AIRC – Associate, Insurance Regulatory Compliance

 Best Practices Webinar - Replacements

On August 6th, IMSA hosted its second webinar in the Compliance Best Practices series, and the focus was on Replacements. Over 100 participants actively engaged in discussion about procedures regarding how to report, review, analyze and act on replacement activity. Many thanks to Mitch Jeske of AEGON, as well as Andrew Shainberg and Debbie Corej of Prudential Financial, for their outstanding presentations.

 Respondent feedback was overwhelmingly positive indicating that all topics and discussions were of great educational value. Respondents found the dialogue regarding monitoring unreported replacements and reporting monitoring results to distributors to be particularly helpful. The recorded webinar is now available to all IMSA-qualified companies at www.IMSAethics.org in the Members section, along with the June webinar on Annuity Suitability.

 STOLI & STAT Resources Now Available Online

IMSA has recently posted multimedia STOLI resources to the Consumer section at www.IMSAethics.org to help consumers to understand what STOLI is, the potential impact of this practice on the individual, and what questions to ask to identify a potential STOLI transaction.

 In the Members section of the website, recent IMSA findings on stranger-owned practices in the annuities arena, otherwise known as STAT, are available to IMSA-qualified companies at www.IMSAethics.org.

  Annuity Suitability Update

IMSA continues to work with representatives of its qualified companies and representatives of other trade organizations to develop appropriate solutions to address today's annuity suitability marketplace challenges. IMSA has been working collaboratively to develop recommendations for the NAIC Suitability of Annuity Sales (A) Working Group to suggest that use of uniform guidance may be a timely and effective solution to clarify regulator and insurer expectations with respect to key provisions of the NAIC Suitability in Annuity Transactions Model Regulation. IMSA has held a series of recent conference calls with its Suitability Working Group and other interested parties to refine the content of its recommendation to the NAIC. More information will be available on this issue in the coming weeks.

Figure 4: Robert Duvall, right, played this fictional Texas Ranger and partner to Woodrow F. Call is "Lonesome Dove."  What was his name?

IMSA Today                                       August 28, 2009

 AARP & IMSA Social Networking Summit – October 8, 2009

Social networking has caused a convergence of consumer protection and compliance-related challenges which are rapidly escalating. On Thursday, October 8, 2009, AARP and IMSA will convene social networking experts, state and federal regulators, consumer representatives, distributors and IMSA-qualified companies in Washington, D.C. from 10:00 a.m. - 4:00 p.m. to identify key consumer protection and compliance issues in the insurance and financial services industries resulting from the increasing use of websites such as Linked In, Facebook, Twitter and other social networking vehicles.

Representatives from IMSA-qualified companies are invited to confirm their participation via email by September 11^th to Margie Lopez at MargieLopez@IMSAethics.org. There is no charge to attend the event, but space is limited and your seat must be reserved in advance.

Figure 5: Left, looking a bit like new Jersey's Molly Pitcher, she was really the "Joan of Arc" of Spain.  What is her name?

Benchmarking Results – Social Networking Survey

Are you curious about:

• Which social networking site is being used most by producers?
• Are producers seeking prior approval from companies before promoting company products via social networking websites?
• What do more than 80% of respondents believe is needed in the marketplace as a result of this online activity?

Log on to the Members section at www.IMSAethics.org for the answers to these questions and more! Thanks to all those who participated in IMSA’s recent benchmarking survey on social networking practices. Your feedback helped to clarify the nature and extent of the use of social networking websites to promote business activities by insurance producers, with respect to compliance issues.  

