Ethics Is a Bottom-Line Issue, IMSA Leader Says; Investigations Highlight Need for Strict Ethical Standards.

LAS VEGAS -- The current investigations of the insurance industry emphasize the need for stricter adherence to ethical market conduct standards, Brian Atchinson, executive director of the Insurance Marketplace Standards Association (IMSA), said here today in an address to the annual meeting of the National Organization of Life and Health Insurance Guaranty Associations (NOLHGA).

"The recent spotlight on our industry is a powerful reminder that ethical business practices are more than just the right thing to do," said Atchinson. "Ethics is a bottom-line issue for the insurance industry. In the months to come, there will be intense scrutiny about the role of market conduct standards and how to best create strong, more efficient consumer protections while recognizing today's dynamic marketplace realities. The need for rigorous standards of ethical business practices is key to any discussion about the future of market conduct regulation."

A year ago, the Government Accountability Office (GAO) reported that inconsistent, uncoordinated and unfocused state regulations did not provide adequate and consistent protections for consumers, and burdened companies with duplicative and unnecessary costs, Atchinson said. Some of those problems may be addressed by the so-called "SMART" Act, pending in the U.S. House Financial Services Committee, which recognizes the value of ensuring that companies establish and maintain a culture of compliance and an infrastructure designed to maintain and address problems as they arise. The SMART Act specifically cites the importance of a best practices organization such as IMSA whose central mission is to promote high ethical standards in the marketplace.

The Model Market Conduct Act developed by state regulators and legislators also should make state insurance regulation more effective and efficient. But Atchinson noted that the model act does not address the issue of an independent, industry regulatory agency to oversee ethical market conduct.

To attain IMSA qualification, insurance companies must undergo rigorous internal and external review and assessment of their policies regarding the marketing, sales and servicing of individually sold life insurance, annuity products and long-term care insurance. Qualified companies must have in place practices and procedures that will alert them to potential problems and prompt self-corrective actions.

"We long have said that this approach for other parts of the insurance industry could protect the marketplace and safeguard insurance purchasers. This is truer than ever in light of the current investigations," Atchinson said.

IMSA is a voluntary, non-profit organization created to strengthen consumer trust and confidence in the life insurance, long-term care insurance and annuity products industry. IMSA members represent nearly 60 percent overall market share for individually sold life insurance, long-term care insurance, and annuity products. Members commit to maintaining high ethical standards and to being fair, honest, and open in the way they advertise, sell and service their products. An important credential only a select number of insurers have attained, the IMSA seal is a guidepost of excellence and integrity for consumers. The IMSA website is www.IMSAethics.org.

NOLHGA is a voluntary association composed of the life and health insurance guaranty associations of all 50 states, the District of Columbia, and Puerto Rico. The life and health insurance guaranty system ensures that the promises made by the insurance industry are kept and that policyholders are protected even if their insurer fails.