Agents
Agents
Training, Knowledge, Ethics, Recruitment, Lawsuits, Government Testimony, Academic papers, FSP Paper,
TO DO:
- Van Mueller/NAIFA/ State Farm – Video
- Slott/ Veralytic – Video
- SOA
- Agents aren’t actuaries
- 1979 -vWho is going to tell them…$, Plan of Insurance
- Servicing
- 2002 – Nobody understands UL
- Lawsuits
- Crowne
- Maloof
- Gov
- 199x – Agent
2001 – Investment Strategies to Maximize Yield, Society of Actuaries
“MS. SUSAN OBERMAN SMITH: I think that one problem, even with the illustration disclosure, is that you are still not controlling what the agent actually says to the client, even when he or she sees that illustration.”
1995 – PRACTICAL ILLUSTRATIONS AND NONFORFEITURE VALUES, Society of Actuaries – 14p
…key issues … perceived by the CLUs and ChFCs responding to the survey as causing the greatest problems for those working in the life insurance industry at the time.
#1 – Lack of knowledge or skills to competently perform one’s duties
Public trust in business is commonly viewed as having two dimensions—integrity-based trust and competence- based trust. An integrity violation occurs when a person acting on behalf of an organization intentionallyviolates an agreed-upon practice or principle and thus is perceived as dishonest, whereas a competence violation occurs when an individual lacks the skills or knowledge to adequately perform a job.
2011 – The Ethical Environment of the Life Insurance Industry: The Impact of the Recession and Slow Recovery. by Robert W. Cooper, PhD and Garry L. Frank, PhD – JOURNAL OF FINANCIAL SERVICE PROFESSIONALS
Prudential’s efforts to ensure that its agents understood and explained to consumers the effect of the change in dividend practices were largely unsuccessful and may have resulted in many cases, in an expectation that illustrated dividends would be paid. p13-14
A review of company records reveals· that the company, through its internal complaint system, knew of cases of alleged misrepresentation and other improper sales practices by its agents, and in many instances failed to adequately investigate and impose effective discipline. p15
Prudential is responsible for the behavior of its agents and managers and, therefore, where misrepresentations have resulted in harm to its customers, the company should provide appropriate compensation commensurate with the nature and amount of the harm and misrepresentation.Given the fact that it is difficult to ascertain who was harmed and the extent of that harm, the company concluded that the best approach to remediation would · be to reach out to all potentially affected policyholders. Prudential, therefore, is prepared to contact 10.7 million policyholders nationwide…. p17-18
There appeared to be little if any awareness of guidelines and any consistency in agent training. p173
Prudential must issue written directives to appropriate staff which would establish the following improvements to its training program:– Training shall also cover areas of potential misrepresentation…. p222
1996 – Report of The Multi-state Life Insurance Task Force and Multi-state Market Conduct Examination of The Prudential Insurance Company of America
NAIC
Life Insurance Buyer’s Guide
NAIFA
Birney
TW
1995, SALES ILLUSTRATIONS, Society of Actuaries – 14p
Lawsuits
- 2010 – Maloof vs John Hancock
– Supreme Court of Alabama,September 30, 2010, Google Scholar - 1998 – CASTEELv.CROWN LIFE INSURANCE COMPANY, August 28, 1997 / Publication Ordered July 6, 19
–CROWN LIFE INSURANCE COMPANY v. CASTEEL, Argued November 19, 1998. - 1995 – Sales Illustrations, Society of Actuaries
- My next comment relates to the vanishing premium “payback.” I guess I’d have to say I’m disappointed that companies haven’t defended themselves more vigorously in this whole situation. Maybe the reason is that their agents didn’t do the proper job at the point of sale. But if the agent did, and if the agents have a good file, and they’ve been following up since the point of sale/issue and have communicated properly to their clients the impact of interest rate changes on at least an annual basis, I don’t think we would have this problem. I found it fascinating that the agent in the Crown Life case got $40 million for mental anguish. — Kevin A. Marti
2018 – Vogt v State Farm Government Testimony –
-199x- Metzenbaum
-197x – Father
NAIC Proceedings
1999-4 NAIC Proc. 745 Agent Training
“Mr. DeAngelo said he did not recall seeing incorrect or misleading training materials, so this is somewhat a theoretical question.”
“Mr. Hanson responded that he had seen misleading materials in market conduct examinations.”
“What the regulators really want to say is that the agent training materials should not be misleading or incomplete.”
Mr. Coleman agreed that by law a company is responsible for its agents.
If an agent fails to act as its company requires, the company must deal with the agent.
Mr. Nepple agreed that the law is clear that a company is responsible for its agents, but he saw some value in having the redundancy.
1994-4
Illustration Usage / Policy Summary/ Policy Overviews
George Coleman (Prudential) said it had been his understanding that illustrations would not be required at the point of sale. He said some agents did not use illustrations and he thought it more appropriate to get a signature on an illustration at the end of the process so that the one illustration signed matched the policy applied for.1995-1 NAIC
NAIFA – Video, State Farm, Van Mueller, Training
Wicka – How do Agents use these? It would be good to hear from agents.
1994-3 p521 (563)
“Mr. Montgomery asked how companies would control brokers who were selling insurance.”
1994-3 p565 (607)
“Commissioner Wilcox responded that, in many companies, the actuary did not have the ability to control illustrations; this regulation would bring credibility and integrity to the process.”
“Problems that occur now are sometimes because the company did not see what the agent had prepared.”
First of all, I believe there is cause for concern arising from the repeated inferences, both in this paper and elsewhere, that the agent is somehow obligated to provide “service” long after the sale on the policies that he has sold. Certainly the insurer has an obligation to provide such service, but I cannot agree with the rationale that it must be done through the agent. No other industry expects its salesmen to double as servicemen and technicians.
The normal agent’s contract authorizes him to do three things: submit
applications, deliver policies, and collect the initial premium thereon. In
no way is he authorized to do such things as secure policy loans for the
insured, let alone to answer questions about policy provisions and dividends, which he probably is not qualified to do. –Albert Easton
1974 – CONSUMERISM AND THE COMPENSATION OF THE LIFE INSURANCE AGENT, by Anna Rappaport, Society of Actuaries
“In the state of Maryland, a recently enacted disclosure regulation has two special features.”
“First, there must appear a statement in the disclosure form which warns that any oral statement of the agent should be considered in the purchase decision, but only if it is reduced to writing and given to the applicant.”
1979 – Cost Disclosure – Society of Actuaries
1953 SOA
- N. T. FUHLRODT, speaking on section A, said that recruiting and development of a field force is one of the big problems of all companies, the cost of which is measured not only by the level of commissions paid, but by the morale and turnover rate of agents. A successful company must maintain a proper balance between the agent’s compensation, policyholder’s cost, and .the company’s profit. Overstressing term insurance, he said, results in inadequate income to the agent in spite of high volume of sales, poor persistency, and, if such insurance is not properly sold and understood, loss of future business to the agent. https://www.soa.org/globalassets/assets/library/research/transactions-of-society-of-actuaries/1953/january/tsa53v5n1223.pdf
AGENCY PROBLEMS–RESULTING FROM SPECIAL POLICIES
LAW