Key C&E Challenges
September 7, 2011
Interaction between Compliance, Ethics and Business
The Symposium began with an outstanding panel of professionals representing Prudential Financial discussing important questions facing all compliance and ethics professionals in the industry: How to Develop Appropriate Coordination between Compliance, Ethics and Business functions. John Doscher, Vice President-Compliance, Michele Ansbacher, Chief Ethics Officer and John Gordon, Vice President-Business Quality discussed the ways Prudential Financial aligns the interests of these functions to achieve its business goals.
It is recognized that circumstances may arise in which challenging issues are presented that may impact compliance, ethics and business interests. This session reviewed the strategies employed to allow an effective coordination between these organizational functions to take place and discussed situations in which conflicts may arise and explore techniques that can be used to gain consensus resolution of these matters.
Complying with Annuity Suitability Requirements
With a panel of top insurance professionals with a strong working understanding of the Annuity Suitability Model Regulation and the operational challenges it presents and a perspective from a state insurance regulator who was instrumental in drafting the model regulation, CEFLI has structured an excellent forum to address these issues in a unique way. This panel was different from other Annuity Suitability panels that you may have seen or heard about as questions ranged from secondary review to training requirements to supervision. Some of the specific questions addressed were: Does your company policy align with the Annuity Suitability Model Regulation, or does it closely follow the individual state specific regulations? How would your company handle the scenario whereby an agent submits business but did not go through the required specific product training requirement? How would your company address the sale of fixed annuities by broker-dealers… Do you still rely on their review even though it does not go through their mandated suitability review process (like variable annuities)? These were just some of the pressing challenges companies faced which were discussed from different company perspectives at the Symposium.
Luncheon: PricewaterhouseCoopers’ State of Compliance: 2011 Study
Ellen Walsh, Partner with PricewaterhouseCoopers, and Don Walters, CEFLI President & CEO, will discuss the recent PricewaterhouseCoopers’ State of Compliance: 2011 Study and its implications for the life insurance industry.
The study reviewed four basic questions: What is your role and authority in the organization? How does the company structure its compliance effort throughout the enterprise? What risks do you worry about? What types of resources are provided to compliance to do its job?
Ellen and Don will review the highlights of the study and discuss trends and observations concerning compliance and ethics practices in the life insurance industry.
This is a session you won’t want to miss.
The SEChas announced plans to develop a uniform fiduciary standard in response to enactment of the Dodd-Frank legislation. The life insurance industry maintains a strong interest in this issue given its potential impact upon the different distribution models used by life insurers to distribute their products.
Chris Petito, a Partner with CEFLI Affiliate Member Dewey & LeBoeuf, will moderate this panel discussion which will review the SEC’s plans to develop a uniform fiduciary standard. Nick Gerhart, Vice President-Compliance & Regulatory Affairs from Sammons Financial (Midland National) will be joined by [identify other speaker] to offer perspectives from several life insurance company representatives to discuss the impact development of a uniform fiduciary standard may have upon their current organizational structure and distribution systems.
The industry’s compliance and ethics professionals are awaiting the outcome of the SEC’s fiduciary standard rule developments. This session will afford an opportunity to share current developments and future implications.
Unclaimed Property has been a front-and-center issue for the life insurance industry’s compliance and ethics professionals in 2011. The dynamic nature of these developments challenge all regulators and life insurers.
CEFLI is pleased that Jason Gosselin, of Partner with CEFLI Affiliate Member Drinker Biddle, will moderate a first-of-its-kind, direct face-to-face discussion between a regulator and industry representatives to explore this multifaceted issue.
Mr. Gosselin will be joined by Robert Wagner, General Counsel of the Illinois Department of Insurance, which, along with several other states, has taken an active interest in this issue. Frank Best, General Counsel, Insurance Operations and Corporate Secretary of The Penn Mutual Life Insurance Company, will offer comments on the issue from an industry perspective.
Also, we hope to be able to report developments arising out of the NAIC Summer National Meeting on the issue of Unclaimed Property as part of this panel discussion.
This session alone may be worth the price of registration!
Fraud Awareness and Prevention
CEFLI’s panel will provide a regulatory perspective and a company perspective on actions taken to identify and address industry fraud. FINRA and company professionals will go through their efforts to combat fraud. Also, there will be an opportunity to discuss the areas generating fraudulent activity and even get into some of the specifics of recent cases. In addition, the panel will cover their systematic approach for the fraud training of company employees and some of the related statistical trends of faud activity.
Examination Protocols and Priorities
Key company executives will focus on the use of formalized processes when developing exam protocols and priorities. The objective is to have a process that is more efficient and less costly. There will be discussions of strategic theory as well as practical applications of the process. There will also be discussions around the advantages of self- reporting, building relationship with regulators, keeping current with the findings from other companies, managing the use of external contractors or vendors (that handle the exam process for the state DOI) and tracking and recording results so as to enhance and further refine the process.
Looking at compliance metrics, our panel will discuss what the regulators are looking for and the specific types of company reports they would request. To build off that, there will be a discussion on the types reports that companies use to identify red flags and specific trends that need to be further reviewed. Companies will also discuss how they interpret specific metrics and take preventative measures that address issues before they become problems. Lastly, there will be a discussion on the types of metrics that can be used to reflect positive results in a company’s overall compliance program.
The PricewaterhouseCoopers’ State of Compliance: 2011 Study indicated that 38% of the respondents to this survey do not have systems in place to measure the effectiveness of their compliance programs.
The SECrecently implemented new Whistleblower Rules developed in light of the enactment of the Dodd-Frank legislation that encourage reporting of questionable activities directly to the SEC.
Many companies have effective whistleblower programs in place designed to encourage and resolve internal reporting of inappropriate activities.
John Walsh, Chief Counsel of the SEC’s Office of Compliance Inspections and Examinations, will review the SEC’s Whistleblower Rules and will be joined by Carol Stern, Vice President & Chief Compliance Officer from ING, and Keturah Pestel, Code of Conduct Officer from Thrivent Financial, to explore the strategies than their organizations employ to encourage internal reporting of questionable matters and policies and procedures designed to address these issues in a timely manner.