Insurance Ethics Organization Recommends Ways Insurance Assessors Can Avoid Conflicts of Interest.

Business Editors

NEW YORK--(BUSINESS WIRE)--Jan. 10, 2003

The Insurance Marketplace Standards Association (IMSA), the leading organization for ethics in the individually sold life insurance, annuities and long-term care insurance industry, today announced preliminary recommendations on how independent assessors evaluating life insurance companies for ethical practices can avoid all potential conflicts of interest.

Speaking to the Practising Law Institute (PLI) in New York, IMSA Deputy Director Donald J. Walters said his association has developed a series of proposals to address potential conflicts of interest that might arise when independent assessors examine prospective or current insurance companies to be sure they comply with IMSA's standards for marketing, selling and servicing life and long-term care insurance and annuities.

"IMSA embarked upon this important project more than a year ago -- well before the revelations of unethical business practices by such now infamous names as Enron, WorldCom and Arthur Andersen," Walters told PLI's conference on "Understanding Securities Products of Insurance Companies."

Every three years, IMSA member companies must complete a complex and comprehensive review, followed by an outside, independent assessment to demonstrate their commitment to business practices that safeguard the consumer.

Based on interviews with independent assessors from the legal, accounting and professional services consulting professions, IMSA has created clearer guidelines for assessments of current and prospective members, including consulting services that will be prohibited to avoid potential conflicts of interest.

For example, Walters said, the recommendations indicate that a partner or principal conducting an independent assessment for IMSA will not be allowed to audit that company's financial statements, and the independent assessment team must be separate and distinct from the company's financial audit team. IMSA will issue the final guidelines later this year.

Created in 1996 to strengthen consumer trust and confidence in the life, annuity and long-term care insurance industry, IMSA is a voluntary membership organization of more than 200 of the nation's top insurance companies representing 68 percent of the insurance policies individually sold in the United States.

The association has gained recognition from regulators and insurance rating agencies through its requirements that member companies are committed to honesty, fairness and integrity in their promotion and delivery of individual insurance products.

IMSA's Code of Ethical Market Conduct requires its members to:

-- Maintain high standards of honesty and fairness in business;

-- Provide competent, customer-focused sales and service;

-- Engage in active and fair competition;

-- Provide advertising and sales material that are clear in purpose and honest and fair in content;

-- Provide for fair and expeditious handling of customer complaints and disputes; and,

-- Conduct strict supervision and review to insure compliance with IMSA's standards.

The IMSA seal is considered a mark of excellence within the life insurance industry and a guidepost for the consumer.