Since the DOL proposed its new regulation on April 14, 2016, the legislation known as the fiduciary standard, the insurance industry has moved to create fee based products, revamp standards around recording suitability conversations and materials, and moving to be more transparent regarding compensation. With this regulation all but dead the SEC released a proposed package of interpretations and rulemaking on April 18, 2018 designed to support the original genesis of the DOL rule to ensure a broker-dealer would be required to act in the best interest of a customer when making recommendations of any securities or investment strategy including such products. The SEC targeted to improve the quality and transparency of information and communication as it relates to recommendations and products while maintaining full access to a broad set of advice relationships and investment products. There are some who feel the SEC could or should have done more to clarify “best interest,” however, and so the State of New York is forging a best interest amendment for annuities and life insurance.
As described in a recent review article in Insurance News Net, the new regulations emphasizes the importance of maintaining and disclosing key suitability information, clarifying the insurer’s or broker’s role in presenting products, and maintaining information about the relationship to ensure proper interaction and intent are maintained. All in all, this implies a significant role for technology to capture and maintain a large amount of information while creating a positive and modern customer experience.
These regulations will continue to drive the need for clear and well defined processes to capture information, maintain the information, and have it available for customer, agent, management, and regulatory purposes. CIOs need to ensure teams are educated on the new regulatory guidelines, define the internal data attributes that will be key, and establish strong relationships with operations, distribution, and internal compliance to ensure the developed and established systems support these functions. The best systems will simplify the process, educate, and make the experience for all impacted parties as effortless as possible.
With so many requirements given around communications, transparency, best interest, concern for positive intent, and knowing the customer, systems will need to track and maintain all customer and distribution interaction. This will include any education a customer may receive from carrier sites, interactions through contact centers (including chatbots), robo-type features, and direct interaction with a customer service representative or advisers. As so many carriers look to create or enhance a multi-channel experience for customers it is critical to consider these and all regulations to ensure proper compliance.
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