IMSAs Executive Director Responds To Bobo Column
To The Editor:
In the June 10 issue of National Underwriter, Jack Bobos column entitled “Why IMSA?” poses a valid question Im happy to address. However, the body of that article was littered with inaccuracies.
Mr. Bobo is correct to be concerned about the insurance industrys vulnerability to questionable market conduct practices. The Insurance Marketplace Standards Association certainly is concerned. It is the reason we exist: to serve the consumer, and the marketplace as a whole, by helping our member companies scrutinize their own marketing, sales and customer service practices to assure a fair marketplace for consumersand by helping our members help their distributors do the same.
Mr. Bobo questioned IMSAs ability to achieve that mission. He questioned the adequacy of our standards, the qualifications of those conducting IMSA assessments and whether IMSA membership, once achieved, is meaningful. Id like to address these three areas in turn.
IMSA Standards. IMSAs Principles and Code of Ethical Conduct are a rigorous set of criteria that insurers must meet and adhere to in order to attain and maintain IMSA membership. Within the framework of six broad principles, there are many questions and subquestions totaling over 190 specific indicators of compliance to provide objective measurements. Insurers must be able to demonstrate compliance with these indicators in order to earn and maintain membership.
IMSAs standards do not pertain exclusively to marketing functions. IMSA standards also cover the entire spectrum of marketing, sales and service of life insurance, long term care insurance and annuity products, including such related issues as customer service, complaint handling and agent background screening. It is a complex and comprehensive assessment.
IMSA Independent Assessors. Such detailed assessments must be conducted by knowledgeable and well-trained independent assessors. Mr. Bobo raises the concern of IMSA assessments being conducted by accountants unfamiliar with insurance business practices, or who may be influenced by existing relationships between the insurer and the accounting firm. IMSA independent assessors have varied backgrounds. Accountants, attorneys, marketers, actuarial consultants and independent consultants have all trained to perform IMSA assessments. However, the majority of independent assessments of IMSA member companies are conducted by assessors not affiliated with accounting firms.
Further, if an IMSA member company selects an assessor affiliated with an accounting firm with which the company has an existing relationship, that relationship must be disclosed in the insurers application for membership.
IMSA is very selective in granting credentials to independent assessors. Consistent with IMSAs core concept of “continuous improvement,” IMSA decided to conduct a review of its independent assessment practices prior to the announcement of the recent difficulties at Enron and Arthur Andersen. We are currently reviewing our independent assessment standards to assure the highest standards of independence and quality. IMSA members dedicate considerable time, effort and expense to meet and maintain compliance with IMSA standards and we want to be sure the full weight of that achievement is acknowledged without doubt.
Value of IMSA membership. Already, the value of IMSA membership is being recognized by insurers, agents and representatives of the regulatory community. Since inducting our first members in 1998, IMSA has achieved many milestones:
- Originally established by the American Council of Life Insurers to help companies in their efforts to maintain a high level of ethical market conduct, IMSA has recently declared its full financial and operational independence.
- We experienced a 98% renewal rate during our first membership renewal cycle in 2001, in which 85% of our members were eligible to renew.
- A growing number of agents endorse the ethical principles espoused by IMSA, recognizing that treating their customers honestly and fairly makes good business sense.
- IMSA has created greater company, agent and consumer awareness of the importance of conducting business according to the highest standards of honesty and fairness.
- IMSA is becoming an increasingly significant factor considered by regulators, rating agencies and consumers when they review a life insurance companys practices and products.
- The National Association of Insurance Commissioners, through its Insurance Marketplace Standards Working Group, is exploring additional ways best practices organizations like IMSA can serve the life insurance marketplace.
As the recently appointed executive director of IMSA, I have had the opportunity to visit with members, independent assessors, regulators and producers to discuss these milestones and IMSAs future plans. While these groups view IMSA from different perspectives, they generally confirm that compliance and compliance professionals have taken on a more prominent role at IMSA member companies directly as a result of attaining IMSA standards and that best practices implemented in order to achieve IMSA membership have raised the overall standard of practice within the life insurance industry.
During my discussions with state insurance commissioners and their market conduct examination staffs, an increased focus on compliance and more well-organized compliance procedures at IMSA member companies are particularly noted. These corporate improvements allow regulators to examine companies more efficiently thereby providing benefits to regulators, companies and consumers alike. By establishing an infrastructure to attain compliance with IMSA standards, some regulators have recently acknowledged that IMSA member companies are more likely to identify market conduct practices that have the potential to harm consumers. This recognition by regulators has been hard-earned as the attainment of IMSA membership status has required a considerable commitment by each IMSA member insurer.
It is clear that many of these improvements would not have taken place without IMSA providing a rigorous set of qualification requirements that is increasingly viewed as the standard of excellence within the life insurance industry. During a period of time in which a perceived crisis of confidence exists throughout corporate America, the answer to the question “Why IMSA?” should be increasingly clear. IMSA membership is the only credential an insurer can earn to assure customers that their company meets high ethical standards in the marketing, sales and service of life insurance, long-term care insurance and annuities.
Rather than “fade away” IMSA and its member companies who have demonstrated commitment to high ethical standards should light the way for the life insurance industry.
Brian K. Atchinson,
Chevy Chase, Md.
Reproduced from National Underwriter Life & Health/Financial Services Edition, June 24, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.