4 Ways to Identify and Resolve Compliance Challenges


The Interstate Insurance Compact has taken strong steps to consolidate compliance issues surrounding life, annuity, and other health products, but the overall compliance landscape continues to become more complex. A combination of outside increased scrutiny of corporate compliance regulations, and evolving insurance marketing practices resulted in more rules than ever for the insurance industry.

Deloitte’s 2019 Insurance Industry Outlook expands on compliance issues by identifying specific areas that warrant extra attention. The report suggests that insurers should be mindful of their market conduct, especially in relation to sales processes for both annuities and life insurance. It also focused on the need to comply with cybersecurity regulations in light of a nationwide law that could pose problems for insurers using third-party providers to manage policyholder data. Finally, it drew attention to the European Union’s General Data Protection Regulation, which raises a number of questions about data security and privacy oversight.

While that might seem like a lot to juggle, these compliance concerns are only the beginning.

Future Compliance Challenges

According to Sean Cox, assistant vice president of First Consulting & Administration, companies face no shortage of new compliance challenges. First Consulting & Administration has been a PIMA member since 2001.

“The insurgence of outside innovators — combined with increased scrutiny on corporate compliance, marketing practices, and third-party administrative practices — has only expanded the compliance pressures faced by the industry,” Cox said.

While products created by tech-savvy entrepreneurs improve user experiences and allow the insurance industry to reach new markets, Cox said they too often treat compliance as an afterthought. Regulators are left to determine the implications of certain services, such as selling products online and whether the correct licenses are in place to sell those products.

Complicating matters further is the push among insurers to reach new customers and find new markets, which has made it necessary for state regulators to keep an even closer eye on sales practices. Because regulators can issue fines and shine a spotlight on organizations that don't abide by the rules, compliance staff members face added pressure to ensure that sales and marketing practices don’t put their companies in the news for the wrong reasons.

Even with the numerous evolving compliance issues that exist, one remains the same: state views on certain out-of-state groups. In recent years, the National Association of Insurance Commissioners discussed taking actions that would negatively affect affinity groups. That prospect has become less of a threat as regulators learn more about and see the benefits of these groups. Still, Cox said, the out-of-state policyholder issue is “highly scrutinized in many states and hasn’t shown much change over the last decade.”


Next Compliance Steps

Given this complex situation, how can executives help their organizations navigate these and other compliance challenges successfully? Here are the best places to start:

1. Engage compliance early in partnering discussions. When contemplating a potential partnership opportunity with a technology provider, compliance leaders should have a seat at the table from the beginning. Compliance staff will have a more holistic view of regulations and can often identify issues before the negotiation process — while there is still time to address them.

Consider talking about any significant innovations with domicile and other key state regulators as you discuss potential partnerships. Working with regulators early in the process can offer solutions internal teams might overlook.

2. Consider a third-party compliance consultant. Outside compliance consultants can also provide a bridge to connect companies with solutions to compliance challenges before they become insurmountable. With a PIMA membership, for instance, you gain access to a private online community where you can search for members who have the expertise your organization might lack.

3. Follow marketing compliance best practices. It’s not easy to build a successful marketing compliance program, which is one of the primary reasons PIMA offers resources and publications for its members to help them abide by compliance best practices. PIMA has a Legislative & Regulatory Interest Group, and members like First Consulting host annual insurance advertising compliance events.

4. Vet out-of-state groups to avoid compliance issues. If you suspect that a group could raise concerns with state regulators, err on the side of caution. States that have had issues with out-of-state groups in the past will likely have issues with similar groups in the future. Vet all out-of-state groups you work with to thoroughly to avoid any problems.

Organizations like PIMA provide an important outlet for carriers, marketers, and administrators to discuss, share, and stay abreast of the most common compliance challenges and solutions in the insurance industry. It’s up to your company to ensure that all your bases are covered.

PIMA® (Professional Insurance Marketing Association®) is a member-driven trade association focused exclusively on the group-sponsored benefits market.  For more information on becoming a member, click here.