The Business Council of New York State, Inc., whose membership includes over 4,000 member companies, chambers of commerce, and associations, has reviewed the aforementioned legislation and is proud to strongly support its enactment.
The proposed legislation relates to the standard nonforfeiture law for annuities decreasing the statutory guaranteed amount of interest from three percent to one and one-half percent for a period of two years.
As you know, annuities are a very popular investing option for consumers in New York State today. Unfortunately, as interest rates have fallen to new lows in the past year the guaranteed rate that must be offered is now artificially high. This proposal insures that consumers will continue to be able to purchase annuities while enabling the insurer the ability to offer the product without fear of negative spreads.
The three percent rate that is our current statute was based on a National Association of Insurance Commissioners (NAIC) model proposal over twenty-five years ago. Today, the NAIC and others are working to adopt a new proposal that more properly reflects today's economic climate. This proposal, with a two year sunset, bridges the gap from the old way of dealing with annuities to the twenty-first century.
For the above stated reasons the Business Council strongly supports S.6370/A.10410 and requests its approval this session.