KJKC - News Update

Spring has sprung!

The Year's At The Spring
The year's at the spring,
And day's at the morn;
Morning's at seven;
The hill-side's dew-pearled;
The lark's on the wing;
The snail's on the thorn;
God's in his Heaven—
All's right with the world!

I trust there are some poetry lovers out there amongst our IMSA friends, who I know are cultured people. Once when I asked a colleague at a large life insurance company if he was familiar with William Carlos Williams (the New Jersey poet), he responded with this question: “What Agency is he in?”

Anyhow, spring has indeed sprung, and the flowers are in bloom in Florida, and I hope where you are too. There’s a lot going on, so enjoy the spring, take a deep breath and read on!

EXECUTIVE SUMMARY

Public Weighs in on Corporate America’s values! (Knights of Columbus/Marist Poll)

What I Learned at the Summit……a few thoughts from Ken Kalis

The Official Summit Report………………(via IMSA and AARP sources)

New IMSA Board Members………………………………….(hey, I know this guy!)

Update on Survey on Licensing Independents….. (and another chance to participate)

News from IMSA Today………..(March 19, 2009 edition)

New England AICP E-Day……………………(KJKC will be a sponsor & exhibitor)

An IMPORTANT New Number……………….(352-505-0705)

What We’re Up to………………………………………………..

Best Practice of the Month……………(A great way to use LIMRA CAP!)

A Spring Deal You Can’t Beat!!

Quote of the Month:

“Today, America faces a serious problem with a financial crisis caused in no small part by greed – the public lacks confidence in our financial system, and in much of ‘corporate America, This confidence cannot and will not be restored until American executives and companies choose to be guided by a moral compass in their business decisions. Only a strong commitment to ethical business practices on the part of executives and the companies they lead can restore America's confidence in its financial system.”

-- Carl Anderson, Supreme Knight of the Knights of Columbus

Public Believes Corporate America Needs New Moral Direction

Executives and public agree companies not driven by public good, say ethics should be priority.

View Poll Results click here

Most Americans give corporate America poor or failing grades for honesty and ethics and rate the country’s business leadership as poor during this time of economic crisis, according to a Marist Poll commissioned by the Knights of Columbus.

Among the American public, 76 percent believe that corporate America’s moral compass is pointed in the wrong direction, 58 percent of corporate executives agree; and a majority of Americans, and two-thirds of executives, gave a grade of D or F in ethical matters to the financial and investment industry.

“Today, America faces a serious problem with a financial crisis caused in no small part by greed – the public lacks confidence in our financial system, and in much of ‘corporate America,’ ” said Carl Anderson, Supreme Knight of the Knights of Columbus. “This confidence cannot and will not be restored until American executives and companies choose to be guided by a moral compass in their business decisions. Only a strong commitment to ethical business practices on the part of executives and the companies they lead can restore America's confidence in its financial system.”

Along with Wall Street and financial industry executives, politicians received “poor” marks in ethics from a majority of Americans, and a majority of executives. Doctors and accountants received the best marks for ethics among both Americans and executives.

More than 90 percent of Americans and 90 percent of executives see career advancement, personal financial gain, increasing profits, or gaining competitive advantage as the primary factors that corporate executives take into account when making business decisions. Only 31 percent of Americans, and 32 percent of executives believe the "public good" is a strong motivating factor.

Interestingly, three-quarters of Americans, and more than nine in ten executives think that a business can be both successful and ethical. However, while 74 percent of Americans and 86 percent of executives believe people should have the same ethical standards in business as in their personal lives, more than half of executives, and nearly three quarters of Americans, think that most people miss that mark.

The survey indicated that the public and executives believe that religion provides a good ethical standard for doing business. Nearly two-thirds of Americans believe that religious beliefs should significantly influence executives’ business decisions. More than two-thirds of executives agree.

What I Learned at the March 3, 2009 Summit in Washington

No, the cherry blossoms were not out; it was freezing cold. But I did learn a few things. There was a good group, a nice mix of regulators and company people. The discussions were good with lots of participation. You can read the “official” version below, but I just want to make these points.

Everyone agreed that in this crisis financial situation, there is lots of blame going around. Both companies and regulators are being blamed. Fingers are pointing everywhere. The regulators, both state and federal, are being told to do more with less. Expectations are high, and budgets are low.

As a result, regulators are going to be focusing more and more on companies whose business and compliance practices are not up to the IMSA standards. This means that IMSA member companies may be in a “safe harbor” situation, as long as they are members in good standing, which means keeping up the IMSA standards.

I also learned that there is a significant difference among IMSA companies in terms of their response to the crisis and to the prospect of even more regulation. Some companies are just rising to the occasion like the compliance champions they are, sharing best practices, offering to work with other companies and regulators to pull together so that we all come out of this healthy, sound and strong. A few companies seem to be resistant to being team players and have adopted a defensive, refractory stance. My hope is that everyone will pitch in whole-heartedly to work with IMSA, the regulators, consumers and other companies to help restore confidence and trust in our industry and in the integrity of the CEO’s and other corporate people who are facing such difficult times.

