A team of insurance regulators might reduce bias against lunch in annuity seminar warning notices.
The team could replace a warning against “‘free lunch’ seminars’” in an official sample notice with a warning against “‘free meal’ seminars.”
(Related: NAIC Focuses on Annuity Sales Practices)
The team — the Promoting Appropriate Sales Practices in Life Insurance and Annuities Working Group — began working on an update of the current sample notice in January.
The working group is part of the National Association of Insurance Commissioners, a Kansas City, Missouri-based group for insurance regulators.
The NAIC can’t normally set rules for states. The NAIC can develop “models,” or samples of insurance laws, regulations, procedures and forms. States often use NAIC models when coming up with their insurance rules and forms.
The NAIC approved Model Number 278, the “Model Regulation on the Use of Senior-Specific Certifications and Professional Designations in the Sale of Life Insurance Annuities,” in 2008.
In 2008, the NAIC also adopted a model notice, “Consumer Alert ‘Preventing Abusive Practices: The Misuse of Senior Designations and “Free Lunch” Seminars.’” The model notice is supposed to help state insurance regulators use the model regulation.
The sales practices working group includes state officials. The working group also includes some of the people picked by the NAIC to speak for consumer interests in NAIC proceedings.
State officials and consumer reps had a general talk about marketing seminars Jan. 10. Several participants said they had seen flyers for annuity or insurance marketing seminars that failed to use the words “annuities” or “insurance,” according to conference call notes.
Since Jan. 10, the working group has posted several rewrites of the existing model notice, and several general comments on the model.
Two consumer reps — Brenda Cude, a financial planning professor at the University of Georgia, and Karroll Kitt, an associate professor emeritus at the University of Texas at Austin — proposed getting lunch bias out of the model notice.
The consumer reps submitted a notice rewrite of their own in April. They said they “used the term ‘free meals,’ to be inclusive for a brunch, lunch or dinner.”
When marketers first began organizing the seminars, the most popular meals “used to be lunches, then went to dinners, and could move to brunch,” Cude and Kitt wrote.
Insurance agent and financial advisor groups seem accept the idea of letting the revised notice apply to all sorts of free meals.
The advisor groups have persuaded the working group to change the explanation of why consumers should be cautious when attending free meal seminars. The 2008 version, which is the one now in use, warns consumers that, “There is always a catch to a ‘free’ seminar, even those advertised as unbiased.”
In a draft posted earlier this month, the notice states that, “There is always a purpose to a ‘free’ seminar, even those advertised as unbiased.”
Cude and Karroll argued that use of the word “catch” would do more to get consumers to be careful.
Gary Sanders, a vice president at the National Association of Financial Advisors, argued told the working group that earlier drafts of the model notice were too mean to agents.
The earlier versions “could create the unwarranted and incorrect impression that all or most of financial advisors/insurance producers are unethical and/or do not ‘play by the rules,’” Sanders wrote.
— Read 5 More Tips for Seminar Success for Advisors on ThinkAdvisor.