Annuity Outlook

"Where's the Risk Today?"

"We know the value a fixed annuity product can add to a well-rounded retirement portfolio. Annuities are gaining national attention and acceptance as a source of reliable, guaranteed income in a time of market uncertainty. More and more consumers are looking to fixed annuities for the level of protection they add to a retirement income strategy . . ."  - Excerpt from NAFA Annuity Outlook Magazine

Click here to read the entire article authored by our own Glenda Bean and Maureen James in the NAFA Annuity Outlook Magazine.

NAFA “Cautionary Tales: Enforcement Actions from State Insurance Departments” has good advice

The November/December 2013 edition of NAFA’s Annuity Outlook publication has an easy to refer piece on advertising issues. General Counsel Pamela Heinrich consolidates several recent enforcement actions (several from the state of Utah) related to advertising materials into a short series of do’s and don’ts. The list could be taken from the recommendations we make on a daily basis for the ads we review.

So often we get push back from the creators saying that we are being overly rigid in our interpretations and in our concern over these issues. After these several enforcement actions, Ms. Heinrich advises as follows:


  • Exaggerate benefits, particularly by using absolute words like “all” or “unlimited.”
  • Rely on the rules of one state when the piece will be used in multiple states.
  • Exaggerate training or certifications, particularly in the context of senior citizens.


  • Be clear that a meeting will be with an insurance producer and that it is likely there will be a solicitation for an insurance product.
  • Disclose that an insurance product is involved in all marketing materials.
  • Identify all relevant parties—the carrier and/or the producer—making sure that the identification is consistent with the licensee’s names and addresses on file with the DOIs.
  • Disclose that workshops or similar events are part of the insurance sales process. Ms. Heinrich specifically warns against “bait and switch” at these events, including “meet and greet” events.

We think this is all excellent advice and, as does Ms. Heinrich, we encourage that these tips be kept in mind as marketing material and campaigns are created.

NAFA Annuity Outlook Article: a Reminder to Marketing Organizations

Nick Gerhart, Vice President of Compliance and Regulatory Affairs for North American Company for Life and Health Insurance (“North American”) wrote a piece for the July/August 2012 issue of NAFA Annuity Outlook discussing the importance of addressing compliance issues that have arisen as third party/independent/field marketing organizations (“IMOs”) have grown in number and strength. Gerhart states: “What once was considered a resource to expand an insurance company’s reach into new markets is now considered an integral part of the sales process.” He follows up with a statement that goes to the heart of a very big concern of ours: “The burden of responsibility on the IMO is even heftier with the complexity that comes with new product design and regulatory changes.”

At insurance compliance conferences, the topic of marketing and compliance often being in some type of conflict with each other is raised on a regular basis. The problem for IMOs is that they grew as marketing organizations and that is their unique strength and focus, but now compliance is becoming more of a risk to their livelihood. It seems clear that unless an IMO can introduce and maintain a strong culture of compliance, while continuing to keep their marketing focus, they are at significant regulatory risk. Life insurers are also concerned about the very real risk that may follow the sale and several are taking steps to do what they can to foster a sense within the IMOs that compliance really matters.

At a recent AICP Chapter E-day, I co-presented on the topic of producer-generated advertising and the compliance issues we see in the pieces we review with an attorney and examiner from the Kansas Insurance Department. Advertising is only one of the compliance areas that IMOs need to be looking at and thinking about if they want to protect their firms.

Mr. Gerhart says that North American has recently initiated a “thorough, in-person business practice review with top IMOs.” He indicated that they look at the IMOs business practices as well as review specific compliance and regulatory matters. During their visits, North American requests and reviews specific documents.

This is a reflection of the need for a real cultural change at some IMOs. We work with a large number of IMOs and see a wide variety of attitudes regarding compliance and also see major differences in the culture of various organizations. It is our opinion that IMOs face regulatory risk unless they do the necessary work to foster and create the sense that, in addition to teaching and selling marketing tools and strategies, they must also convey a clear and unequivocal sense that sales and the materials must be used in a broader atmosphere of compliance.

It has been great to see insurers taking a more active role in looking for compliance at IMOs and we think that it will be good for both. We agree with Gerhart that “IMOs today face a lot of challenges: fierce competition, low interest rates and compressed margins, increasing regulatory burdens, and with that, increasing compliance expectations. Insurance companies need to leverage their knowledge base and find ways to help IMOs navigate the compliance component.”