Simple errors can prove very costly in insurance. I’ve talked to people whose agency forgot to issue uninsured motorist coverage on a policy, for example — or failed to get that form signed, which amounts to the same thing.
In one case, the company only realized their blunder when the client got into an accident with someone who didn’t have insurance. Since the client didn’t have uninsured motorist coverage, the agency had to foot the bill. They’d actually issued the policy but had forgotten to get it signed, rendering it worthless. With one signature, they could’ve avoided paying that claim.
Then, the agency turned around and billed the client for it. As you can imagine, the client immediately started looking elsewhere for coverage.
This type of thing happens often in the insurance world. For an insurance agency, compliance is critical. Having an experienced staff member dedicated to this function can greatly reduce compliance risks for insurance companies.
Let’s talk about why this is so critical — and what you can do to strengthen compliance while also ramping up productivity.
Compliance Risks for Insurance Companies
Compliance issues in the insurance industry can fall into several categories. Let’s examine the root causes of many of these issues.
Shifting Compliance Requirements
Compliance in the insurance industry is an ever-changing landscape. Increasing regulatory complexity and heightened risk levels pose challenges for busy agents.
The National Association of Insurance Commissioners (NAIC) publishes model legislation along with a list of specific laws based on it that particular states have adopted. State laws deal with topics from records maintenance to producers’ collection of commissions. Just keep in mind that the NAIC’s list may not be entirely up to date (they review it every two years), so check with your state insurance department for specifics. You can also utilize the National Insurance Producer Registry (NIPR) to check relevant regulations.
An insurance agency’s compliance with state-specific updates on licensing requirements is also crucial. Ensuring you correctly interpret legal language, and how to apply relevant laws, is critical as well — and these things aren’t always immediately clear. Additionally, shifting regulations in areas like tax deductions affect businesses across industries.
Emerging Challenges in Data Security
Safeguarding client data brings new hurdles as well. Many states have regulations on data collection and usage, which are updated periodically in response to emerging threats. Here are a few examples of such legislation at the state and federal levels:
- The federal Gramm-Leach-Bliley Act requires insurance companies and financial institutions to tell customers how they share their information and protect sensitive data.
- The Federal Trade Commission’s Standards for Safeguarding Customer Information, enacted in 2003, were modified in 2021 and 2023 to update data security requirements.
- The NAIC Insurance Data Security Model Law, which many states base their policies on, establishes data security standards and practices for insurers.
- The NAIC Model Bulletin on AI pertains to use of AI by insurers. Adopted in numerous states, it provides guidance on best practices in use of AI tools.
Experimentation with AI tools could leave companies open to data breaches. Assessing which platforms are safe enough to entrust with their data presents a major challenge. Making a mistake could lead to costly lawsuits and harm to their reputation. Agencies must ensure that any third-party partners also comply with applicable data-security regulations.
Further, if agencies don’t protect clients from emerging scams, they could be held liable. In the life insurance industry, where policies sometimes hold a cash value that can be withdrawn, companies don’t always set a high enough bar for personal identification, Reuters explains. This opens the door for scammers to withdraw funds from clients’ accounts.
Increased Severity of Natural Disasters
The increase in serious weather events also poses risks for many agencies. Some companies are restructuring how they operate, working to reduce exposure in particular areas, or raising premiums to handle these issues. Navigating significant changes to how they do business can increase the likelihood of compliance issues. Further, offering the appropriate forms and levels of coverage in a rapidly changing climate risk landscape can prove daunting.
If, for instance, a client requested specific types of flood or fire coverage and the policy doesn’t adequately provide them, the insurer could be held liable. Moreover, the insurer must confirm their ability to pay claims within a changing risk landscape, which requires complex scenario modeling and smart decision-making.
In the insurance world, simple mistakes carry high stakes. Errors and omissions claims can result from mistakes and oversights — even simple ones. If you make a high volume of sales, you’re especially prone to these errors. A strong compliance strategy won’t just protect you from penalties — it will also build trust with customers.
Let’s turn to how a VA can help you implement a strong compliance strategy now.
Improving Compliance with a Good Virtual Assistant
Compliance in the insurance industry begins with strong systems and protocols. But to implement them, you need to have people in the right roles. Let’s look at what a skilled insurance VA will bring to the table in this regard.
Why Hiring a Virtual Assistant Will Strengthen Compliance
A VA brings several key competencies that are crucial for compliance, as we’ll discuss now. These strengths can make a virtual assistant a tremendous competitive advantage.
