Planning for the Worst and Hoping for the Best: 
How Early Compliance Intervention Can Save Money

The joke goes that the compliance area in most companies is the “sales prevention department,” and those of us in compliance do spend a lot of time telling people “no”.  However, seeking compliance experts’ early involvement in product development can not only result in more compliant and marketable products, but can also save time and money getting those products to consumers.  As part of a team with marketing, information systems, claims and other divisions, compliance experts, whether they are in-house or outside consultants, can help identify potential problems before they arise.  More importantly, experienced compliance professionals can help find solutions. Leveraging this compliance expertise can be particularly useful in the following situations:

Your company is developing a new product or adding a new feature to an existing product.

By soliciting the input of a compliance professional with expertise in the product or feature being added, your company can determine whether the proposed design will work in your company’s key states or will require significant revision.   While no one wants to hear that a particular design feature cannot be approved in the state where the company does most of its business, it is certainly preferable to have that information early on, before nationwide filings have been made and state disapprovals come in.  Likewise, if a number of states are going to require a change that will impact rates or administration of the contract in a significant way, knowing this early and having a plan to deal with such change is imperative.   By dealing with these issues in the initial phases of product development, changes can be made to avoid or minimize such potential problems.

New features or products can also result in state filing complications.   A compliance expert can determine where a product is subject to review in multiple divisions (for example, a travel accident policy may be subject to both property & casualty and health review or a disability rider attached to a life policy, which may be subject to both life and health review).  A compliance expert can also advise where additional supporting documentation will be needed for the filing or where other aspects of the project will result in unusual delay in securing state approvals.   Understanding these concerns means that steps can be taken to minimize their impact, by ensuring that roll-out dates are reasonable, needed filing materials are ready and issues of concern are addressed in the filing correspondence. 

Your company is marketing via a different channel, such as electronic or direct marketing. 

When a company decides to sell its products using a new method, a compliance expert can play an important role in understanding the regulatory issues that will impact forms and procedures.    For example, if your company has decided to develop a product that will be marketed, applied for and issued electronically, a compliance expert can advise regarding electronic signature and delivery requirements, electronic handling of replacement and other disclosures, whether or not screen prints or an electronic application procedure will need to be filed, and similar issues.  

No one wants to be in a situation where a product is approved, but the infrastructure needed to market, issue and administer the product are not compliant.  By dealing with this situation early on, insurers avoid delays and are able to get their product to market faster. 

Your company is marketing to a new audience.  

Regularly, insurers broaden their market by entering the worksite, group or individual market, having not done so in the past.  Even when familiar with a product in one market, selling the same product to a different market can change form, rate, rule and filing requirements.  A benefit or feature that the company has always offered in a state through one distribution channel may not be allowed or may be allowed only with significant change for the new audience.  A compliance expert can help the company prepare for these concerns in advance and can advise of disclosures, notices and practices that are unique to the new market and which may not have been required before.

Though the involvement of compliance in the early stages of product development is often seen as causing unnecessary delay, such view is unfair.  While the additional preparation can slow down the process of submitting a forms filing, that time is justified in the time and money saved in reaching the company’s ultimate goal - - securing state approvals and getting a product to market.