 Annuity Suitability Update   

IMSA continues to pursue alternative strategies to current NAIC efforts to promote suitable annuity sales. IMSA has worked collaboratively with numerous marketplace stakeholders to develop a Model Bulletin that could be adopted by the states to provide guidance and clarify regulatory and insurer expectations with respect to key provisions of the NAIC Suitability in Annuity Transactions Model Regulation. The Model Bulletin incorporates essential elements of FINRA Rule 2821 (pertaining to the sale of deferred variable annuities) to clarify the types of information to be collected from and communicated to a consumer in order to conduct a suitability analysis. Brian Atchinson recently met with Connecticut Insurance Commissioner Tom Sullivan and his senior staff to discuss IMSA’s work to forge a successful resolution. 

In addition, the Model Bulletin incorporates some of the key findings of IMSA's Annuity Suitability Supervision and Monitoring Report (November, 2008), developed through consultation with eight state insurance departments to reasonably assure compliance with the Model Regulation. The Model Bulletin is being shared with various regulators and other stakeholders to gain additional input and comment prior to the NAIC Fall National Meeting. 

                                                       Figure 6, below right, is August's birthstone.  What is it?

 IMSA Welcomes New Compliance Chief

Effective Monday, August 31^st, IMSA is pleased to welcome John Travagline as its new Vice President of Compliance. John comes to IMSA with more than twenty years of experience in the insurance and financial services industry, and for more than 15 of those years he served in a compliance leadership role. John has contributed his time and expertise on numerous IMSA committees in the past, including the Qualification Process Working Group last year chaired by former Board member and current NAIC CEO Dr. Terri Vaughan. In addition, he has earned the FINRA-sponsored CRCP (Certified Regulatory Compliance Professional) designation from The Wharton School of Business.

 “I believe that IMSA’s compliance standards and self-regulatory approach are more important in the marketplace than ever before,” says John, “and I’m excited to be a part of this forward-thinking organization.” Contact him directly at JohnTravagline@IMSAethics.org.

 Upcoming Meetings

Some upcoming industry events in which you may be interested include:

September 8              IMSA Standards Development Committee Conference Call

September 9              IMSA Communications Committee Conference Call

September 12-16       NAIFA Convention & Career Conference 2009 – Orlando, FL

September 14            IMSA Producer Advisory Group Meeting – Orlando, FL

September 15            IMSA Compliance Committee Conference Call

September 21-24      NAIC Fall National Meeting – Washington, D.C.

 To submit comments or to cancel your email subscription at any time, please JenniferKalita@IMSAethics.org

Figure 7, left, is another August flower, although you may know it better from Flanders Fields or Veterans Day.  What am I?

Photo by Michael Maggs, Wikimedia Commons"

Getting ready for IMSA’s 5^th cycle beginning in 2010?

How time flies! It seems like only yesterday that IMSA came into being.  Now IMSA’s fourth membership cycle is winding down, and the fifth is on the horizon in 2010. The Kenneth J. Kalis Company is already working with companies whose membership renewal is set for 2010. If you are in this group, we suggest a minimum of 6 months lead time to give you all the time you need to complete the rigorous review. As always, IMSA has moved forward with its policy of continuous improvement and introduced some key changes for the next cycle.

