Insurance agents: Who does your insurance department work for?

By Stephen D. Forman (LTCA)

Long Term Care Associates, Inc.

I would like to think my insurance commissioner works for both the protection of the consumer and the advocacy of my profession. I worry about the latter sometimes.

​An increasingly popular communication found in many insurance department newsletters is the publication of enforcement actions. The proliferation of such lists may be the result of legislation for all I know, but I suspect it has more to do with zealous insurance commissioners grandstanding before the public. Having one's name published is today's scarlet letter, and being named in a press release is the insurance department equivalent of a perp walk.

In terms of absolute numbers, enough agents and firms were fined or had their licenses suspended or revoked in my resident state of Washington in 2011 that the commissioner could have put out a press release practically every third day. He rarely passed up the opportunity. As a Washington consumer, what kind of impression would that make on you about our profession?

Absolute numbers can be deceiving, though, since the total pool of agents and firms actively licensed and regulated in Washington far outweighs the number disciplined in the year (most for the infraction "failure to respond"). According to the state's website, over 118,000 producers are licensed here.

So, to put the whole issue in perspective, roughly 99.912 percent of Washington producers are irreproachable. Exemplary. Spotless. This rate of 99.9 percent is virtually unchanged from 2010.

I would like to think my insurance commissioner works for both the protection of the consumer and the advocacy of my profession. I worry about the latter sometimes.

In a recent guide posted to our state's website providing consumer advice for appealing claim denials, nowhere in the 54-page guide was it suggested that the policyholder speak with, or seek assistance from, her agent. In fact, neither the word agent nor producer even appeared in the guide at all (except in one nominal reference like the glossary, as I recall).

How out of touch is that? One of my most-circulated and widely-praised pieces emerged from an interview that made its way into Kiplingers regarding the importance of the agent in the claims process. We can be of enormous help, if only we are allowed. If only we are trusted.

But if our insurance departments set out with an adversarial stance towards the producers they regulate, with the posture that agents are not to be trusted by nature, then our full suite of resources and capabilities are stifled. That's not consumer-friendly.

Witness: Elsewhere on our insurance department site there is a page devoted to long term care. Resources are provided for locating federal, state and local benefits; VA and Medicare benefits; tools for finding a financial planner or accredited CPA; legal educational materials, estate planning and elder law, plus tools for locating an attorney; tool kits for advanced directives, living wills and durable POAs for health care. The page offers tons of information. Is the consumer ever directed to speak with a specially-trained LTCI specialist? No.
The state of Washington had a 6-hour LTC CE course requirement for long term care for as long as I can remember and then switched to the NAIC 8-hour (plus 4-hour refresher) model effective January 2009.

So it can be said that there are bona fide LTCI specialists in Washington, a subset of agents who are particularly well qualified in this field. But the Washington Insurance Department guide says only this on the topic of long term care insurance (in the context of all the above advice): "check with your insurance agent."

After that glowing endorsement, the consumer is primed to continue her research with this parting shot: "Watch for fraud!"

And so I ask, what is your relationship with your insurance department? Is it user-friendly? Does it give the appearance of neutrality, or of taking sides in a partisan battle? Is your commissioner elected or appointed?

I think there are some among you who would tell me I'm crazy for even speaking up — that I should keep my nose down and fly under the radar. Do any of you feel nervous about speaking your mind about your own state insurance department for fear of retaliation?

Please share your experiences with the rest of us in the comment section below.