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 considering 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 several 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 incorporate 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.

First Consulting is excited to bring you the latest news with the insurance Compact.  Last year D.C. passed D.C. ACT 22-514 which paved the way for this jurisdiction to join the Compact. There were a few hurdles D.C. had to clear before they could join the Compact, but on March 6th, the final hurdle was achieved.  The Compact will begin accepting D.C. as part of Compact filings on March 21, 2019.

What does this mean for the industry?  In addition to including D.C. as a Compact jurisdiction for your new form filings, you will also want to consider adding D.C. to any previously approved Compact filings.

Just as a reminder, earlier this year the Compact also announced two other exciting new services:  the Filing Fee Calculation Service and Expedited Review Process Pilot (click here to learn more).

First Consulting is considered an expert filer and would be more than happy to help you with all of your filing needs both with Compact and Non-Compact filings.

Claire Miller, CPCU, AIC
Associate Consultant

On November 13, 2018 the District of Columbia passed D.C. ACT 22-514 that paves the way for their addition to the Interstate Insurance Product Regulation Commission (Compact). There are a few final hurdles to be cleared before this becomes official, but it is anticipated that an effective date will be announced in February or March of 2019.

What does this mean for the industry?  In addition to including DC as a Compact jurisdiction for your new form filings, you will also want to consider adding DC to any previously approved Compact filings.  Don’t forget that this process of adding DC to your previously approved Compact filings typically involves tracking down and adding Mix & Match information.

Keep you eye out for an announcement on this change soon and Contact Us if our experts can help your Company with implementing DC or any other IIPRC and state filing activity.

Claire Miller, CPCU, AIC
Associate Consultant

The Compact announced its Pilot Program for Expedited Review this month.  The Pilot Program will run from January through June 2019.  This program is for experienced Compact filers or, if you will, “frequent flyers” with the Compact. If your Company qualifies for the Expedited Review program you can get a filing reviewed and approved in as few as ten days.

There are several requirements that must be met, so be sure to check out the Overview and Instructions for using the program.

Using this new program comes with the following stipulations:
1. It will cost you double the applicable Compact filing fee; and
2. Each Company can only have one filing in the Expedited Review Queue at a time.

The Queue will only accept four Life and two Annuity filings at any given time.  Don’t fret, if the queue is full when you want to submit your filing, the Compact will add you to the wait list.  You can submit your filing for normal review and if your number on the wait list comes up then they will move your filing from normal review to expedited review.

This is a lot to take in, but the long and the short of it is, if you are an experienced Compact filer and the product you are filing meets the criteria, you will be cleared for TSA Pre-Check and can use the Compact’s Expedited Review Pilot Program.

If you need help with your next Compact filing Contact Us today.  First Consulting is an experienced third-party filer not just with the Compact, but with all jurisdictions and can help you meet your product filing goals.

Claire Miller, CPCU, AIC
Associate Consultant