2009 Enhancements to the IMSA Process

1.    Mandatory Use of Topic Based Approach

1.1.  Optional previously, required in 2010

1.2.  10 Topics with 15 Subtopics grouped by Topic: Needs Analysis/

1.3.  Suitability; Laws & Regulations; Policy Making; Agent Appointments;

1.4.  Training; Replacement; Advertising; Complaints; IMSA Principles and

1.5.  Code; Supervision/Monitoring.

1.6.  More efficient, less redundant

1.7.  Reformatting of previous information

2.    Mandatory Use of IMSA Templates for New Companies

2.1.  Standardized format for all new companies

2.2.  Gives better quality control

2.3.  Consistency from all companies

2.4.  Templates on line at IMSA site

2.5.  Format based on Elements of Compliance a la KP4 IMSA

3.    Consulting Role for Independent Assessors

3.1.  Assessors may work with company during self-assessment

3.2.  Restructuring of assessment process making it more interactive

3.3.  Facilitates understanding of the process for new companies

3.4.  Return to pre-2003 practice

4.    Limited offering of Streamlined Assessments for former Member Companies

4.1.  Limited eligibility for recent members

4.2.  Must be used by December 31, 2010

4.3.  Must attest to compliance with all IMSA standards

4.4.  Must engage Qualified Independent Assessor for testing

4.5.  Testing of limited number of standards, 4 of 5 sampling standards, 3

4.6.  chosen by QIA

5.    Optional Attestation Alternative for Membership Renewal for Qualifying Companies

5.1.  Alternative approach to regular process

5.2.  At least two cycles of IMSA membership

5.3.  CEO and CCO must attest to compliance with all IMSA standards for

full period.

5.4.  Must comply with IMSA’s Emerging Issues and so attest.

5.5.  Submit all regulatory reports to IMSA.

5.6.  File Appendix to Attestation

5.7.  Systems or programs in place to manage compliance risk.

5.8.  Compliance with IMSA standards reviewed on on-going basis and

policies and procedures updated to remain in compliance.

5.9.  Compliance trends must be regularly reported to management.

5.10.              Description of how corrective actions are handled.

6.    Updated Assessment Handbook and Manual

6.1.  Handbook revision completed in topic-based approach format

6.2.  New optional attestation approach documents part of appendix

6.3.  Manual revisions ongoing by IMSA Standards Development Committee

Ken Kalis continues to serve on the IMSA Standards Development Committee which developed these changes and is available at any time to answer any questions or to facilitate your Company’s work on getting the most from your IMSA experience.  Just call at 352-505-0705 or email kkalis@kkalis.com.

Please visit our IMSA-dedicated website at www.kkalis.com.

Using your IMSA reassessment as a risk management tool

The copyrighted IMSA Independent Assessment Process does more than just qualify you for IMSA membership.  True, it is a strong testimony to your commitment to integrity and compliance with the IMSA standards, but those standards are so thorough and wide in scope that they can provide an overarching structure you can use to test all aspects of compliance within your company.

We encourage our client companies to get the most out of their IMSA experience.   We encourage them to leverage their IMSA experience as a tool for risk assessment, on-going self assessment and preparation for future market conduct examinations.  But the potential use of and values you can derive from your IMSA assessment are limited only by your imagination and creativity. 

Why not create an annual compliance plan based on the IMSA standards?  Work with your Internal Auditors to determine how they can use the IMSA process to strengthen and streamline their ongoing work.  Use the assessment as an opportunity to benchmark your policies and procedures with those from other companies by asking your Qualified Independent Assessor for best practice and other intelligence gleaned from other IMSA companies.

Before you begin your next IMSA assessment, ask yourself “what are our key issues?’ and use the IMSA process to help you develop tailor-made continuous improvement to your policies and procedures.  In this way, we have helped client companies build world class annuity suitability standards, state of the art monitoring tools and even completely restructure compliance departments.  The Independent Assessment Process is the heart of IMSA, and we encourage you to use it to get the most out of your IMSA experience and as leverage to building a world-class culture of compliance.

Figure 8: This famous Swedish playwright wrote "MIss Julie" and the "Dance of Death", a model for "Who's Afraid of Virginia Wolfe."  A Rival of Henrik Ibsen, his name is ...?

Streamlined Reinstatement Extended Through 2010

As many of you know, IMSA has created a streamlined reinstatement process for former members. Due to the economic downturn, this new expedited approach will be available through the end of 2010.

To renew your IMSA membership this way, you need to:

• Perform due diligence to determine you meet the IMSA standards.

• Prepare a CEO / CCO signed Reinstatement Attestation

• Attach all required examination reports

• Demonstrate compliance with the IMSA standards for the past 90 days

• Engage a Qualified Independent Assessor to do an abbreviated assessment

of 7 or the 25 IMSA standards

• complete the process by December of 2010.

