The spring conference season has come around once again. CCS had a strong presence at IAdCA in Scottsdale, AZ and I had the honor of becoming president of that organization, while Glenda Bean was elected vice president. From here we have AICP Chapter Education Days, the American Fraternal Alliance’s Spring Symposium, GAPCA’s Annual Conference and, not at all least, our own symposium on social media and online advertising coming up in two weeks! We have folks coming and going for pretty much all of May.
We all know travel can be exhausting, but I love attending conferences because it allows me to see many of you in person, which is a very special treat for me. So much of our interaction is via email or telephone – perhaps video if we are lucky. Being able to talk face-to-face means a great deal to me.
One of the other things I love about conferences is it lets me see the growth in my staff from year-to-year, conference-to-conference. I see their strengths and development every day in our regular daily work, but conference attendance takes a different skill set and those we don’t get to practice as often. Sometimes that growth comes in presenting skills or talking to folks at the booth and other times it comes in leadership, such as Glenda’s new role in IAdCA. I am so proud of them all as they leave the safety of our office – where clients rarely come – for the insurance compliance world at large! I hope you get the opportunity to meet and talk with them this year – you will not be disappointed. They are a very fine group of people and it is my great pleasure to work with them every day, both in the office and on the road. ~ Cailie
Value Billing: What do you think?
By Cailie Currin
CCS has come a long way since 2007 when I opened the virtual door and hoped you would come in! You did and I am deeply grateful for that. Because you trusted us both in the beginning and all along the way we have been able to provide compliance services in a way that is unique in our niche. My background is legal and from law firms I learned some important lessons. But I also learned that law firms are often not the most appropriate or cost-effective place to go for compliance.
When I started CCS, I wanted to create a new category without the expense of a law firm, but not just a low-cost filing shop either. Our success indicates that there was a demand for such an option and our success provides that we can meet that higher standard. However, one thing that came with me from my law firm background was hourly billing. Hourly billing, or its cousin, flat fees based on estimated time spent, creates inefficiencies that frustrate me as an entrepreneur. I have always offered alternative billing options, but almost no one takes them and even the flat fee arrangements I have entered into have essentially been time-based estimates made into flat fees. In this approach there is the appearance of “winners” and “losers” – if it takes longer than anticipated, the flat fee works to the benefit of the client and if it goes more quickly, it benefits us. But that keeps us stuck in the hourly billing mode. I am very interested in exploring a move toward value billing. However, for that I need your help.
Value billing is something we all know from our personal spending. We are willing to pay a certain price for goods or services and not willing to pay more. Similarly, as the seller, I am willing to sell our services for a certain price and no less. Of course, we must cover our costs but the “value” of what we do for you has little to do with how long it takes us to do it.
To make value billing work, however, requires us to talk about the project in ways we don’t now. It might be a little uncomfortable for each of us at first and that may mean it makes sense for bigger projects initially. So, I encourage you to think about what our services mean to you in terms of pricing. Then think about whether it would be nice to get an invoice with an explanation of what we have done, but with the price for that service would be what we agreed upon in advance. No worrying about more charges in the future - you know what you are paying for the service in advance. Once we agree on a price and you feel that that price is fair, given its value to you, do you really care how we spend our time?
I look forward to your feedback either by phone: my direct line is 518-512-0175 or by email: firstname.lastname@example.org.
The Fine Print
By Suzanne Seay
Forbes magazine had a story last week that referenced the “fine print” in an insurance policy. Now I’ve read a whole lot of life insurance contracts in my day, and it seems to me that the type size is pretty darn consistent. And pretty much never smaller than 10-point (for comparison, the New York Times print edition is in about 9-point type).
In fact, the size of the type in insurance contracts is generally specified by statute.
Here’s the quote from “A Problem With Life Insurance That’s Universal,” by Scott Hanson:
“Over the past couple of years, thousands of universal life policyholders have been informed that their insurers are using the fine print of their contracts to significantly increase their long-static monthly premiums. Some customers have been hit with increases of over 200%.”
Perhaps the author did not mean literally that the type face was smaller in this part of the contract than in other parts of the contract. Perhaps he meant, more figuratively, that the cost of insurance charges was inconspicuous or obscured. I would argue that COI tables, which usually take up at least a full page of a policy, are actually eye-catching.
I remember when I first started reading policies for compliance. I flipped through a policy and the table of COI charges did indeed catch my eye. Because the numbers were listed as per-thousand-of-face-amount, I got out a calculator and figured out the annual charges at various ages for a hypothetical face amount.
I remember asking Cailie, “Who would buy this?”
“Those are the maximum charges,” Cailie pointed out, “the actual charges are generally much less.”
But still, I thought, they could get that high.
As I got more experience, it turned out that maximum COI charges are high and virtually identical in insurance contracts. It’s the way business is done. The maximum charges are also generally set by statute. Of course, a company could use lower maximum charges, but if it does, it generally has to hold more in reserves. This means there is a disincentive to use lower maximum charges.
