A LITTLE NIPPER
NY releases ‘watered down’ regs for in$urance
Gov. Cuomo must have a soft spot for Wall Street.
Regulations for insurance companies introduced Wednesday by the state financial watchdog were watered down from proposed rules unveiled last year, industry insiders said.
For example, the rules enacted by Maria Vullo, the superintendent of the state Department of Financial Services, allow insurers to hold less money to pay their obligations than the minimum amounts in the initial proposals.
Lower cash requirements are precisely the kind of thing that warms the hearts of Wall Street, insiders said. The initial proposals from Benjamin Lawsky, the previous DFS boss, were much stricter.
DFS insisted, though, the lower cash requirements did not mean it had fallen down on the job.
“DFS will continue to make certain that New York’s insurance market is fiscally safe and sound and that the reserves to back insurance policies are appropriately set to protect consumers,” Vullo said in a statement.
The rules boil down to how much cash insurance companies have to hold in rainy-day funds for future claims.
The adjustment comes days after the DFS issued rules for other financial services companies that allow them to diffuse among a company board the responsibility for money laundering. Lawsky had proposed holding a single chief com- pliance officer criminally responsible.
The regulator has created an insurance sector working group to help adopt rules. That group includes top dogs like Chief Executive Ted Mathas of New York Life, as well as consumer advocates like Birny Birnbaum of the Center for Economic Justice.
Under Lawsky, who was the first DFS superintendent and now runs his own Manhattan-based consul- tancy, there was no working group.
In 2014, Lawsky had lowered the amount of cash insurance companies had to hold by about one-third. After the latest move, the amount would go down for the second time in two years.
Under Vullo’s rules, insurance companies will be allowed, starting in 2018, to use computer models to figure out how much cash they should hold in reserves, rather than rely on formulas set by regulators.
“The superintendent has taken a fresh look at the positions of the department and how that affects both consumers and the regulated entities,” Richard Loconte, a spokesman for the DFS, told The Post.
The regulator pointed out the standards adopted by Vullo are already in place in 45 states, and allow for more dialogue with the National Association of Insurance Commissioners.
“We aren’t just handing over everything to the insurance companies,” Loconte said.
Lawsky declined to comment.
“What people don’t understand about the life insurance business today is that a major part of these guys’ business is selling investment products,” Marcus Stanley, policy director at Americans for Financial Reform, told The Post.