Historically, time to market for new insurance products has been slow. Operational silos, complicated infrastructures, and legacy processes all contribute to delays — and, as such, can be corrected internally to minimize friction points. However, what can’t be easily corrected is the overall regulatory framework of the insurance industry. Although a necessity for protecting consumers from unfair, unreasonable, or ambiguous policy provisions and gaps in coverage, directives issued by state regulators can lead to long lead times for product development cycles.
This is especially true for insurers that want to offer a new product nationwide, as it isn’t just the laws and regulations that vary state by state. Rate review, rating rules, and forms vary, too. What’s more, besides the materials related to product form and rate filings — such as information on marketing strategies and commission structures — insurers must also answer financial and data calls requested by the states. When combined, it’s no wonder why those in the insurance industry run into difficulties remaining compliant when compiling the necessary collateral to go to market.
Take property-casualty lines as an example: On the individual side, roughly half of the states require insurance companies to file rates and receive prior approval before a product goes into effect. For commercial, many products are often subject to a competitive rating approach. Because of this, states retain authority to disapprove rates if they find that the competition isn’t working. With advances in automation, you can trust that regulators will catch any company that submits materials that stray outside the regulatory framework for insurance providers.
Needless to say, failure to keep up with and implement state requirements into the materials for new products being filed results in objections from states and rejections to those filings. However, there are many things within your control that make adhering to state requirements and remaining compliant easier in the insurance industry. Chief among them is your insurance materials management. Gathering the correct collateral can reduce the number of state objections and rejections, thereby providing improved speed to market across the country.
How to Be Compliant With Your Insurance Materials for New Products
Although regulations vary by state, more rigorous management of insurance collateral can often provide an answer regarding how to be compliant when going to market. Consider the following steps as you gather materials for new products:
1. Standardize policy formats.
By standardizing policy formats as well as those used for procedures, you ensure team members include the key elements in your company’s insurance materials. Pay close attention to the background section, purpose statement, and scope. Each provides context surrounding the policy or procedure.
Because each state has different insurance company-related compliance requirements, a good practice is to create one set of collateral for all 50 states’ variations. This saves time in the long run, as you can submit new product materials for each state in one fell swoop.
2. Include a header block.
The header block in insurance materials is essential to your compliance management efforts. This details critical information about the policy, including (but not limited to) the following:
3. List all related materials.
- Policy title.
- Policy number.
- Department tasked with managing the policy.
- Effective date of the policy.
- Date of policy approval.
- Identity of the approval authority.
- Revision date(s).
- Number of pages.
To guarantee consistency and avoid any confusion around procedures, instructions, or information associated with your policies, include a list of all related insurance collateral. Otherwise, cross-referencing becomes a time-consuming task and important aspects of compliance can be missed.
4. Prioritize citations.
In your company, instill the habit of citing and updating all applicable laws, regulations, requirements, and program rules in each set of materials for both your new and old insurance policies.
5. Institute record-retention guidelines.
Due to insurance company compliance requirements, you’ll want to enact policies and procedures for creating, storing, and rescinding compliance-related materials — including the original copies of revised or rescinded policies. Should a challenge arise about a new policy, you can then refer back to the terms at the time of issuance.
6. Invest in document management software.
With the right configuration, document management software can assist in tracking when updates are necessary for your insurance collateral. Vet potential vendors to ensure they can meet all insurance company compliance requirements. For smaller organizations, you might be able to get by with a Microsoft Access database or Excel spreadsheet.
Getting new products to market doesn’t need to take months when you gather the collateral needed for insurance company compliance requirements. Once everything is in place, it becomes much easier to monitor and respond to regulatory changes, reducing the chance of missing key elements in your materials that would lead to a state objection and filing rejection.
If you’d like to learn more about how to be compliant with your insurance materials, join PIMA’s legislative and regulatory community. Learn about the benefits of a PIMA membership or contact us today.
Published on July 19, 2021.
PIMA® (Professional Insurance Marketing Association®) is a member-driven trade association focused exclusively on the group-sponsored benefits market.