't need, since Model #275 only ever reached annuities to begin with.

Broader than the national model in a specific, real way

The single biggest structural difference: Regulation 187 covers life insurance recommendations, not just annuities. The NAIC's Model #275, even in its 2020 revised form, never extended to life insurance sales at all — a producer recommending a term or whole life policy in a Model #275 state is checked against ordinary state suitability and replacement rules (see our churning and twisting explainer), not a best-interest standard. In New York, that same life insurance recommendation is held to the same best-interest-style process as an annuity recommendation.

Regulation 187 also reaches certain in-force transactions — a recommendation made on a policy you already own, such as a proposed change to an in-force annuity's features — in a way the national model's new-sale focus doesn't squarely address. Both frameworks put the consumer's interest first as a matter of stated policy, but they're separately drafted rules with their own wording, so treat them as two different rulebooks worth reading on their own terms rather than assuming a producer who satisfies one automatically satisfies the other.

The three-year fight over whether it could survive at all

The amended regulation didn't take effect uncontested. Insurance agent and broker trade groups, including the Independent Insurance Agents & Brokers of New York, sued DFS, arguing the amended rule was unconstitutionally vague — that key terms like "best interest," "recommendation," and "suitability information" failed to give producers fair notice of exactly what conduct was and wasn't permitted. A trial court initially sided with DFS, but New York's Appellate Division, Third Department, reversed in April 2021 and found the amended regulation unconstitutionally vague.

DFS appealed to New York's highest court. On October 20, 2022, the New York Court of Appeals, in Matter of Independent Insurance Agents and Brokers of New York, Inc. v. New York State Department of Financial Services, reversed the Appellate Division and rejected every argument the petitioners raised, holding the amended Regulation 187 valid and constitutional. That decision is the reason the rule described on this page is still the operative one in New York today, rather than a version that got struck down and never came back.

Don't confuse this with Regulation 194

New York also runs its own, separately numbered commission-disclosure rule — Regulation 194 — covered in our companion explainer on commission disclosure. The two are easy to conflate because they're both New York-specific and both stricter than the national baseline, but they govern different things: Regulation 187 is about whether a specific life insurance or annuity recommendation actually serves your interest; Regulation 194 is about whether, and how, a producer discloses what they're paid for making it. A producer can fully comply with one and still fall short on the other.

What this means if you're in New York

If you're shown a life insurance policy or an annuity by a New York-licensed producer, it's reasonable to expect the same documented, best-interest-style process our annuity explainer describes — care, disclosure, a stated basis for the recommendation — applied to the life insurance sale too, not just the annuity one. And because Regulation 187's own survival was genuinely contested in court as recently as 2022, it's a documented example of how a state-specific consumer-protection rule can actually get tested, not just assumed to hold up on paper.