The National Association of Insurance Commissioners might want to consider creating a model that would govern use of producer credentials.
Julie McPeak, chair of the Life Insurance and Annuities Committee at the NAIC, Kansas City, and executive director of the Kentucky Office of Insurance, made that suggestion recently during a committee conference call.
The U.S. Securities and Exchange Commission, state regulators and others have talked about allegations of deceptive use of credentials in connection with investigations of “free lunch seminars” and other marketing efforts.
Sen. Herb Kohl, D-Wis., chairman of the Senate Special Committee on Aging, sent the NAIC a letter Oct. 3 urging state insurance regulators to adopt and enforce standards for financial advisors who work with older consumers.
During the life committee conference call, McPeak noted that some designations are easily obtained and can be bought for as little as $149.
Existing state laws do prohibit use of fake designations, but the laws do not help prevent use of genuine designations that offer little value to the consumer, McPeak said.
The NAIC could start by creating a consumer alert and a producer alert regarding designations, then create a model after regulators have had time to think about the issue, McPeak said.
Sandy Praeger, NAIC president-elect and Kansas commissioner, noted that the Kansas department and the Kansas securities division have issued a joint letter warning against the possibility of misleading use of one particular designation.
Producers using the designation will have to provide a disclosure letter emphasizing the limitations of the designation before completing an insurance or securities transaction, Praeger said.
Gary Sanders, a senior counsel at the National Association of Insurance and Financial Advisors, Falls Church, Va., said NAIFA has been working with the American Council of Life Insurers, Washington, on the designation issue.
Regulators need protections that can prevent offenses, not just enforcement measures that can be used after an offense has been committed, Sanders said.