Glenda Bean (Director of our Advertising & Producer Compliance Department) and I recently led a training session on advertising compliance to a group of compliance officers from FMOs. We got into a discussion about the role of emotion in insurance advertising and advertising in general.
A similar discussion appears in the October issue of InsuranceNewsNet in the article titled “Guiding Emotion in Marketing” by Scott R. Kallenbach, FLMI, Research Director for LIMRA’s Strategic Research. As an insurance compliance attorney, this discussion heightens my antennae. Fear of death and ensuring the financial security of loved ones may be a “strong emotional motivator” as Mr. Kallenbach states, but it’s also a red flag for compliance personnel.
When we review advertising, one of the key things we look for is whether the piece is misleading or has the tendency to mislead or deceive. NAIC Advertisements of Life Insurance and Annuities Model Regulation, Model 570 section 4.A. One way that a piece may have a tendency to mislead is if it suggests that an insurance product can deliver or prevent a particular emotional state. Promissory statements, particularly about emotional states, will result in a recommendation for revision to reduce regulatory risk.
Nonetheless we do recognize that, as Mr. Kallenbach states, “emotional appeals can help companies and their distribution partners communicate with the buying public more effectively.” The key to doing this effectively from a compliance perspective is to think through the role that the insurance product plays in the prevention or attainment of the emotional state. For example an annuity cannot alone promise financial security, but it may have a role in creating that feeling or emotion. An ad that holds out a promise of security is likely to be problematic while one that focuses on the role an annuity can play in creating a feeling of security is less likely to create regulatory risk.