Thirty-two: That's the official number of compliance steps that affect your sales of life insurance, annuities, and other financial products.
Almost every agent, however, is in violation of at least one of these guidelines, rules, regulations, mandates, common laws, and statutes that are required by federal and state governments and other bodies.
There's no need to panic, however. The seemingly impossible task of fully meeting compliance can be dealt with in an organized and rational way — but first, we need a little perspective. Here's where we create the 33rd, 34th, and 35th rules to add to the existing list.
Agents are subject to the rules and regulations of various states. The vast majority of those rules and regulations are designed to protect the public by constraining agents and insurers or creating a situation where they are obligated to perform certain tasks.
If an agent should find themselves at odds with the regulations, their defense that they followed the spirit of the law will always prove a poor substitute for having met it to the letter.
It is not better to ask for forgiveness than for permission, and you should view with suspicion anyone who says it is. Agents make enough honest mistakes, and we do not need the additional burden of making intentional violations.
Most requirements include record-keeping and other checks designed to actively prevent agents from getting out of line. For instance, you can't acquire or maintain licenses or selling agreements without errors and omissions insurance, you have to pass tests on money-laundering and such, and you must manage policy delivery correctly — or else you don't get paid.
Proper observance of the other compliance elements is initially entrusted to you as both professionals and as citizens. We have, for instance, the constitutional right to publish advertisements without prior restraint, but if we bypass compliance approval, we may eventually find ourselves in trouble with both our company and state regulators. Following is a discussion of the four main groups of compliance concerns and the practical issues that surround them. (See sidebar for specific elements contained within these four main issues.)
Training
Not that many years ago, life agents needed little more than a rate book, and a new agent could be forgiven for thinking that training was their chief activity.
In a recent interview, Sandy Praeger, president of the National Association of Insurance Commissioners, said, "As far as training areas go, that is usually under the purview of the insurer. The personality of the trainer can often determine how the agent handles compliance issues. If there is an overbearing emphasis on sales, then compliance issues might be overlooked by the agent. It takes a happy medium of stressing both company and consumer goals as agents are being trained."
Prospecting
Prospecting consists of planning and executing an approach to the public. Planning is mostly legwork. Actual execution, however, requires visual or verbal presentation material. The fundamental rule here is that all material must be submitted to your compliance officer prior to use. "All material" includes the obvious ad copy and related bits plus phone scripts, emails, and other material used to contact the public by the agent or on the agent's behalf.
If, for instance, if you buy leads or accept "free" leads from an outside vendor, or if you employ persons or companies to contact the public, you remain fully responsible for each contact, even if that it was made before you bought or received the list of leads. The material used to make these contacts must be submitted to compliance officers before you act on it. Reputable lead-generating firms are aware of these needs, and they can provide you with the necessary material or, if you're lucky, the contents thereof may already have been approved by the firm. You should always check that this is being done. Note that an outside agency may have gained exception from the no-call rule while contacting the people on their lead list. This exception cannot be inherited by purchasers or recipients of that list. In short, agents retain all responsibility, but they lose any exception.
Sales process
We all know this process is heavy on the paperwork; even veteran agents can find themselves lost in forms and functions related to some of their more complex transactions.
