Currin Compliance Services — Insurance Compliance and Regulatory Consultants

Life • Health • Annuity
Compliance you can trust. Service you can rely on.

Our mission is to deliver an unparalleled combination of knowledge, creativity, and superior
problem-solving skills to each compliance challenge faced by our clients in the insurance industry.

to join our email list!


LinkedIn Twitter
RSS Feed Blog

Life Insurance Law Blog

Entries in Insurance Compliance Insight (2)


Kansas Continues Lead Role in Advertising Sanctions

Thanks to my friend Alan Prochoroff, Editor and Publisher of Insurance Compliance Insight, for providing, in his September 9, 2013 edition, a brief discussion and link to the Summary Order issued by the Kansas Insurance Department (“KID”) on August 27, 2013. Mr. Prochoroff describes the issues succinctly as follows: “the postcards mislead recipients into believing their financial well-being may be in jeopardy. The postcards supposedly suggested the person had an annuity that might be adversely affected if they didn’t contact the company. Making matters worse was a disclaimer on the cards. Kansas said that language was in print too small to remedy the misleading language that was printed in a much larger font.” KID has also issued a Consumer Alert today (September 10) regarding the order.

We often hear in our practice that sanctions like this don’t happen and “everyone is doing it.” This suggests that if that is the case, “everyone” can expect to be hit with a penalty from KID. The order imposes a monetary penalty of $5,000 on Lead Generating Systems, LLC, aka Unlimited Fulfillment Services, aka Smart Leads. This is in addition to a previous penalty of $4,000 that remains unpaid. In addition to the monetary penalty, a cease and desist order was issued. The sanctions were based on the unfair trade practices law in Kansas. The Consumer Alert provides some additional details about the claims made in the postcards, namely that they stated recipients financial well-being was at stake because their annuities were purportedly at the end of the surrender charge period. 

Kansas has taken a lead role among state regulators in targeting lead generating as a source of problems in insurance advertising. In 2012, KID issued Bulletin 2012-1 specifically addressing issues raised by third party marketing firms.

One of the issues not addressed in this order is whether any producers who used these lead generating devices in their sales, any Independent Marketing Organizations who made the lead generating systems available or promoted them to their producers, or any carriers whose annuity contracts were issued to consumers who responded to the misleading claims on the cards will be sanctioned as well. It seems clear from the applicable laws and regulations that there is authority to find that once a misleading claim like those in the cards sent to Kansas residents, the entire sale is tainted and all along the line in the sales process are exposed to liability. Only time will tell if there are further repercussions. 


"Insurance Compliance Insight" has Interesting Articles on Compliance Challenges for 2011

I find ProBusiness Publishing LLC, publication [Insurance Compliance Insight] (“ICI”) a great resource for information and I look forward to its weekly arrival in my inbox. Alan Prochoroff, Editor and Publisher, regularly discusses the issues that are most important to those of us who are engaged in insurance compliance. The January 10, 2011 edition of ICI has several articles that, taken together, point out some of the significant challenges facing the insurance industry from a compliance and regulatory perspective in 2011.

The lead story is about changes in commissioners around the country. All together, he identifies five new heads of Insurance Departments: in Minnesota (Michael Rothman), Ohio (New Commissioner is Unknown and Chief Policy Officer resigned one day after Mary Jo Hudson), Oklahoma (John Doak), Texas (Unknown) and Wisconsin (Ted Nickel). In the same article, he discusses our New York Governor’s proposal to combine Banking, Insurance and the Consumer Protection Board into a single regulator of financial services. Of course anytime there is a change of leadership in an insurance department there are changes to the regulatory climate in the state. Sometimes it is subtle and sometimes it is quite obvious, but there are always differences that need to be learned and understood.

Prochoroff’s article “CEFLI Opens for Business - Here’s What You Can Expect” offers some very interesting new insights into CEFLI. As many readers will know, IMSA dissolved late last year and became CEFLI. With the new website and public discussion of the new organization’s mission, the differences between the two organizations are becoming more clear. Also more clear is how CEFLI intends to position itself differently from AICP, LHCA and other compliance organizations: First CEFLI is focusing on Ethics as much as Compliance and the differentiation between the two. CEFLI is also looking to engage C-suite professionals rather than the more front-line compliance professionals who are the life-blood of both AICP and LHCA. CEFLI wants to engage with Chief Compliance Officers and Chief Ethics Officers. I agree that is a different focus than either AICP or LHCA has, but it is not as different from the ACLI’s Legal and Compliance Section and I would expect that group and CEFLI to work closely together. I am very interested to see how CEFLI evolves into its niche.

A later ICI article points to one of the challenges that CCOs and Chief Ethics Officers face. In “Best Practices Collide with Resources” a couple of Life insurance CCOs discuss with Prochoroff the challenges they face in this time of scarce resources but increasing compliance demands. The conclusion is exactly what CEFLI seems to want to address. When the number of rules governing insurance compliance is exploding, it becomes more and more difficult to maintain anything other than an exclusively rules-based system inside an insurer. If “ethics” goes beyond “mere compliance” to a higher, non-rules based system of and culture within a company, if all hands are on deck trying to comply with the multitude of new rules, there is little left over for more esoteric “ethics.” Not that anyone is saying ethics are not important, quite the contrary, just easily squeezed out in an effort to meet increasingly complex compliance demands. ICI discusses three specific examples of these increased demands in 2011: an annual doubling of data calls, the new annuity suitability regulation and Regulation 194 in NY, which mandates that producers disclose their compensation.

All this leads me to be very sure that there are enough issues related to ethics and compliance discussion and work to keep those of us who do it on a daily basis extremely busy.