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You CAN Find Success

in the New World of Compliance and Suitability

I want to take a few minutes here to talk directly to the independent insurance professional. I’ll start by telling you something you already know. Insurance is highly regulated and becoming more so all the time. It is a new world. You can’t ignore compliance and suitability and continue to do what you have always done. Not everyone who is noncompliant will get caught and sanctioned, but many will. How much of a risk do you want to take with your livelihood?

If you have been in the business for some time, you have had the opportunity to look critically at your practices and realize that they may pose a risk to all that you have worked so hard to create. You can make small changes that in most cases will make a big difference in your regulatory risk. If you are just starting to build a business, you have the opportunity to do things right, from the beginning.

As you begin, know that compliance is attainable. Compliance is worth it. It isn’t always easy, but it is possible. The tips that follow will help you get there. You will almost certainly sleep better knowing that you are not only building a successful business, but you are also actively protecting your business, your livelihood and your reputation.

Compliance and Suitability

Insurance compliance is a very broad field, and it has many components. One of the relative newcomers to this field of compliance is suitability. It arrived at a time when compliance in general was beginning to be looked at differently. Suitability is one example of the ways in which compliance is changing and becoming more part of the day-to-day operations of all insurance businesses.

I think it is helpful to think about suitability in two ways:

(1) technically, focusing on the suitability form with its specific requirements and training requirements, and

(2) conceptually, encompassing everything that happens before an annuity contract is issued.

If you are only looking at the compliance mandate as filling out the suitability form, you are at risk. Suitability is a much bigger issue than that.

Suitability starts with the first contact between an insurance producer and a potential purchaser. Every point of contact has implications for suitability. To stay compliant, each of those points needs to be carefully thought through. The suitability form itself operates as a check on what has come before it in the sales process, but it is not a substitute for compliance regarding each client, long before the form is completed.

What is the first contact? A lead, typically.

Where did it come from? What do you know about it? How much should you know?

A recent (August 27, 2013) Final Order from the Kansas Insurance Department makes clear some of the potential problems you may experience when you buy leads. Here are a couple of excerpts from that Order:

13. Respondent engaged in deceptive and misleading advertising (cite omitted) by mailing deceptive postcards to Kansas residents, which misled recipients into believing their financial well-being may be in jeopardy.

14.  Respondent engaged in deceptive and misleading advertising (cite omitted) by mailing misleading postcards to Kansas residents suggesting that they have an annuity that may be adversely affected if they do not contact Respondent.

In this case, the “Respondent” was the lead-generating company, but the Department could also bring an action against any producer who used the leads generated by these deceptive and misleading postcards. Starting the sales process with the consumer misled in these ways may make it much more difficult to successfully argue that a sale was ultimately suitable.

The fear created by these false statements may cause the client to make decisions that are not well thought through. If the applicant’s decision-making process starts off with inaccurate information, that may be impossible to fix later on – even if that suitability form looks perfect and the application has every “t” crossed and “i” dotted.

Due Diligence

“Due diligence” often comes up in the context of buying something, such as a company or an investment, but it can apply in many other contexts. Here, the intent is to use it broadly. Generally, due diligence is the level of care that a reasonable person exercises to avoid causing harm to other persons or their property. An unsuitable sale is often seen as doing harm to another person – not physical harm, but financial harm. Suitability is the legal standard that applies in our industry, but thinking about the general concept of due diligence can help you find answers to the very important questions that will surely arise in your day-to-day business as you complete the sales process over and over again. Due diligence is also relevant regarding other compliance issues such as advertising, replacements, source of funds, etc.

When you look at leads – or anything you acquire from someone else, including your clients – think about due diligence. What would a reasonable person with an obligation to make her sales suitable ask of the lead-generating company? If you are buying mailers, just because you didn’t create them doesn’t mean you’re not responsible for them. What would a reasonable person think about documentation of the liquidation of a variable annuity followed closely by the purchase of a fixed annuity? Was there a recommendation to liquidate? If so, did the person who made it have the appropriate license? Was the liquidation part of a replacement or was it two separate transactions? Look critically at everything you do in your business life. If you see a potential complaint, you can be sure others will see it too. Act first. Then make decisions that protect yourself and your business, while exercising due diligence as you move through a sale.

It just means that you should act in a reasonable fashion. Do what a reasonable person would do. When you are thinking about relying on anything created or provided by someone else, stop to ask questions about compliance. You are responsible for all the materials you use, even if you did not create them. Where did they come from? From whom? If there are applicable regulations, have they been reviewed for compliance with insurance laws and regulations? If so, by whom? If you don’t get satisfactory answers, keep pushing or walk away. Your business is on the line. Your reputation is on the line.


It is a common maxim: people, product and process are what make any successful business. People and product are a lot more fun than process. But when it comes to compliance and suitability, process is the governing factor. And in conducting insurance business, having and following processes is a very important way for you to stay compliant and thus protect your business.

On the business side, you likely know that having procedures helps keep your business progressing and growing successfully. Lead cultivation is a simple example of this kind of procedure. If you don’t have a process for following up on leads, your business will suffer. In compliance, the same holds true. So identify the areas that pose compliance and suitability risks, e.g., advertising and replacements. Then develop, implement and follow policies that address the pitfalls involved in these areas.

I think I see eyes rolling. But it isn’t as hard – or as time-consuming – as it may seem. Look at what you do as if you were training someone else to do it. Know that it’s a process and a procedure. Then review in your mind those real-life situations in which you might not have done as much due diligence as perhaps you should have, in relation to suitability or other compliance issues. How could you demonstrate it differently, if needed, that you had taken reasonable steps to show concern about suitability and compliance through the entire sales process? And not just at the point that the suitability form is completed or the replacement questions are answered. Write down the steps in the process with any changes that are needed to heighten the attention paid to compliance and suitability, and then start following that process and instructing others to do the same. It’s not so hard – really.

It you work at that a bit and discover that something in your new process isn’t working the way you want it to, don’t scrap the whole thing, just make some changes and keep going. A note of caution is warranted here. A documented process focusing on compliance is very important. Following that process once you have it documented is even more important.


Compliance means protection of your relationship with your clients and protection of your business. In many ways, every day you work hard to grow those relationships and your business. Focusing on compliance and in particular suitability is another way you can do that. It isn’t as glamorous as a big sale or a new, larger office, but it is just as much a sign that you are running a firm that will be around for the long term.

Devote some resources (or at least take some time) and use due diligence concepts to pursue compliance. Compliance isn’t always easy, but neither is running your company. But if you do it, then you will be around for the next big client. Your competitors may not. You can do what you need to do to ensure that your sales are suitable and compliant, from the beginning and all the way through. That effort is worth it.

Cailie Currin, Esq. President & CEO, Currin Compliance Services LLC Cailie never anticipated that she would have passion for insurance compliance. When she interviewed at the then NYS Insurance Department, it was the longevity of the attorneys on staff there that impressed her – she thought there must be something about the work that was not immediately evident. There was and she found the work a great fit for her too, even though she decided to leave state service for the private sector. While she worked at law firms and in-house at a major life insurer, she found her true calling as a small business owner and consultant. As the business has grown, her pleasure with the mix of work, both management and direct compliance consulting, has become clearer. Cailie also serves as Past President of the New England Chapter of AICP and is on the board of directors for IAdCA.

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