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regulators

Back in the Office

I am very lucky. I get to balance running a business with the substantive work of insurance compliance. This suits my strengths and weaknesses as a working being. Over the past couple of years, the amount of time that I spend on business travel has increased and it can be both exhausting and exhilarating. 

I have just spent two days travelling. The first day was spent training another attorney on advertising compliance. He is knowledgeable and experienced. Our time together was as much to point him in the directions where his attention was needed, as it was to really teach new material. I have done similar trainings many times now and each time different issues come up, depending on the niche of the trainee’s organization. On Tuesday we spent most of our time talking about websites and the issues inherent in trying to control the flow of information and the cost of going back and pulling material down when it is problematic. The training was at a fairly high level and there was general agreement between us about what the standards are and what needs to happen structurally to achieve compliance.

The second day was more demanding, but in a generally good way. I was asked to review a large volume of materials and help figure out a way that they could be presented that would be compliant with state insurance regulations as well as be successful from a sales perspective. The discussion was fast paced, and friendly, but with an edge. The slides moved in front of me at a very high speed. I was reacting both at a gut level and trying to provide an analysis at a rate that was very intimidating. There were about 6 people in the room and all were looking to me to make these quick (though tentative) decisions: decisions that impact all kinds of people along the insurance purchasing/selling chain. But as I was feeling overwhelmed at the speed of the review and discussion, the main presenter looked around and then directly at me and said I “scared” him. On several occasions he said my facial expressions and “grunts” (really?) were as valuable as my words. He wasn’t really scared, I don’t think, but he did recognize that if he couldn’t convince me that what he was doing was ok, he had a problem. Going into the discussion, I wasn’t sure we’d find a resolution. I am still not sure, but I feel more positive about the possibility. My concerns were heard and generally understood.

I love the collaborative nature of compliance work. I never enjoyed the adversarial battles of my life as a lawyer before my regulatory practice. Compliance is different. A good outcome in compliance isn’t a win or a loss: it is not a zero sum game in the way litigation is. Rather, compliance is finding a way to make an idea work. It is protecting people and entities from loss rather than trying to remedy the loss after the fact. Compliance is reaching an understanding of what the issues are and how we can work together to build a better product/ad/program. Sometimes that process – reaching that outcome – is more difficult than others, but in my experience it is always worth it and it is always rewarding.

I am back in my office today feeling great about the work we do, about the people I work with here in the company I founded, those “out there” in the industry, and the regulators who make sure that there are rules to play by and that they are (generally) enforced evenhandedly. I have no doubt that other challenging days are ahead, but dealing with those challenges is what we do. And I come back to the office feeling like we are pretty darn good at it – if I do say so myself. 

“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)?

AICP: "Fostering an Innovative Environment"

I am at the AICP national conference in Orlando, and yesterday attended a session called “Fostering an Innovative Environment.” I was intrigued because innovation is not easy in a highly regulated industry. One speaker, John Palmer of First Consulting and Administration, was clearly passionate about the topic and his part of the presentation was focused on Steve Jobs as role model for innovation. It is hard to argue with the idea that Jobs is an incredible innovator. But what was missing, for me, in the presentation, was the connecting of the dots between innovation in a consumer product market to innovation in insurance. I tried to articulate this in the session, but I wasn’t able to really get to what was bothering me.

Later I realized that the issue I wanted to talk about was whether insurance regulators think of innovation as a good thing. Generally we all think innovation in electronics is a good thing. We expect it and we can’t wait for the next great thing or even the next best incremental improvements. Personally, I’ve been waiting for the iPhone 5 for months.

But in the insurance world, innovation is different. Innovation has to clear regulators first, before it can get to market. From my own experiences, as well as observations, it can be difficult to maintain the “fire in the belly” of a great new idea, through a long regulatory process where obstacle after obstacle must be overcome. Regulators obviously see products that get abused in the market place and that is a real problem that needs to be addressed. But if each innovative product is reviewed by insurance department staff with the perspective that it is the next regulatory headache, innovation at the company level will be tough to sustain.

What I want to talk about is how to get regulators thinking about working collaboratively with companies on innovative products as part of what makes the job rewarding. While there can be problems if the line between regulator and regulated becomes blurred, if a regulator can work with a company on a product that really fills a consumer need AND meets the requirements of the state’s laws and regulations, isn’t that more rewarding than saying no for the regulator and isn’t it better for consumers? I find days that I have meetings with regulators, where we work together talking through product design issues, to be some of my most enjoyable days. Obviously not every idea is a good one. In a highly regulated industry, especially one with prior approval on products, regulators are a key component in finding a way to foster an innovative environment. I want to tap into the real passion that I think many regulators have for consumer protection and work collaboratively to get the innovative products, designed to meet real consumer needs, to the market. Make the products better for consumers through regulation, sure, but let’s still let some of the creativity of the consumer electronics field find it’s way into the more staid world of insurance.