It has been a pleasure sharing the insurance agency compliance best practices expertise of the 3H Corporate Services team. If you have not yet read Part 1 and Part 2 in the series, I encourage you to do so. Two final points worth mentioning before we embark on today’s post: 1) these collective tips and best practices are certainly valuable, but they don’t replace the importance of engaging an expert insurance regulatory compliance attorney; and 2) it’s important to have proper and well-documented protocols and procedures in place and equally important to ensure your organization is adhering to them.
With that said, let’s explore the final six best practices.
All sales and marketing communication must be accurate, true, and not confusing to the general public.
Having said that, each state has its own minimum requirements when it comes to sales and marketing communications. Of these California’s requirements are perhaps the most restrictive. Accordingly, if you operate nationally and/or in the state of California, the following will apply in circumstances where sales and marketing communications are sent to a California insured:
Furthermore, the license numbers must be in a type size that is no smaller than the largest of any street address, email address, or telephone number of the licensee. For example, if an email includes a 10-point street address, an 11-point email address, and a 12-point telephone number, the license number must be at least 12-point.
Your agency’s website should not be overlooked and should be included in your compliance program.
A well-constructed website, amongst other things, should:
If you are utilizing an unlicensed partner’s website for promotional purposes, you need to be aware of the restrictions associated with doing so. These include:
Additionally, and consistent with the restrictions detailed in Part 2 of this series, any unlicensed partner may not receive compensation which is linked to the placement of insurance, or the commission received pursuant to the placement of insurance.
Your agency must be registered with the Secretary of State (SOS) in each state where it is conducting business as determined by each state’s applicable laws. SOS registrations obtained must be maintained in good standing. To maintain good-standing status, periodic reports are required to be prepared and filed, when due, and a Statutory Registered Agent, where required, must be appointed, and maintained in each registered state. Knowing what needs to be filed when, and with whom, can be a time-consuming juggling act. Lapses are common and can result in revocation of authority to transact business.
Make certain your agency is registered with the Department of Revenue in states where it is licensed and transacting insurance business, as required pursuant to each state’s tax code. As noted in Part 1 of this series, the filing footprint you establish can significantly impact filing fees and ongoing tax liabilities. I cannot overstate the value of consulting an experienced insurance regulatory professional. Feel free to get in touch and we can share how we have helped some clients save tens of thousands of dollars through prudent filing footprint strategies.
You can avoid significant statutory fines and penalties by filing surplus lines policy placements, premium tax periodic reports, and premium taxes promptly. Filing requirements and deadlines vary from state to state so having the proper protocols in place is essential.
For the past 20 years we have helped hundreds of clients establish, enhance, and maintain exemplary compliance programs. The insurance compliance best practices we have shared here, and in Part 1 and Part 2 of this series, represent some of the most common areas where we see compliance protocol shortfalls. These 18 guidelines are hardly exhaustive, and every agency is unique. Your protocols need to be tailored to your specific agency’s circumstances.
I hope you have found these posts thought provoking and useful in considering your agency’s current compliance protocols, and any gaps related thereto. Of course, if you have any questions or need help getting started, please get in touch by submitting the form below or giving us a call today.