Staying Focused and Organized
Most insurance teams are made up of people who thrive on building relationships. Your sales and customer service people are great connectors. They’re creative people who know how to listen to a client, understand their concerns, and then speak to their needs in a way that reaches them. But are they good at data management? Probably not.
The VAs we help clients hire, on the other hand, are pros at data management. They’re the type of people who will methodically run through a checklist of documentation steps to make sure nothing was left out. This requires a much more technical skill set, whereas sales and relationship-building is more of an art. For these reasons, a good VA will help their company achieve better documentation and fewer processing errors.
I will be the first to admit that the VAs at my company keep things better organized than I ever could. Because I’m juggling so many other balls, I’m prone to shifting focus before I’ve completed the process. While I can establish a protocol, they’re pros at carrying it out, adhering to the step-by-step details.
Following Up Instead of Procrastinating
A lot of agents just aren’t good at following up. They close the sale and move on. They procrastinate and then forget to prepare and send policy documents, or they do it late, rushing and forgetting key details. Meanwhile, a VA will assertively follow up with clients, getting that documentation signed and into their system. They don’t procrastinate and then rush to catch up — they follow through and do it right.
Instead of expecting your relationship people to magically become pros at compliance, appoint someone else to the task — someone who’s actually good at it. This will pay major dividends in terms of building your reputation, streamlining your processes, avoiding costly mistakes, and keeping clients happy. Having a skilled VA dedicated to handling these tasks will greatly reduce the risk of not complying with all relevant regulations.
Increasing Leaders’ Capacity for Decision-Making
Often it’s hard to find time to fully analyze the shifting compliance landscape. But when someone can step in to handle many of the day-to-day tasks, leaders will have more time for this strategic thinking. Hiring an assistant will give organizational decision-makers more time to determine how to apply relevant laws, modify organizational processes, and engage in risk/benefit analysis.
Best Practices for Leveraging a VA to Improve Compliance
Let’s look at how to get the most from a virtual assistant, in terms of compliance — starting with selecting the right one.
Choose a VA with the Right Background
Not every virtual assistant has the skills needed to help an insurance agency maintain compliance. This takes a person with the right experience and mindset, along with relevant background.
At ia Blueprint, we meticulously vet our VAs to ensure they have the right character, knowledge, and training. We look for people with experience in our clients’ specializations, like personal or commercial lines. With this background, our VAs understand how insurance industry processes work and can complete them with a high level of skill and accuracy. They’ll help keep all your documentation in order and make sure you don’t miss any crucial steps.
Entrust Your VA with Core Compliance Tasks
Clarify which compliance-related tasks the VA will own and manage. Here are just a few key ones:
- Processing payments quickly and accurately, reducing the chance of billing errors.
- Following up with clients promptly after purchase of coverage. Assign responsibility to the VA for following up on documentation and client onboarding tasks.
- Assisting with conducting carrier audits by organizing documents.
- Maintaining good file organization and confirming that CRM info is up to date.
In these ways, a VA will enhance compliance and reduce the chance of errors and omissions issues.
Set Clear Protocols
Avoiding oversights begins with clear protocols and processes — and appointing someone you trust to bottom-line them. Here are a few best practices to follow.
- Periodically review compliance requirements and update company processes accordingly. Create an in-house compliance handbook that you can update as needed. Brief the VA on any changes as they occur.
- Use a quick-reference checklist for each process to ensure no steps get skipped.
- Don’t rely solely on esignatures. Instead, maintain copies of signed documents in your supporting file folder. A lot of agents have a backlog of contracts to print and file — and if something happens to the platform, they have no backup. Don’t fall into that trap.
- Ensure that any changes to policies that clients request are made promptly, with the relevant forms signed. Look through and update CRM data to ensure accuracy.
Compliance issues in the insurance industry pose a risk to every agency. But they don’t have to negatively affect your business. With the right staff and systems, you’ll protect yourself from these completely avoidable threats. In the process, you’ll also impress your clients, improve satisfaction, and keep retention improving.
Ready to talk about how a VA could help your business strengthen its compliance? Get the ball rolling by setting up a discovery call. We’ll discuss different strengths a skilled VA can bring to the table, improving compliance and enhancing your operations in numerous other ways. By choosing exactly the right person, you’ll maximize the value you gain from your virtual assistant.