November 4th election - analysis on how this could impact your company!

Alan Prochoroff, editor and publisher of Insurance Compliance Insight has put out a timely and very informative piece on this week’s election and the impact on insurance.

Alan writes:

“Three insurance commissioners were reelected Tuesday and a new commissioner will soon take office in Kansas.
And because the vast majority of insurance commissioners are appointed by governors, as many as 10 incoming state chief executives could pick new heads of their insurance department.
See our analysis of how this could impact your company in this special report from Insurance Compliance Insight.

Click here to read our article.


Don’t Forget the Source

Glenda K. Bean and I just returned from a two-day compliance training session at a large Insurance Marketing Organization (IMO). I really enjoy training and I am happy to have the opportunity to do quite a bit of it these days. However, I have been doing 1-2 day trainings on life and annuity advertising compliance for quite a while now and I was feeling as though my presentation was getting stale. So for this most recent trip, I decided to completely re-vamp it and I was very pleased with the outcome.

One surprisingly successful element was in the afternoon of the first day when the group of about eight of us read aloud both the NAIC model advertising regulation and the unfair trade practices act model. Section by section we went around the room and read it aloud. As we went around we had the opportunity to talk about specific historical issues that led to certain provisions as well as current applications for sections drafted years ago. We had very interesting discussions about what individuals with various licenses could do and not do. We talked about the differences between guaranteed and non-guaranteed elements, as well as the difference between determinable and guaranteed. All of these issues have been part of my previous presentations, but they arose differently when based on reading the models directly.

We spent much of the second day reviewing ads together in a variety of ways. The comments were good and the participants had clearly learned a lot. I don’t think every topic is suited to this approach for training, but it did reinforce for everyone how important it is to continually go back to the primary source documents. Memories are good and secondary materials can help, but there is nothing like going back to the law itself or the regulation itself for a clear understanding of the requirements for advertising materials, whether created by carriers, marketing organizations, agencies or individual producers. I think that’s what the group we trained this week learned. That feels like good progress.

Learning from others

Currin Compliance is located in upstate NY. This week there has been a lot of publicity about NY Attorney General Eric Schneiderman’s investigation into false online reviews of businesses. When I started reading the articles, I kept hoping I would not see any insurance related examples cited and I did not. I am hopeful that the insurance industry will avoid this growing problem, but I am concerned because of the increasing importance of online reviews to consumers.

The Saratogian’s article of September 24, 2013 references a Nielsen consumer survey that found “online reviews were the second most trusted form of advertising after word-of-mouth by family and friends.” Further, the survey revealed that “70 percent of customers worldwide trust online reviews, rising 15 percent in four years.” The problem, according to Schneiderman’s investigation is that many of the online reviews are false. His office has settled cases with 19 companies for $350,000 in penalties.

Insurance is a business based on trust. It could be appealing for an insurance producer to use services that promote online visibility and include trumped up online reviews of their knowledge, experience and performance for clients. It could be promoted as effective use of social media and promoting one’s image in that realm. I am very hopeful that the insurance industry can learn from others and avoid this trap. It might sound perfectly reasonable when pitched as a way to increase one’s visibility and reputation. But false reviews are not harmless and Mr. Schneiderman has sent a warning this week. I hope the industry is listening.

“Self-Policing” Producers

The use of online advertising is as hot as ever and the insurance industry wants its piece of the marketing pie. And who could argue with that? With practically everyone and their mom (Hi Mom!) having access today to the World Wide Web, the Internet can be an easy, accessible, worldwide “billboard.” However, whether you use a figurative billboard or a literal one, advertising regulations still apply. As the prevalence of online advertisements increases, so will the watchful eye of regulators, especially if complaints start to increase.