SERVING CONSUMERS IN A CHANGING REGULATORY ENVIRONMENT

- AARP & IMSA Address Key Issues Associated with Suitable Annuity Sales at Annuity Suitability Summit -

Bethesda, MD (March 10, 2009) – AARP and The Insurance Marketplace Standards Association (IMSA) recently convened an Annuity Suitability Summit Meeting in Washington, D.C. State and federal regulators, consumer advocates, life insurance companies, and those who sell and distribute products gathered to address the critical issues regarding the suitability of annuity sales to consumers and the challenges of coordinating regulatory approaches to best serve consumers.

In light of marketplace challenges, there is a clear increase in regulatory activity on both a state and federal level. Summit attendees agreed that it will be important for regulatory change to be focused on better regulation, not simply more regulation. Other topics discussed included supervision and monitoring efforts, disclosures and producer training.

"AARP is very focused on annuity products being sold to older adults and strongly supports the work IMSA is doing in the insurance marketplace," said AARP Executive Vice President and Chief Communications Officer Kevin Donnellan. "This valuable work benefits older Americans, many of whom rely on annuities and other life insurance products as part of their financial planning."

“Americans of all ages in all 50 states need to be treated fairly,” said IMSA President & CEO, Brian Atchinson, “and AARP and IMSA are working together to ensure that insurance industry standards remain high.”

“There is a temptation to cut corners in a tight economy,” said Ryan Wilson, Strategic Policy Advisor at AARP’s Public Policy Institute. “It is especially good in this climate that the insurance industry and regulators continue working together to improve systems that inform and protect consumers.”

From the IMSA website: http://imsaethics.org/

Insurance Marketplace Leaders Join IMSA Board

Executives from Prudential, Acacia Life Insurance Company & Montgomery Financial Group Named to Standards-Setting Organization Board of Directors
IMSA has appointed three new members to its Board of Directors:

-- Salene Hitchcock-Gear, President and CEO of Acacia Life Insurance Company and President and CEO of Ameritas Investment Corp.

-- John Doscher, Vice President & Chief Compliance Officer of Prudential Annuities

-- Randy Scritchfield, President of Montgomery Financial.

"These three experienced marketplace leaders bring important industry perspectives and will provide valuable input to IMSA's Board," said Scott Curtis, President of Raymond James and Chairman of the IMSA Board of Directors. "We're looking forward to their contributions to the organization."

"This is an important time for Americans as they confront the need for financial security and are concerned about purchasing suitable insurance products to meet their needs," said IMSA President and CEO Brian Atchinson. "These distinguished professionals bring experienced viewpoints on industry and consumer issues as we establish national standards that promote ethical business practices to benefit consumers, companies and distributors." Atchinson provided the following background on the new board members:

Salene Hitchcock-Gear
Salene Hitchcock-Gear is President and CEO of Acacia Life Insurance Company and President and CEO of Ameritas Investment Corp. Prior to serving Acacia Life and Ameritas Investment Corp., she served as vice president of strategic direction and financial planning products for Prudential Life Insurance Company and as manager of the advanced markets department at Metropolitan Life Insurance Company.

John Doscher
John Doscher is Vice President and Chief Compliance Officer of Prudential Annuities. He has provided compliance support and oversight for 18 years in various compliance and internal audit positions at Prudential. During that time, John served as the Chief Compliance Officer for Prudential Investment Management Services LLC, the broker-dealer that distributed many of Prudential's variable annuity and mutual funds products. In addition to his experiences at Prudential, John was a consultant for Price Waterhouse in their Investment Management Industry Management Consultant Services Unit.

Randy Scritchfield
Randy L. Scritchfield, CFP(TM), LUTCF is President of Montgomery Financial Group, a financial services brokerage and consulting firm based in Maryland. Randy has a long history of both achievement in and governance of the Million Dollar Round Table (MDRT), and he also serves on the Finance Committee of National Association of Insurance and Financial Advisors.

Survey on Independent Producers in IMO’s
We originally fielded this survey in January, but interest is growing, and we’d like to get as many of you to respond as possible. Read on:

At our IMSA Standards Developmet Meeting on March 4, 2009, one of the topics was "Background Checks on Independent Producers." The issue was passed along to us by IMSA's Compliance Committee, and we agreed it was worth pursuing. Attached is a short survey on this topic which we would like you complete for your company, or your company's independent producer distribution channel.

