DOL Fiduciary News: December 19, 2016
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Could complying with the DOL rule give insurers a competitive advantage?
LifeHealthPro; Dec 15, 2016
Among the industry’s many gripes about the Department of Labor’s conflict of interest rule, one that rises to the top is cost.
Industry estimates peg the cash outlay needed to align company operations with the rule to be in the billions — $11 billion for brokerages alone, if a recent estimate by consulting firm A.T. Kearney proves accurate.
But there’s a flipside to the mountain of money. And that’s this: Companies that outperform with their compliance initiatives are more successful than competitors. Best-of-breed insurers do better financially their peers on key business metrics such as premium revenue, return on equity and the bottom line.
The source of this contention: The Deloitte Center for Financial Services.
In its recently unveiled “2016 Insurance Ethics and Compliance Survey” (https://www2.deloitte.com/content/dam/Deloitte/us/Documents/financial-services/us-fsi-compliance-to-power-performance.pdf), the professional services firm interviewed senior executives from 15 of the largest U.S. life and property and casualty insurers, including chief compliance officers (37 percent of the study’s respondents), who rated their companies on key compliance and spending parameters. Deloitte used these responses to classify carriers in terms of their “compliance maturity,” then compared their answers to financial parameters disclosed in the companies’ financial statements.
The report’s conclusion: “Today’s great compliance function,” the authors write, “should be considered an asset to insurers, where investment in the function is associated with increased top and bottom lines, as well as lowered danger of reputational and other risk.”
NAFA vows to continue DOL rule fight
LifeHealthPro; Dec 16, 2016
On the same day the D.C. circuit court declined its request to block the Department of Labor's fiduciary rule (http://www.lifehealthpro.com/2016/12/15/dc-circuit-court-refuses-to-block-dol-fiduciary-ru), the National Association for Fixed Annuities vowed to continue its fight against the regulation.
“We are still working hard to defeat rule and make sure everyone understands our position on that,” said Chip Anderson, NAFA’s executive director, during a webcast Thursday to summarize the association’s activities during 2016 and provide an outlook for 2017. “Rest assured, NAFA will continue efforts to stop the DOL rule any way we can.”
Evaluation Tool to Help Advisors Meet DOL Rule
InsuranceNewsNet; December 13, 2016
Cannex Financial Exchanges, a provider of annuity pricing and illustration data, is launching a new tool to help advisors compare the benefits of variable and fixed indexed annuities.
The annuity benefit comparison tool is expected to launch in the first quarter of next year, Cannex said, or roughly the same time the Department of Labor's fiduciary rules begin to take effect.
The tool is considered an important element in helping advisors determine whether one annuity is more suitable for a client than another, Cannex said.
Variable and fixed indexed annuities offer features at different commission rates and buyers often find it difficult to compare one annuity to another.
“Our approach allows advisors to evaluate the insured performance of these products to assist them in making the appropriate selection to meet client’s financial planning objectives,” said Gary Baker, president of Cannex USA, in a news release. (https://insurancenewsnet.com)