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March 24, 2011 at 08:00 PM
Whether or not you hold a security license, there are many aspects of compliance that every insurance agent must understand. For example, you must comply with your state’s advertising, disclosure, and suitability regulations in any seminar you conduct.
At the regulatory level, a seminar is typically considered to be any public gathering sponsored by a licensed agent — in other words, any gathering that is not a private meeting with an individual, couple, or family. Under this definition, the traditional seminar stretches to include free lunches, client appreciation events, dinners, and after-dinner conversations — and that’s just a starter list.
We’ve all seen the attempts to avoid seminar labels by calling it an “afternoon coffee” or “meet-and-greet.” But why bother? Compliance is relatively straightforward and, in the end, it is the best thing for your business and your clients.
NAFA has worked with many regulators on advertising and disclosure principles, and we have found one common thread: Most investigations into seminar selling begin with a complaint from a seminar attendee. Complaints cause regulators to examine all your seminar-related material and scripts, as well as any information you provided in follow-up appointments. For obvious reasons, investigations like these should be avoided: at least, they take up a lot of your time and, at most, they could end up costing you money and perhaps even your license and your business.
Read on for some quick tips that will help you stay compliant.
Just the facts
Advertising should give a factual, comprehensible, “whole-picture” basis for making a decision. Core practices during your seminar should include:
- Make statements that are accurate and not misleading. Do not exaggerate benefits, interest rates, guarantees, or other features. Describe annuities as insurance contracts.
- Never omit information that is important to the consumer.
- Make your advertisements understandable. Define terms that the average person would not understand.
- Ensure any information about specific products or insurers is complete and appropriate for the consumer’s decision-making process.
- Provide a physical presentation that is clear and easy to read and understand. Do not obscure information (e.g., don’t put the interest rate in huge text and then add a hard-to-see line about surrender charges). Make sure each piece of information you provide is prominent and proximate to other information so as not to mislead an average client.
A fair marketplace
Advertising should always satisfy a consumer’s need for competitive and comparative information that is presented fairly. Information like this helps your clients make informed decisions. Do not disparage insurers, regulators, or other competitors. Do not make statements that unnecessarily inflame or imply the need for urgency, which could encourage consumers to make unsound decisions against their best interests. Introductory offers or specials should not imply limited availability or time periods for purchase unless that is a fact. Testimonials and third-party endorsements should be genuine, and you should disclose any financial interest or relationship — personal or professional — that the endorser has with you.
For a more detailed discussion on advertising best practices, check out NAFA’s Advertising Principles Paper.
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