It is no secret that I have had a bone to pick with the National Association of Insurance Commissioners for some time now. I find the group to be highly contradictory: it says it is a private trade association until it pretends to be a government agency, and it says it is non-profit while earning millions of dollars selling database access that really ought to be free to the public. Last year, we discovered that in the NAIC’s 2012 budget, there was a proposal for $177,800 to secure a “celebrity spokesperson” as part of the group’s ongoing consumer education effort, better known as InsureU.
Going by a recent NAIC press release, that celebrity spokesperson is Grammy-award-winning singer/songwriter Amy Grant. Grant, if you’re unfamiliar with her, is the “Queen of Christian Pop” and has had a huge musical career. From 1977 to 1991, she enjoyed a steadily growing career in the gospel and Christian pop recording industries. In 1991, her album Heart in Motion achieved crossover success with hit singles such as “Baby, Baby” and “Every Heartbeat,” which peaked at Nos. 1 and 2 respectively on the Billboard Top 100. Since then, she has remained on the radar and in 2002, she returned to the Gospel world, she was awarded a Hollywood star in 2005 for her contributions to the entertainment industry, and to this day she continues to enjoy great success.
Grant is the perfect kind of recording star to represent the insurance industry, with a wholesome kind of image nobody can really be turned off by (except, perhaps for those in the Christian community who have long criticized Grant for being “too sexy” or for getting divorced in 1999). And she has a personal story to tell about how she and her sister had a personal need for the kinds of products and services the life industry has to offer at a time when they needed them most. They also needed to know how to make informed choices for themselves, which is what InsureU is all about: providing consumers with the information they need to make smart insurance-buying decisions.
This is all well and good…except this is not what the NAIC should be doing.
“Through the NAIC, state insurance regulators establish standards and best practices, conduct peer review, and coordinate their regulatory oversight.” That’s from the NAIC website and its Amy Grant press release. And what it translates to is: ensuring a high standards of consumer protection by coordinating regulatory efforts among the otherwise patchwork quilt of regulatory regimes ths insurance industry must face in this country.
How the heck does Amy Grant telling us how we need to know what kind of insurance to buy equate into better consumer protection? It doesn’t. Sure, the NAIC might argue that making smart buying decisions is the first step to not getting taken to the cleaners by agents selling unsuitable products. But such an argument if ever it was made, would be nothing more than a spurious distraction. The reality is that InsureU and Amy Grant are marketing insurance products to the public by pushing the notion that everybody ought to have insurance; the next step is figuring out which kind you ought to have.
The truth – and it is something known by anybody selling life insurance these days – is that life ownership remains low. And the first Amy Grant PSA I heard wasn’t about educating consumers. It was reminding them that they probably are underinsured and should get some more coverage. Keep in mind, I don’t have a problem with people getting properly insured – this country is critically underinsured. My problem, though, is when you have regulators telling people to buy more products from the very industry they are regulating.
The NAIC is not, nor should ever be, an insurance marketing operation. There are many fine trade associations to do that. The LIFE Foundation, for one, does a great job with its Real LIFE Stories competition, in which real-life testimonials tell how the purchase of life insurance helped to save a family from financial ruin. Heck, I have been on the judging panel for that effort two years in a row now, and I love it. I think that award does something worthwhile. I think the LIFE Foundation does something worthwhile. And I think insurance is worthwhile.
What I don’t think is worthwhile, though, is when a group such as the NAIC, which is already guilty of having too cozy a relationship with the very industry it oversees (as evidenced by the degree to which insurance regulators come and go from the ranks of the industry itself), dips into its too-large coffers to do the industry’s marketing for it. Consumer education is one thing, and is an important part of making sure people don’t get suckered. But let’s be honest here…we aren’t being treated to Amy Grant’s soothing voice so we can spot a wayward agent or to keep from buying term when we should be investing in whole. Amy Grant has been enlisted by the NAIC to help sell insurance. And if she hasn’t, then the NAIC really needs to retool its InsureU campaign to make that clear. Getting rid of a glitzy star would be a good first step. If Grant really needs the work (which I doubt), send her over to LISA – Betty White has to retire sooner or later.
This is a clear conflict of interests betwen the regulators and the regulated, and I hope very much that legislators in Washington – some of whom have already pointed out the NAIC’s strange behavior and asked the group to explain itself – will do likewise with this. Let the industry do its own marketing, and let its regulators keep a respectable distance from the trough from which it feeds.