CLHIA-ACCAP

Background In 2016, the CLHIA Board of Directors endorsed a series of ten recommendations aimed at enhancing outcomes for customers and, in some cases, closing regulatory gaps related to the distribution of life insurance. These recommendations reflect an industry commitment to maintaining a strong customer focus and having policies and procedures that protect customers. Recognizing distribution's unique and specialized role in treating customers fairly, the Board then considered how different distribution structures can better serve the needs of customers and meet insurers' compliance obligations. We found that, to meet consumer demands, insurers' distribution models have evolved over the years to include a variety of channels (e.g., MGA, national account, and career channels). However, our existing regulatory structure for distribution, and the accompanying oversight obligations, most closely reflects a period when most insurers sold their products through a traditional career sales force. In this paper we outline the industry's resulting position that a fundamental change is required to improve advisor oversight. Specifically, we believe that a regulatory licensing and oversight regime is required to establish distribution firms as distinct, licensable entities with certain advisor oversight responsibilities. Introducing such a regime would not change an insurers' existing compliance obligations, rather, it would provide the necessary tools to allow insurers to meet regulatory expectations for proactive compliance programs that are focused on fair outcomes for consumers. 1

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