“More has to be done to protect seniors” who fall victim to those who use dubious senior designations to promote themselves as financial planning experts, state insurance legislators were warned during the spring meeting of the National Conference of Insurance Legislators here.
As evidence of the extent of fraud involving questionable senior designations, Karen Tyler, a North Dakota securities commissioner and president of the North American Securities Administrators Association, Washington, backed her warning with the following facts:
–3,600 enforcement actions and $61 million in penalties.
–$900 million in restitution.
–over 900 years of jail time for misconduct.
Much of the problem stems from “free-lunch seminars” in which seniors are invited to a luncheon seminar billed as an educational session, Tyler said. But in all 110 examinations in a NASAA survey, “all were designed to sell,” she said.
The problem, she continued, is that requirements for designations can vary greatly. In response, rules are starting to show up that prohibit misleading use of those designations. Additionally, a proposed rule is going out to NASAA membership for a vote with the results expected in 21 days, she said.
Susan Voss, Iowa insurance commissioner and secretary-treasurer of the National Association of Insurance Commissioners, said her state put out a bulletin on the issue and that the NAIC is considering how to respond to the senior designation problems in the market. The bulletin, released on Sept. 7, 2007, notes that insurance companies are responsible for advertising of their products whether the advertising is prepared by the company or producer. It goes on to say that a producer designation is part of that advertising. Voss said that such protections should apply to consumers of all ages.
“The proliferation of titles adds to the confusion,” said Assemblyman Joseph Morelle, Rochester, N.Y. But, he also noted that advisors can say they have years of experience without actually advertising a designation, so that there are ways around new designation rules.
Ryan Wilson, a strategic policy advisor with AARP Public Policy Institute, Washington, said this is an important point because a person can legitimately be in the industry and avoid requirements that are ultimately established in states.
While Gary Sanders, senior counsel for law and government relations with the National Association of Insurance and Financial Advisors, Falls Church, Va., said his organization “strongly condemns all deception of consumers and sales practices,” he also cautioned against “throwing the baby out with the bath water.”