Questions Regarding Onboarding of Independent Agents from Large IMO’s

Instructions: Simple type in “yes” or “no” and give any explanation you feel necessary after the “how?” Use as much space as you need. Please also complete the “7 Easy Questions” below about your company. You will remain anonymous in the report, and we will not use this information for marketing purposes nor will we share it with others. The Kenneth J. Kalis Company, Inc. March 16, 2009

(1) Does your Company appoint all agents in an independent marketing group once you have accepted the group as a third-party distributor?

(2) Does your Company conduct a background check on all such agents?
a. Does your check vary depending whether the products are variable or not?_______________How?______________
b. Does your check vary depending upon the type of IMO and the due diligence he IMO conducts?_______How?_________

(3)    When do you do the background check?
            a.       As soon as the agreement is effective;
            b.      When new business is written by that agent:
            c.       Other: (please explain)________________

(4)    Do you use an Independent Producers Clearing house?

(5)    Which one?_____________________________

(6)    What best practices have you observed in this area?________________

(7) How often, if ever, is your background check refreshed?_________________

ANTITRUST NOTICE

The Kenneth J. Kalis Company (KJKC) is committed to adhering strictly to
the letter and spirit of the antitrust laws. Our communications and flash
surveys are designed solely to provide a forum for the expression of
various points of view on topics described in the communications or
Surveys. Under no circumstances shall these tools be used as a means for
competing companies or firms to reach any understanding - expressed or
implied - which restricts competition or in any way impairs the ability of
any organization to exercise independent business judgment regarding
Matters affecting competition. Accordingly, we ask for and appreciate any
observations or sensitivities you may have to any aspect of our
communications or surveys that presents a risk from the standpoint of the
antitrust laws.

Kalis to Sponsor New England AICP E-Day in May

The New England Chapter of the AICP (Association of Insurance Compliance Professionals) is holding its E-Day signature event this year on Friday, May 15, 2009 at the newly renovated Four Points by Sheraton Norwood Hotel & Conference Center in Norwood, MA.

AICP's E-Day is an excellent opportunity for insurance groups of all kinds to share information about your products or services with over 125 dedicated insurance professionals, including regulators. It’s also a good opportunity to learn what’s going on with companies and to meet interesting people! Here’s a list of speakers so far:

SESSION	SPEAKER
Hot Topics L&H	Reginald Young, NJ
	Mike Bartholomew, ACLI
	Ed Charbonnaire, MA
	Maureen Hartsmith, NH

HotTopics P&C	Frank Kimball, ME
	Paula Pallozi, RI
	Maryellen Sasseville, NH
	Anne Marie Narcini, NJ
	MA - TBD
SERFF	Kelly McCumber, NAIC


Group Disability	Mike Bartholomew, ACLI


AML	Thomas Carahaer, LIMRA


Networking	Jamie Freedman, Endicott College


Bankruptcy	Selinda Melnik, E&A


Privacy	Jenny Erickson, LIAM
	Christine M. Santariga, Ropes


Financial Strategies	David Olsen, Fidelity


Surplus Lines	Steve Stephan, NAPLSO
	Dan Brown, Sonnenchein

Complaints	Darlene Leary, Hanover
	Maryellen Sasseville, NH
	Anne Marie Narcini, NJ
Interstate Compact	Charlie Rappaciuolo, IIPRC
	Andy Baron, Liberty Mutual

Future Trends	Kathy Donovan, WKFS

IMSA Today March 19, 2009

STOLI…with a Twist

Think stranger-originated life insurance is old news? Not so, say the attendees at the recent IMSA-AARP Annuity Suitability Summit Meeting, who expressed growing concern at STOLI transactions and the new twist: STOLI activity in the annuities market.

In addition, STOLI was very much on the minds of IMSA’s Standards Advisory Committee and Standards Development Committee members. Both committees have met in recent weeks to explore what role IMSA standards play in enhancing overall industry practices in the current economic climate.

The Standards Advisory Committee met on March 11th and advised that IMSA develop STOLI information and resources for our web site. These are in development and will be available at www.IMSAethics.org in the coming weeks.

Distribution & Producer Issues

The Standards Advisory Committee also discussed producer training, background checks on independent producers and annuity disclosures. It was agreed that producers in today’s environment could benefit from suitability training, in addition to enhanced product training. Establishing standardized, ongoing, continuing education training options may be one way of achieving this objective. It was acknowledged that company practices vary in regard to conducting background checks on independent producers. With regard to annuity disclosures, companies are challenged to provide disclosure in language that captures the complexity of some products while presenting it in a way that can be understood by all customers.

The Standards Development Committee met recently and, in addition to STOLI issues, members addressed concerns that during the current economic downturn, companies and distributors can be challenged to generate business and may be tempted to cut corners and disregard suitable sales criteria. They agreed that IMSA-qualified companies are better protected by IMSA’s compliance standards, because suspect transactions are easier to detect, and thus, less likely to occur, under the IMSA supervision and monitoring standards.