This is exactly what Stan Haithcock prescribes in his recent article When an online annuity ad goes bad” (2013). Haithcock raises a number of interesting issues, such as the “one size fits all” problem of annuity advertising as well as the “need” for web promoters to mislead the public from the very beginning of the sales process. What stood out the most to me was his “call to arms” – not just to consumers or regulators – but also to other agents to begin “self-policing” the annuity industry. His suggestion? “Every time you see a bad pop-up ad or display ad, take a screen shot of it and send it to your state insurance department and the carriers whose product you think the “promoter” is pushing. Every time you see a video that is pushing the limits on facts, send a link to them as well. Demand that they clean it up. Demand that they do their job…” He doesn’t limit this to online ads – he goes on to say it’s time for ads, regardless of the medium, to be looked at under a “microscope.” That is a bold request and a risky one too.

Can you imagine what that could mean for individual producers, FMOs and carriers? Do you feel confident enough in your own advertising that if it gets sent to a regulator, you could defend what is being put out there? When it comes to sales, reputation is a big part of an agent’s livelihood. Imagine that your business was under the microscope of the state department of insurance. Even if no fine is given (and chances are, there will be a fine), that type of negative exposure can stick to a producer for a long time. We are often asked, “what’s the risk” of certain words and phrases that come up in ad review. This can be a difficult question to answer since regulations are broad and somewhat subjective. However, with others within the field looking for (and frustrated with) bad ads, there can be a much greater risk than what you might expect.

You have to remember, just like Facebook can be a treasure trove of embarrassing and damaging content for people going out and looking for a new job, the use of online advertising is easily accessible to anyone – consumers, regulators and your competitors. Before putting content out there, ask yourself if this passes the desk of your state regulator, are you prepared to defend it (and your business)?

The Role of Emotion in Insurance Advertising

I have been reading Supreme Court Justice Sonia Sotomayor’s memoir, “My Beloved World,” which by the way I highly recommend, for many reasons. In the section where she is working in the NYC District Attorney’s Office and doing some of her first jury trials, I was struck by her discussion of appealing to a jury by touching their emotions. She writes about a discussion with her boss after the loss of two jury trials back-to-back. He tells her “Even the most perfectly logical argument, absent passion, would make the choice [to convict] seem like one of personal discretion rather than solemn duty.” (p. 209) She then discusses the role of emotion in jury trials, and it left me thinking about the role of emotion in insurance advertising.

Not as big of a leap as it might first appear.

Then- Assistant District Attorney Soyomayor was trying to figure out how to get a group of people to do something that is generally painful—send a human being to jail or prison. Insurance producers are trying to get people to do something painful—spend money on something they can’t feel or touch, to spend a lot of money on what often amounts to promise of something that will be good in the future. So, is the role of emotion the same? I think so.

We often tell those who submit ads for our review that they need to tone down the emotional appeals of their ads. But that isn’t because there is a problem with including some emotional appeal, we recognize that there is an important role for emotion in sales generally and insurance in particular. However, there often is a problem with the manner of emotional appeal. Some of the pieces we see are the equivalent of an ADA saying to a jury that convicting the defendant in one case would eliminate crime in the city. It’s not the appeal to emotion; it’s being realistic in that play for an emotional reaction. Getting one criminal off the streets versus eliminating crime.

So what does that mean for life and annuity advertising? For one, “peace of mind” and similar phrases are the equivalent of a crime-free city. No one thing is going to get you there and it may actually be unattainable. Life insurance and annuity products may help by being one of the conditions that could create peace of mind, but it is more like the conviction of one bad guy—a good thing and important, but not the cure-all to suffering.

Getting back to the book, it is also important to note that Justice Sotomayor was being told to add emotion to logic, not make a substitution: “the difference between winning and losing came down to the appeal to the emotion rather than fact alone.” (p. 209). She started with total command of the facts and relentless preparation. (Her story is one of success born from hard work and mastery of the material in front of her.) She needed both to experience success with a jury. And that is what we look for in ads. There can be some emotional appeal, so long as it is reasonable and so long as there is a strong balance between the emotional and the factual.

Jury trials are essentially selling a story. Justice Sotomayor had a very successful jury trial record. She describes the process in a way that seems applicable to insurance advertising and sales, “Devising the case is always a two-step process: build the strategy out of reason and logic; then throw yourself into it, heart and soul. But if you have to revise the plan, suspend feeling and revert to logic until you can think of something you can sell with passion.”