Posted in Ethics & Compliance

A New Era in Compliance & Ethics…

 
Business Ethics ConceptThe Insurance Marketplace Standards Association (IMSA) was created in 1996 in response to a crisis of damaged consumer trust and confidence in the insurance industry. An independent, nonprofit organization, IMSA had more than 200 voluntary members that lead the insurance industry in promoting high ethical standards in the sale of individual life insurance, long-term care insurance, and annuity products. The organization has been superseded by the formation of the Compliance & Ethics Forum for Life Insurers (CEFLI), which can be found online at www.cefli.org. If you open their website, the Home page opens with the title, “A New Era in Compliance & Ethics…”

The Compliance and Ethics Forum for Life  Insurers (CEFLI) state that it “…represents a new, improved approach to knowledge, information and resources for life insurance compliance & ethics professionals.”  The Forum, “Governed by a Board of Directors comprised of chief compliance & ethics officers, CEFLI is an organization developed by chief compliance & ethics officers for chief compliance & ethics officers. CEFLI will help to develop innovative strategies and identify best practices to address the most important compliance & ethics issues on the minds of today’s thought leaders within the life insurance industry.”

I applaud any organization that promotes improved governance in an industry that in recent times has reached the outer limits of corruption and self dealing such has the Principal Group of Companies reached.  But apparently this issue has been around a while.  The CEFLI is seldom mentioned in trade magazines, and insurance company websites do not seem to promote it’s ideology.  Donald J. Walters is the President & CEO of CEFLI, and the following biography was obtained from the 2012 International Insurance Symposium where he was a guest speaker:

“Don Walters serves as President and CEO of The Compliance and Ethics Forum for Life Insurers (CEFLI),an organization dedicated to serving the needs of compliance and ethics professionals in the life insurance industry. Previously, Don served as Senior Vice President, General Counsel and Secretary of the Insurance Marketplace Standards Association (IMSA). Prior to affiliating with IMSA, Don served as Senior Counsel in the State Relations Department of the American Council of Life Insurers (ACLI). He was also a member of the Law and Compliance Department of Fidelity and Guaranty Life Insurance Company (F&G Life) based in Baltimore, Maryland where, among other duties, he served as Chief Compliance Officer for F&G Life’s broker-dealer, F&G Securities, Inc. Prior to attending law school, Mr. Walters developed a financial planning practice specializing in insurance products with two NYSE broker-dealers.
Mr. Walters has a Juris Doctor (J.D.) degree from The Catholic University of America, and a Masters in Business Administration (M.B.A.) degree from the University of Arizona. He also earned his Bachelor and Master ’s degrees in Music from the University of Arizona and holds the Certified Financial Planner (CFP) and Fellow, Life Management Institute (FLMI) designations. He is a member of the Maryland State and American Bar Associations.”
In a press release dated October 19, 2010, Mr. Walters announced that “CEFLI will work closely with life insurer ethics and compliance professionals to identify and offer products and services designed to assist their efforts to promote sound ethics and compliance practices in the life marketplace. CEFLI will also build upon the accomplishments of IMSA by continuing to offer forums such as summit meetings and webinars to bring together key stakeholders, including state and federal regulators, producers, distributors, consumer advocates and life insurers, to address contemporary ethics and compliance challenges and develop appropriate solutions.” According to the press release, CEFLI’s mission will allow the organization to examine a broad range of issues impacting compliance and ethics professionals which go beyond IMSA’s current scope and will be able to delve deeper into ethics and the establishment of ethics programs and associated best practices. CEFLI will maintain the IMSA certification process and its standards and will explore new ways to leverage technology to provide timely benchmarking and compliance information more efficiently. The “old” Insurance Marketplace Standards Association’s (IMSA) motto was “Committed to honesty, integrity, and ethics.”
We can give the effectiveness of the old IMSA a thumbs down for failure to achieve “honesty, integrity, and ethics” in the insurance workplace, given what we know about the 2007-2008 financial crisis.  I suspect the CEFLI was a “new beginning” for the group, most likely consisting of a grossly non-compliant, non-ethical membership.  But I have a question for Mr.  Walters, “how can you instill a sense of “compliance & ethics” in organizations if the corporate leaders fail the ethical aptitude to clearly understand the nature of compliance.  I googled the Principal Financial Services Website and failed to find any reference to the CEFLI nor the words Compliance and Ethics Forum for Life Insurers.  For 2016, Principal was declared “the most ethical company” for Financial Services by the Ethisphere Institute, the global leader in defining and advancing the standards of ethical business practices that fuel corporate character, marketplace trust and business success.”  If you study the mission statement of the Ethisphere Institute, they equally measure up to the Mission statement of the CEFLI…
  1. Our corporate ethics standards, vetted by leading experts and used for 10 years, provide an independent, objective measurement tool critical to drive business decisions and stakeholder interaction.
  2. We recognize programs and companies who’ve proven that their programs and practices are extraordinary and provide mechanisms to help communicate those recognitions.
  3. Ethisphere’s global Summits, roundtables and publications capture the leading voices in the field. And our corporate membership group provides unparalleled networking opportunities.

 

Principal is very proud of it’s status as one of the world’s most ethical companies.  In fact, google Ethisphere and Principal Financial and this news release pops up first out of almost 7400 hits!  If CEFLI and Principal is googled, the only related search involves a Florida Settlement Agreement between the Florida Department of Legal Affairs and Prudential Insurance Company, involving the enforcement of Florida’s unclaimed property laws.  Hmm, but Prudential was the only other “most ethical company” next to Principal!  But this pdf publication was published on CEFLI’s website in 2012, if you look at the active link!

If we take the above information at face value, we have the allegedly two most ethical insurance companies in the world, both members of compliance and ethics related associations.  And both involved in fraudulent activity.  I can assume both companies are members of the CEFLI, which certainly has good intentions, with less than meager results so far.  According to Mr. Walters, one goal of his organization is to “…bring together key stakeholders, including… consumer advocates.”  I am a consumer advocate, and I have applied for membership in his Forum… if the sky is falling, he might even approve my membership.  If I could communicate my views as a member, I would suggest the following dictate of his mission.  “Mr. Walters,  without core values, and the insurance industry corporate management HAS NO CORE VALUES…. you cannot instill ethics nor compliance into any organization. “Embezzlement, Fraud

 

 

 

 

 

 

Share:

Author: Dennis Myhre

Mr. Myhre can be contacted at..... dmyhre@fiduciaryfactor.com