Insurance Regulation – Past and Present

The AICP Heartland Chapter had its E-Day in Kansas City on Monday, April 25th and it was well done (as usual). There was a keynote address by Commissioner Ken Selzer of the Kansas Insurance Department (KID), and sessions on the DOL Fiduciary Rule, IMO’s and their carriers, and market conduct exams. For those who may not be members of AICP, I recommend joining – not only for the content of the conferences and meetings, but also for the opportunity to network and share best practices with your colleagues.

The keynote was particularly enlightening as Commissioner Selzer described how insurance regulation began in America. He described how life insurers would, for example, sell a life insurance policy with a face value of $1,000 to a consumer. When the insured passed away, the insurer would assess the beneficiary’s assets, lifestyle, and other factors, and then negotiate a settlement of perhaps $100. The insurer would do this hoping that the beneficiary would lack the sophistication or motivation to sue the insurer for the face amount of the policy. In response to these types of abuses, states formed insurance departments to protect insurance consumers.

Fast forward to today. The KID is determined to meet the evolving demands of the marketplace. There is now a chat feature on its website and Commissioner Selzer asked the audience members to take out our cell phones and “Like” the KID Facebook page. Times change and the KID is staying current with the times – not only in the use of technology, but also in the area of insurance regulation. Many of you may remember that Kansas is also a regulatory leader, and they issued bulletins 2012-1 and 2014-1 pertaining to third party advertising – especially involving IMOs. Many of us in the insurance industry are continuing to discuss this topic as evidenced by the AICP session on IMOs and their carriers.

What’s next on the horizon when it comes to insurance regulation? Certainly the impact of the DOL Fiduciary Rule will be enormous, but what else may be next? One thing is certain – the regulatory environment continues to rapidly move forward – and compliance professionals need to continually sharpen and expand their skills to keep pace.