The Forbes article appears to be written primarily for older consumers who own UL policies. It reads like a “seniors beware” kind of story. Of course, everyone should try to understand any contract they sign and pay for. But UL policies have lots of moving parts, and they are not easy to fully comprehend. Perhaps even the author of the article is missing a piece of the equation?
If a company raises COI rates, the premium required to keep a policy in force will almost certainly rise. But more premium may also be required because interest rates have fallen over the past several decades. A 20-year-old policy may have begun crediting 7%, but may now be crediting just 1%. This drop would lead to declining cash value, and that alone could cause the policy to be in danger of, even if COIs and other charges have remained steady over the years. Of course, rising COIs would make that worse, but that is not necessary for policies to be in danger of lapsing after years of premium payments.
Did the policy state that both these things could happen? Most likely it did. And most likely the disclosure was in 10-point type. But was it clear? We all try to make the policies we draft, review and file clear. But in my personal opinion, it is not easy to sit down and read a life insurance policy from beginning to end and not find it confusing. Many people, sadly, don’t even make the effort. The truth is that UL policies can be complicating, despite all of our best efforts and that would be true even if they were printed in...
Compliance Metaphors: Options Abound, But I Want More
By Glenda Bean
I once heard someone describe compliance as similar to the plumbing in a house – it’s not glamorous and functions behind the scenes, but it’s necessary – and when things break down, it stinks. I’ve heard many compliance metaphors, and when I first heard this one, I thought it was totally spot on. Many metaphors used to describe compliance centered around this theme. Compliance is necessary, but no one really likes it. And while I still enjoy the compliance-as-plumbing description (it certainly hits home when compliance breaks down), I think we can do better.
I don’t want to settle on compliance being pigeon-holed as the un-glamorous, behind-the-scenes “necessary evil” that companies and agents have to deal with. Does it need to be front-and-center like the new central AC system that is totally wonderful, but not necessary? No, but I personally feel that if we’re able to stop thinking of compliance as a solely mandated function and instead push ourselves to see it as another business tool to leverage, not only can a company’s internal operational flow improve, so can the business bottom line.
Reputation. Our world is increasingly digitized with so much information instantly at our fingertips. Bad reviews or press? Easy to find it. Our attention span is decreasing. First impressions are everything, and if you do get additional time to impress someone, count yourself lucky. Embracing a pro-compliance attitude, including compliance as part of the businesses culture, demonstrating a commitment to compliance in all business areas of a company, and having conversations internally and externally about this commitment can set you apart from the pack, and build your reputation.
Compliance is a form of risk management, just like the products sold in the insurance industry. Use compliance to mitigate risks and build your company’s reputation. Move it from behind-the-scenes, and start using this tool to propel your company ahead. Tell us, is compliance the plumbing in your company? What’s your favorite metaphor for compliance?
Dear Compliance Hero
As compliance consultants, we get asked a lot of questions that are very specific. But sometimes we get asked general questions that could apply to many of our clients and friends in the insurance compliance world. We’d like to answer some of those here. If you would like to see your question answered here, send it to email@example.com. If your question makes the newsletter we will send you a little token of our appreciation for your interest and participation.
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Dear Compliance Hero,
As an insurance agent in the Age of Social Media, it’s important to me that I stay relevant and current in the way that I advertise my business, my products, and my services. My question is about creating compliant advertising content that is available on a digital platform. Blog posts are one particular type of ad that I’m struggling with. I used to send a newsletter to a set list of potential, current, and past clients and this newsletter had a footer that included a disclosure stating that I am an insurance agent who works at XYZ insurance agency and by contacting us, you could be offered information regarding the purchase of insurance products. Now, instead of a printed newsletter, it’s available online as a blog. Each article is posted to my website, but is also individually available for viewing and shared to the general public via Facebook, LinkedIn, and Twitter. How important is it to include the above-mentioned disclosure on these blog posts? What if the post is about something completely unrelated to my business and insurance, doesn’t suggest that they should contact me, and is purely meant to be fun? It sure seems like including the disclosure on every single post will negatively impact the number of sign-ups I get for a newsletter that I think is more editorial than promotional.
Thinking though when and where you should include disclosures on social media posts can be tricky to get right. As a blanket statement, I think it’s safe to say that even if the content its self isn’t about insurance, either generally or in terms of the sale of specific products, it should always be clear who is authoring the blog post. The consumer should always know who is providing information to them, even if the information is fun and off topic.
If the blog post does include a call to action, I would absolutely stick with the disclosure that you’ve included in your question. If there isn’t a call to action in the blog post (this includes those fun, off topic posts that are unrelated to your business, your products, etc.) then the disclosure could be slightly more casual but at the very least, it should state who you are (an insurance agent) and who you represent (your agency) and what you provide (e.g., “we help retirees in the creation of income strategies that utilize a variety of insurance products”).
In response to your concern about such a disclosure negatively impacting your subscribers, I would say that this should not deter the target group of people that can benefit from your services from subscribing. If anything, this could maybe help “weed out” anyone who wouldn’t be a good fit for your business, anyway! Hope this helps!