Insurers and broker-dealers need to communicate more to better police against unsuitable sales transactions.
That was the message of speakers on a panel at the American Council of Life Insurers annual meeting in Orlando.
John Doscher, vice president of compliance for Prudential Financial, Newark, N.J., said that while insurers have an obligation to ensure that the sales of their products are suitable, and that while they can contract that work out to a third party, they should be able to show that the policing is being done. When state regulators show up, he said, “you don’t want them to see that you pushed it off onto the broker-dealers,” he said.
However, Mr. Doscher said that life insurance companies should speak to those doing the selling when they see what could be a potential problem.
“When you find a pattern or trend” which could indicate sales that are unsuitable, he said, “you have to follow up.”
Insurers, he noted, only see the business from a broker-dealer that deals with their products, and Mr. Doscher cautioned insurance company executives from assuming that pattern they see with their products is necessarily a problem.