New York Life Insurance & Annuity Corporation has agreed to pay $10.9 million in compensation and penalties for causing clients to switch their existing annuities to a plan that generated less income, the state’s insurance regulator said on Tuesday.
The insurer did not properly disclose income comparisons and suitability information of the annuity products to consumers, according to an investigation by the New York Department of Financial Services (NYDFS).
The action is part of an ongoing industry-wide investigation into practices related to insurers’ recommendations to replace a specific type of annuity with another, the regulator said.
New York Life Insurance remains fully committed to providing policy owners with the right tools and guidance to meet their financial needs, a spokeswoman told Reuters.
Annuities are contracts between life insurers and customers that provide guaranteed payments for the remainder of an individual’s lifetime or for a specified period.
New York Life Insurance will also revise its disclosure statements to include side-by-side monthly income comparison information and revising its disclosure, suitability and training procedures, among other actions, the NYDFS said. (Reporting by Noor Zainab Hussain in Bengaluru and Suzanne Barlyn in Washington Crossing, Pennsylvania; Editing by Sriraj Kalluvila)