Ken Kalis was a member of IMSA’s Working Group that created this cost effective way to renew IMSA membership and to minimize or eliminate external assessment costs in the future. A good first step is to call your Qualified Independent Assessor and start to formulate a strategy. We are talking with a number of companies who are interested in using this approach to renew their membership, and we would be interested in talking with you about it too. If you are interested, please call us at 352-505-0705 or email to kkalis@kkalis.com.

Figure 9, Right: 

This major philosopher advanced the idea of "original sin."  After a sinful life himself, he became a saint.  Who is he?

 The Best Practice of the month.

This month’s best practice is from the Ethics Panel chaired by IMSA Senior Vice President & General Counsel Don Walters at the ACLI Legal and Compliance Meeting in Boston in July.  It’s a practice I’ve seen work many times over the last 35 years, but this is the first time I’ve seen it so aptly and adroitly applied to ethical market conduct issues.

One of the key elements of continuous improvement is the recognition of outstanding performance and appropriate encouragement and reward.  This can often be achieved via an employee awards program.  And this is exactly what one prominent IMSA member company has done with its ACE Awards (ACE stands for Allstate Compliance and Ethics).

The process is built upon Employee‐to‐Employee Recognition of Outstanding Compliance and Ethics Behaviors.  A panel of senior executives judges nominees based on specific criteria (which you can change to meet your needs) that include “Straight Story,” Collaboration, Results Orientation, Seeks Improvement, Accountable, Trustworthiness, Respect, Act Courageously and Integrity.

Awards, which every company should adapt to meet its needs and available resources, include an ACE Crystal Engraved Award, Modest Cash Award, Custom Name Plate and Notes as well as a Recognition Luncheon.  Someone once said “You get what you reward,” and this really looks like a great way to encourage ethical market conduct as well as integrity and commitment in your company.

 Figure 10: Named after the philosopher above, the Spanish claim the first Thanksgiving was actually held here.  Where exactly is that?

Figure 1:  The Gladiola is August's Birth Flower

Figure 2:  Gaius Julius Caesar Augustus (23 September 63 BC – 19 August A.D. 14) was the first emperor of the Roman Empire, which he ruled alone from 27 BC until his death in AD 14.

Figure 3:  Augustus Edwin John,  (4 January 1878 – 31 October 1961).

Figure 4:  Augustus McCrae, better know to his friends as simply “Gus.”

Figure 5:  Agustina de Aragón, (March 4, 1786 - May 29, 1857) was a famous Spanish heroine during the Spanish War of Independence.  Known as "the Spanish Joan of Arc,"^[1][2] she has been the subject of sketches by Francisco de Goya and the poetry of Lord Byron.

Figure 6:  Peridot.

Figure 7: The poppy.

Figure 8: August Strindberg  (22 January 1849 – 14 May 1912), arguably the most influential and most important of all Swedish authors.

Figure 9:  Augustine of Hippo (November 13, 354 – August 28, 430).

 What We’re Up to at the Kenneth J. Kalis Company, Inc.

As you can see from the chart below, visits to our web site are down (to 40 per day in August from 87 in March), but much of this is seasonal, and we are expecting an upward turn in September.  We are very pleased that our former chief competitor has asked us to continue to serve his client companies as he retires, and are making sure we are fully prepared to serve you

In every way.  We now have 4 Qualified Independent Assessors (out of a total of 20 practicing) and 12 Subject Matter Experts who have past experience as assessors and have been a part of the Kalis team for many years.  We have also updated our easy to use Microsoft Word based KP4 IMSA software for the Topic Based Approach format, required of all companies by IMSA in 2010.

As this process of getting ready for 2010 continues, we are also working on an assessment and tuning up our website at www.kkalis.com so that it is current and responsive to your needs.  Please let us know if you have any questions or if we can be of service in any way.

Thank you for your continuing interest in ethical market conduct, IMSA and the Kenneth J. Kalis Company.  God bless and keep you!

Ken Kalis

“The IMSA Guy” 352-505-0705