3 Key Compliance Hot Buttons – Take Note & Protect Yourself

After working with independent insurance producers, carriers, and state insurance regulators for decades, I’ve found 3 compliance hot buttons that continue to trip up even the best producers.

These obviously aren’t the only things that a producer needs to be aware of in this great big world of ever-changing compliance rules. It’s inherently risky to be in a business where you are talking to consumers about their life savings and giving them advice. However, I believe that paying attention to these 3 issues can make your life a lot easier by warding off future problems – which are a drag on your time and your wallet.

1) Failing to renew your insurance license on time:

Visit any state insurance regulator’s website, and you will see dozens, if not hundreds, of examples of producers being fined upwards of $250 for not renewing their insurance license on time. These fines are easy money for the states, and it doesn’t require them to do a thing. Don’t foolishly give money away like this. Make sure you calendar-in your renewal date and take care of it early. A few minutes will save you not only the fine but the potential for other penalties for continuing to conduct business without a valid license.

2) Using non-compliant advertising & marketing materials:

Whether it’s as small as a business card, as involved as a website, or as common as the spoken word (e.g., radio and seminars), this hot button is one of the easiest ways for a regulator or plaintiff attorney to criticize you and find an “in” to your practice. If your advertising & marketing are determined to be misleading or problematic, you’ve now opened the door to numerous other avenues for investigation into your practice. The best way to stay “under the radar” here is to ensure you have a qualified individual or firm review your advertising (see DMI’s “Get Out of Jail Free Card” blog here). If you hold numerous licenses, such as securities or investment advisory registrations, too, be sure to consider all of these regulations during the review.

3) Failing to properly and completely document your client files:

Documenting your conversations and your recommendations to clients is the 3rd hot button and crucial to your continued success. As they say, “If you didn't document it, it didn’t happen.” As with the use of poor advertising & marketing materials, having incomplete files can make regulators suspect an inadequate or problematic sales practice and open the door for them to review other areas of your business. With all of the recent attention on the fiduciary standard vs. suitability, it’s more important than ever to make sure that your documentation supports what happened. If there is a question of suitability or even misrepresentation to a client, it becomes a he said/she said situation. A solid client file, which describes client meetings and calls, discussion items, sales literature used, and recommendations made (along with the rationale for them), can be the tie-breaker that swings the decision in your favor. In some cases, you may be asked to turn over a copy of your client file without the opportunity to explain it, so take the time to ensure your record is complete and can stand alone. Develop a system of documentation that is complete, and use it consistently. 

Call DMI and learn how we can work together to help you address these compliance HOT buttons. Download your Marketing Compliance Guide today!

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Maureen James - Co-owner/Principal at Summit Compliance Group, LLC

Experienced Compliance Professional with a demonstrated history of working in the insurance industry. Skilled in Securities, Disability Insurance, Retirement Planning, Fixed Annuities, and Management. Strong entrepreneurship professional. Summit Compliance is a proud DMI Marketing partner.

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