Supervision of Distribution

Transcription

1 Supervision of Distribution Discuss the challenges of staying ahead of the independent distribution sales model, supervision, and oversight Wednesday July 11, :30 4:30pm AMERICAN COUNCIL OF LIFE INSURERS acli.com

2 Speakers: Beth Haddock - President, Warburton Advisers Sarah Jarvis Assistant Vice President Compliance, Pacific Life Insurance Company Cara St. Martin Senior Compliance Director & Chief Compliance Officer of Registered Separate Accounts, Allianz Life Insurance Company of North America Moderator: Cliff Hagler Founder & Chief Executive Officer, Aquilan Technologies AMERICAN COUNCIL OF LIFE INSURERS acli.com 2

3 Today we will be using SLIDO to collect questions and allow you to express your opinion in live polls. You can now take out your phones, and follow these simple instructions. AMERICAN COUNCIL OF LIFE INSURERS acli.com 3

4 Polling Instructions Open browser r Go to slido.com Enter event code: CL2018 AMERICAN COUNCIL OF LIFE INSURERS acli.com

5 Distribution Channels Career Agents Independent Agents Independent Broker Dealers Full Service Broker Dealers Banks Direct Response Others Results 0% 0% 0% 0% 0% 0% 0% Survey #1 Select all distribution channels of your company? AMERICAN COUNCIL OF LIFE INSURERS acli.com 5

6 Distribution Challenges Hot Topics Best Interest Standard of Care Client File Content Social Media Privacy, Data Protection, and Cybersecurity Non-Cash Compensation Replacements Supervision & Oversight AMERICAN COUNCIL OF LIFE INSURERS acli.com 6

7 Best Interest Standard of Care An Umbrella Covering: Suitability COI Disclosure Training Compensation Oversight/supervision AMERICAN COUNCIL OF LIFE INSURERS acli.com 7

8 Best Interest Standard of Care - Department of Labor (DOL) Timeline Oct. 2010: DOL proposes rule July 2011: Congress opposes Sept. 2011: DOL withdraws Feb. 2015: President Obama tasks DOL with developing a fiduciary rule Apr. 2015: DOL Version 2 June 2017: DOL becomes effective Feb. 2017: President Trump directs Labor Department to review the DOL Rule AMERICAN COUNCIL OF LIFE INSURERS acli.com 8 Apr. 2017: DOL signs 60-day delay Aug. 2017: OMB approves DOL delay through rulemaking of 18 months Mar. 15, 2018: DOL Rule struck down by the 5th Circuit Apr. 26, 2018: AARP and AGs of NY, Oregon and CA ask the 5th Circuit for permission to challenge the decision to vacate May 2, 2018: Motion is denied May 16, 2018: Request to reconsider

9 Best Interest Standard of Care Survey #2 Do you think there should be a uniform Best Interest Standard of Care? Yes / No Results Yes 0% No - 0% AMERICAN COUNCIL OF LIFE INSURERS acli.com 9

10 Best Interest Standard of Care The Genie is out of the bottle and there is no recorking Regulatory expectation of greater: Transparency Oversight Training Disclosure Documentation Many proposed rules: NY 187, SEC, NAIC AMERICAN COUNCIL OF LIFE INSURERS acli.com 10

11 Non-Cash Compensation Survey #3 Should all industry non-cash compensation be restricted as it is for variable products governed by FINRA? Results Yes 0% No - 0% Y / N AMERICAN COUNCIL OF LIFE INSURERS acli.com 11

12 Non-Cash Compensation Trips and prizes: Provided by both insurers and marketing, Rules and Regulations Regulators have scrutinized: Conflicts of Interest, Disclosure Issues, and Compensation that is not reasonable. AMERICAN COUNCIL OF LIFE INSURERS acli.com 12

13 Client File Content Educate producers on what they need to maintain in their client files: Required content Recommended content Prohibited content Regulators are asking for this documentation (KS and CA) Looking for evidence of Best Interest and rationale for recommendation AMERICAN COUNCIL OF LIFE INSURERS acli.com 13

14 Social Media Summary - Including: - Remote Supervision, - NAIC Guidance. Survey #4 Does your company prohibit the use of Social Media? Y / N Results Yes 0% No - 0% AMERICAN COUNCIL OF LIFE INSURERS acli.com 14

15 Social Media Regulatory Expectations: Advertising, Correspondence, Dynamic & Static Methods Preparation: Training, Conduct Guidelines, Disclosures, Review & Archiving Supervision: Sharing Posts, Designate Spokesperson, Trust but Verify. AMERICAN COUNCIL OF LIFE INSURERS acli.com 15

16 Privacy, Data Protection, and Cybersecurity Survey #5 Has there been a data breach at your company? Results Yes 0% No - 0% Y / N AMERICAN COUNCIL OF LIFE INSURERS acli.com 16

17 Privacy, Data Protection, and Cybersecurity Summary - including GDPR, Incident/Breach Protocols, Regulatory Expectations Data Mapping, Access Controls, Information Security, Accountable Point Person, Breach / Incident Handling AMERICAN COUNCIL OF LIFE INSURERS acli.com 17

18 Privacy, Data Protection, and Cybersecurity Preparation Training, Minimize Remote Access to PII & Sensitive Information Categorize, Encrypt, & Use Databases, Understand (or get help) phishing, inadvertent disclosure, cyber breach, incident vs breach under state reporting laws, Data License Agreements Understand limit to use derived vs. raw data sharing. AMERICAN COUNCIL OF LIFE INSURERS acli.com 18

19 Privacy, Data Protection, and Cybersecurity Supervision Practice Cybersecurity Drills, Adopt Needto-Know Approach Eliminate or Minimize Risk with Work Flow, Involve Many Stakeholders in Policies, and Audit. AMERICAN COUNCIL OF LIFE INSURERS acli.com 19

20 Replacements Survey #6 Who makes the ultimate decision as to whether the replacement of a life insurance policy or annuity contract is suitable for or in the best interest of the customer? Results: Client / Purchaser 0% Producer / Financial Rep - 0% Insurance Company - 0% AMERICAN COUNCIL OF LIFE INSURERS acli.com 20

21 Replacements The subject of the NAIC Model and related state laws since 1970, with the stated purpose of assuring that the purchaser receives information with which a decision can be made in his or her own best interest. AMERICAN COUNCIL OF LIFE INSURERS acli.com 21

22 Replacements Regulatory structure puts the burden on both the producer and the insured. Insurers required to: Maintain a system of supervision and control, Have the capacity to monitor each producer s life and annuity replacements for that insurer, Maintain records of required notification forms and illustration. AMERICAN COUNCIL OF LIFE INSURERS acli.com 22

23 Supervision & Oversight Training & Education Policies & Procedures Monitoring & Surveillance AMERICAN COUNCIL OF LIFE INSURERS acli.com 23

24 Thank You Beth Haddock - Warburton Advisers Sarah Jarvis Pacific Life Insurance Company Cara St. Martin Allianz Life Insurance Company of North America Cliff Hagler Aquilan Technologies AMERICAN COUNCIL OF LIFE INSURERS acli.com 24