KJKC - News June Update

Ken Kalis Letter to National Underwriter

To the Editor: Jack Bobo raises some good concerns about the audit approach to IMSA in his June 10 column. But the IMSA process is made up of "assessments," not audits. Jack is right that some companies choose their auditors to do their independent assessments, but so far only a third of IMSA's 211 members have taken this route. The choice of an independent assessor is up to the companies, not IMSA. IMSA's web site lists 54 independent assessors from a wide range of backgrounds, auditing, management consulting, law and actuarial studies.

Some companies like the prestige of having their assessment done by a "big name" firm. But independent assessors with insurance marketing backgrounds are available. I happen to be one, building my career in the marketing area of one of the nation's largest insurers. Our IMSA team has worked with more than 30 IMSA companies sharing best practices and highlighting the important synergies between marketing and compliance.

Indeed, IMSA was founded not as a compliance effort but by a panel of CEO's whose main interest was to restore consumer trust so that companies marketing efforts would improve. I outlined some of IMSA's marketing goals in a National Underwriter article of November 5, 1999. These goals are still very much a part of IMSA, and they are having an impact. 67% of the public would be more likely to buy from an IMSA company, according to the 2000 ACLI MAP study.

Let's hope IMSA doesn't "fade away." Its loss would be tragic for our industry.

Sincerely,

Kenneth J. Kalis,
CLU President,
Kenneth J. Kalis Company, Inc. And Qualified Independent Assessor
Gainesville, FL 32608

Independent Assessor Conference Calls

IMSA Deputy Director Don Walters hosted two conference calls this month where independent assessors discussed key questions about proposed changes to the IMSA assessment process. The first of this was on Tuesday, June 18, considering whether independent assessors should be required to recommend best practices and then whether companies should be required to implement them.

The consensus of the group was that the independent assessors should be encouraged (not required) to recommend best practices and, likewise, that companies should be encouraged, but not required to implement them. Part of the thinking that went into this was that as good as any best practice may be, it is only the management team of the company who can make the call that the practice will be a fit with the company culture and will make sense in terms of other plans and goals that management is accountable for.

The second call, on Tuesday, June 25, asked whether every person performing independent assessment activities should be required to be an IMSA-approved independent assessor. A key element in the discussion was the payment of the $5,000 licensing fee and whether that would be charged for everyone participating in the assessment. After a thorough discussion of what each company did, three alternatives were placed on the table:

Maintain the status quo. Keep the assessment fee at $5000 and require only the independent assessor to be IMSA-approved.

Reduce the fee but required all to be IMSA-approved and pay the reduced fee.

Have associates meet IMSA requirements but only the independent assessor would pay the fee.

There was a "vote" on these three proposals, with one person voting to keep the status quo, three to reduce the fee but require everyone who works on the assessment to be IMSA-approved and pay the fee, and two to have everyone working on the assessment to meet IMSA's criteria but pay no fee. One person expressed a desire to split a vote between the first and third choice; the others didn't vote.

Since I was the one person who voted to keep the status quo, I will explain my thinking. In order to provide a thorough and rigorous assessment that adds value to the company, we bring in experts in specific areas to make best practices recommendations. Many assessors make select use of people to help with interviewing, software, sampling, surveying and other types of testing. One assessor friend likens the IMSA process to running a law office. Only the attorney has to pass the bar exam and pay the licensing fees. Making everyone in the office do this would be to no purpose. It would also add substantial cost to the assessments that would be passed on to the companies.

These are, of course, only proposals. You will have opportunities to comment on them before they are forwarded to IMSA's Board of Directors in October. Feel free to comment now. The more input the better.