Call us today @ (518) 692-2494
LIFE • HEALTH • ANNUITY
Compliance you can trust. Service you can rely on.
schedule call with Cailie

Want to outperform your peers? Compliance may be the way!

In a recent Deloitte report, “Compliance to Power Performance: 2016 Ethics and Compliance Survey,” a correlation between compliance and performance is drawn in a way that those of us in compliance have often been unable to draw: “Thus, a great compliance function should be considered an asset to insurers, where investment in the function is associated with increased top and bottom lines, as well as lower threats of reputational and other risks.” p. 18. 

This seems to be the result of more mature compliance programs, especially on the life and health side of the industry, offering more ways to study and look at the effectiveness of compliance. This led Warren Hersch in a commentary in Life Health Pro to speculate that compliance with the DOL regulation might be good for company performance. Because the rule does address market issues that have led to fines and reputational damage, the argument does make sense.

In my opinion, those real issues could have been addressed in a more effective way, but to the extent they are real and compliance with the DOL does reduce exposure to sales practice-related fines and reputational harm, Mr. Hersch may be correct when he concludes, based on the Deloitte study: “Industry estimates peg the cash outlay needed to align company operations with the [DOL] rule to be in the billions — $11 billion for brokerages alone, if a recent estimate by consulting firm A.T. Kearney proves accurate.

But there’s a flipside to the mountain of money. And that’s this: Companies that outperform with their compliance initiatives are more successful than competitors. Best-of-breed insurers do better financially [sic] their peers on key business metrics such as premium revenue, return on equity and the bottom line.”