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Higher Profile.

Compliance officers have experienced elevated status within their companies since the emergence of the Insurance Marketplace Standards Association.

Still in its formative stages, the Insurance Marketplace Standards Association has amassed a membership of 234 life insurance companies that represent more than 79% of market share of all individually sold products in the lines it oversees.

As the life industry's market-conduct organization, IMSA's mission is to promote high ethical standards in the sale of life insurance, annuities and long-term-care insurance products.

In line with that, one of its most important contributions since its formation in 1996 has been the promotion of compliance officers at member companies, said Paul Mason, IMSA's outgoing executive director.

Compliance officers, whose jobs are to see that their companies abide by rules and regulations, often had been sequestered in some back office. But with the emergence of IMSA, their stature has risen, and companies have moved them out front and center, Mason said.

"There is a real sea change in terms of the respect accorded compliance officers because of IMSA," said Mason, who will leave his post this fall to return to his law career. "They now have some weight. The role of the compliance officer is much greater and more elevated."

In some companies, compliance officers have so much clout that they can effectively veto new products. "That person can opine that a particular advertisement could get the company in trouble," Mason said. "Compliance officers are becoming interpreters who identify new issues that the company should be aware of. It's a very heavy responsibility."

John Dohmen, vice president and chief insurance compliance officer at Transamerica Occidental Life Insurance Co., agreed that the role of the compliance officer has become "more proactive rather than reactive," he said. "The level of awareness has been increased in all companies, as well as among customers."

He traced this heightened awareness to the industry's negative press from a rash of class-action lawsuits in the 1990s and the resulting consumer mistrust of insurers. IMSA was the life industry's response to these highly publicized cases that alleged unethical sales practices by some of the biggest companies in the industry, including Prudential Insurance Company of America, Metropolitan Life Insurance Co. and New York Life Insurance Co.

In joining IMSA, Cincinnati-based Great American Life Insurance Co. began scrutinizing everything it did, like appointing agents, selecting criteria and doing background checks.

"In 1998, we re-examined core processes in our business and asked, 'Are we doing the right things?' and 'What are the best practices?' "said Jeffrey Cooper, the company's vice president, chief compliance officer and chief privacy officer.

As a result, compliance officers changed many procedures and gained a higher profile in the company, Cooper said. "As you start to change those processes, you make waves, but you also start to be at the table," he said.

Dohmen said technology also has helped enhance the position of compliance officer. "The use of computers and the Internet has made it much easier for customers to become more knowledgeable about insurance products, and it has allowed both the departments of insurance and insurance companies to be more accessible by customers," he said.

AS a result of its IMSA membership, Transamerica has implemented an early-warning system for monitoring consumer complaints to determine potential problems, Dohmen said. "Rather than wait for quarterly complaint reports or annual reports, we can monitor issues instantly," Dohmen said.

Last year, Transamerica's system identified a producer who was misusing sales techniques to sell its products, and he was terminated. But such cases are extremely rare, Dohmen said.

Carol Stern, vice president of compliance for the life group at United Services Life Cos., Arlington, Va., a part of ING Group, has overall responsibility for the company's compliance with state laws and regulations, its internal code of conduct and the principles of the National Association of Securities Dealers.

"Certainly, IMSA has helped increase our importance," Stern said. "The heightened regulatory environment and litigation environment have made compliance much more important."

United Services has formed a compliance-management team made up of managers from every department. "We create policy and procedures that are all compliance related," Stern said.

While MONY Group always has had a compliance unit, it was reestablished as a full department several years ago, said Charles Leone, MONY's chief corporate compliance officer. The compliance department also has increased in size and significance, Leone said. "We've started pulling in operations" from other departments of the company, including the handling of complaints and investigations, Leone said.
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Article Details
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Author:Bowers, Barbara
Publication:Best's Review
Article Type:Brief Article
Geographic Code:1USA
Date:Oct 1, 2001
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