Annuity Suitability: NAIC Spring National Meeting Highlights

IMSA continues to monitor the activities of the NAIC Suitability of Annuity Sales (A) Working Group as they explore possible modifications to the NAIC Suitability in Annuity Transactions Model Regulation. The working group, chaired by Kim Shaul of the Wisconsin Office of the Insurance Commissioner, met on two occasions during the NAIC Spring national Meeting to discuss concepts associated with a revised Discussion Draft (introduced for the first time at the working group meeting). Key concepts discussed included: whether to provide a "safe harbor" in the Model Regulation for annuities sales conducted through a FINRA broker-dealer; producer training issues; and

delegation of supervision of annuity sales to independent marketing organizations.

The recent IMSA-AARP Annuity Suitability Summit Meeting was referenced numerous times by various regulators throughout this discussion as a forum that helped regulators gain a unique insight into the annuity suitability challenges faced by insurers and distributors.

The working group plans to issue another revised Discussion Draft and would like to hold an interim meeting prior to the Summer National Meeting to review the Discussion Draft in more detail. For more information, please contact Donald Walters at (240) 744-3027 or DonaldWalters@IMSAethics.org. Or, for a more detailed report about the Spring Meeting, please visit the Members section at www.IMSAethics.org.

Anti-Money Laundering (AML) Update

On March 10th, IMSA’s AML Working Group met via conference call to discuss the results of the AML Practices Survey and the interpretation of how companies have implemented practices to satisfy their responsibilities under the U.S. PATRIOT Act. Next steps include a working group call on March 19th to finalize the most appropriate way to publish the survey results to both IMSA-qualified companies and other insurance companies, and to determine whether a recommendation should be made to enhance the IMSA Annuity Suitability Clearinghouse system with proof of training certifications. For more information, please contact John Dohmen at (240) 744-3023 or JohnDohmen@IMSAethics.org.

The March to Washington

Given the considerable focus on possible reform of financial services regulation, including insurance, IMSA President & CEO Brian Atchinson will host a panel entitled The March to Washington at the upcoming IRES Foundation’s National Insurance School on Market Regulation in Savannah, GA on May 4, 2009. Panelists will include new NAIC CEO and former IMSA Board of Directors member, Dr. Terri Vaughan, and Thomas Glassic, who serves as Counsel to the US House of Representatives Committee on Financial Services. The panel will discuss the future of financial services regulatory reform and its impact upon insurance regulation. Or more information or event registration, please visit http://www.ires-foundation.org/register.html.

Upcoming Meetings

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

April 22 IMSA Standards Development Committee in Bethesda, MD

May 3-5 IRES Foundation’s National Insurance School on Market Regulation in Savannah, GA

May 3-5 Association of Life Insurance Counsel Annual Meeting in San Diego, CA

May 12-14 ACLI Forum 500 CEO Leadership Retreat in Arlington, VA (IMSA CEO Brian Atchinson will speak about current compliance and market challenges)

To submit comments or to IMSA TODAY at any time, please contact Jennifer Kalita at JenniferKalita@IMSAethics.org.

An IMPORTANT New Number……………….(352-505-0705)

The Kenneth J Kalis Company has just moved our offices from Alachua (a little suburb, population about 5,000) ten miles east back into Gainesville, home of the University of Florida, as all you Gator fans out there know. Our new address is 3939 NW 62^nd Lane, Gainesville, FL 32653, and our new phone number is 352-505-0705 (the old number, 386-462-1074 will be disconnected on April 21, 2009, but will retain a message directing any callers to the new number for 90 days). All this is on our web site at kkalis.com, where we’re seeing an increase in activity lately.

Best Practice of the Month – March 2009

This is another reason I’m glad I went to the Summit in Washington. There was quite a bit of discussion about LIMRA CAP. The Companies find it very useful, but many of the regulators were skeptical about the usefulness of the information received on completed questionnaires. The regulators thought the questions were too general and did not understand that they were often customized by companies who need to get additional information on a particular issue. The companies who use LIMRA CAP well, find great benefit in affirming that a needs analysis was done and often can identify an issue when a customer cannot correctly identify the product purchased. One company files a copy of each completed survey with the customer file so that they have hard evidence that the policy was delivered and that a needs analysis was done.

A Spring Deal You Can’t Beat!!

Begin your IMSA renewal process with the Kenneth J Kalis Company by the end of spring (that’s June 20, 2009) and we’ll give you a 10% discount on our already guaranteed lowest price. Just call that important number mentioned above that’s 352-505-0705 or email Ken at kkalis.com. Thanks for the opportunity!

Thank you for your continuing interest in IMSA and ethical market conduct. Things are good, but our assessment schedule is slow. Let me know if there’s anything I can do to help you along on your IMSA journey. II

Photo by Patricia Kalis, 1/31/09
Ken Kalis
352-215-9124
Only Believe. Mark 5:36