New York Credit Union Association President/CEO William J. Mellin submitted a comment letter to the state Department of Financial Services, urging the department to exempt credit union’s from a proposal that would place new requirements on credit life and other life insurance products.
The proposal is aimed at ensuring sellers of life insurance and annuity are offering products that are in the “best interest” of the consumer.
Mellin, while expressing support for the DFS’ commitment to ensuring that consumers get the insurance products that best meet their needs, noted that the proposal would actually make it more difficult for credit unions to provide cost-effective insurance products to their members.
“This proposal is predicated on a belief that the existing regulatory framework harms consumers by enticing them to buy insurance products they do not need,” wrote Mellin. “But the experience of credit unions demonstrates that properly administered credit life policies and similar products have and can continue to play a key part of helping consumers guard against unforeseen events and help consumers of all economic classes climb the economic ladder. Credit unions look out for their members and simply put, debt forgiveness products have always been a crucial component of the credit union mission.”
He explained that the credit union industry has not historically offered these products to exploit members, but rather to protect them against the devastating financial impacts of unforeseen emergencies.
Mellin went on to note the exorbitant costs and employee-power that credit unions have needed in order to deal with a torrent of new regulations since the financial crisis, despite having no role in the events that led to the financial and economic downturn.
“Unfortunately, if this regulation sweeps in credit life insurance and is promulgated without substantial revisions, this trend will continue, but on the state level,” he wrote.
He concluded his letter by urging the DFS to exempt credit unions from the proposal.
“As mission-driven institutions with a history of properly using insurance policies to help members, there is no need to impose a compliance framework designed to address the excesses of larger profit-driven institutions, some of which have clearly taken advantage of consumers,” he said.
To download the complete letter, click here.