A Founder’s Keynote Address: Jerry Bell’s Remarks at the Association of Insurance Compliance

   By Karen C. Yotis

 As one of the founders of the Association of Insurance Compliance Professionals, Jerry Bell –whose career in the insurance industry dates back to 1953—was one of the keynote speakers at the AICP’s recent annual meeting and 25th Anniversary celebration in Dallas. In addition to being one of the association’s original founders, Bell was also AICP President in 1987-88, headed several committees, and was a member of its Board of Directors.

During his conference remarks, Jerry Bell talked about the regulatory, technical and educational environment that confronted compliance professionals 25 years ago. He also discussed what the AICP founders envisioned in view of that environment, and the progress the AICP has made in capturing that vision.

Jerry Bell also had the courage to speak out and challenge the AICP to reinvent itself and its vision by finding fresh ways to take charge and make a difference in the industry.  There were some in the audience who simply didn’t agree with him. He inspired many others, and even moved some (including myself) to tears.

What follows is the text of the Jerry Bell’s keynote address at the AICP 2010 annual meeting, which he has graciously agreed to share with our Community.  Of course, Mr. Bell’s views are solely his own and not to be construed as those of the AICP or its members.

This morning I'm going to address the following four points:

I. Do you believe ...that twenty-five or more years ago conditions for compliance specialists were basically the same as today? I don't.

II. Do you believe ...that seven like-minded men got together one sunny day in 1985 to instantly and unanimously agree to form the Society of State Filers? I don't.

III. Do you believe.. .that the Association of Insurance Compliance Professionals has fallen short of the founder's vision? I don't.

IV. Do you believe...that the current and future mission of the AICP is to steadfastly preserve its current course? I don't.

First point - What was the regulatory, technical and educational environment confronting compliance professionals 25 or more years ago?

57 years ago at age 19, I started my insurance career in the mail room of a casualty insurer's Buffalo branch office. Let me mention something I believe you'll find very interesting about insurance in that era.

It may amaze you to know that red lining, yes redlining, was a key risk selection criterion used by most all insurers. We all did it and were insensitive to its impropriety. That was a very questionable and murky practice best left to decades past.

But let's leave this ancient history and leap forward 30 years and look at conditions in the early1980s. Just what were those conditions? Well for me it was a time of frustration, needless tension and uncertainty. I'll list just a few examples.

1) Compliance proficiency was assimilated on-the-job. All learning was acquired either by experience or word-of-mouth.

2) There were no professional certification programs available for either regulatory or industry compliance professionals.

3) There were no academic degree programs with a significant emphasis on compliance.

4) Regulatory jurisdictions varied widely in their requirements for the format, content, exhibits or organization of a rule, rate or form filing.

5) Many state Insurance Codes contained similar provisions. For example many codes stated, as they do now, that rates shall not be excessive, inadequate nor unfairly discriminatory. While the words in State Insurance Codes were often similar, regulators varied widely in their interpretation and application.

6) There was seemingly no coordination or standardization of Market Conduct examinations either within or across NAIC zones.

7) An atmosphere of wariness seemed to prevail between regulators and industry. In large measure this may have resulted from a lack of forums for constructive dialog and mutual understanding about compliance issues.

Second point· What did your founders envision in view of that environment?

In March 1985, your founders met at an NAIC meeting in Williamsburg, VA. Four of your seven founders were Bob Ratch (Allstate), *** Reeves (Travelers), Tom Flanagan (USM), and I. To the best of my recollection, the remaining three were Jim Ament (State Farm), Terry Wright (M.G.I.C. Mortgage Guaranty Insurance Corporation), and Jack Heater (J C Penney Casualty Insurance Company).

Those visionaries agreed on the need for a mechanism to facilitate:

(1) discussion, and

(2) the exchange of knowledge regarding current events; issues; statutes and regulations; problems and solutions; as well as methods and systems for P&C compliance specialists.

Your founders turned their vision into action and accomplished the creation of the Society of State Filers. However, they initially disagreed on several fundamentals such as the type of structure, program organization, publications, membership eligibility, and especially education. Fifteen months later the unincorporated SSF adopted its Principles ofAssociation which stated that the prime focus of future meetings will be to foster the exchange of ideas among members. Those Principles did not specifically mention education. The Society convened exactly six months later in Orlando. Members voted to determine if there was interest in pursuing an educational program perhaps leading to professional certification. A substantial majority voted to proceed, however a few vocal members stated that education was not what the Society was all about. Members were polarized until an Education Committee was appointed to investigate members' educational interests and needs. The seven member committee included AICP pioneer Tom Tomlinson. Committee members worked diligently to assure that education would become a key component of the Society's purpose. It took a while, but thanks to the assistance of my close personal friend, Bob Lennon, and the legal staff of Gen Re the Society was incorporated in Delaware on March 31, 1988. Germaine to the point is the fact that the Certificate of Incorporation stated, in part" ... the Corporation will provide an educational forum... and provide education ... " Those provisions are still in force today!

Third point - Has AICP captured the founders' vision?

In a word... yes! In fact, the founders' vision has been far exceeded.

1) You have broadened membership eligibility to be much more inclusive by adding L,H&A, service organizations, and regulators.

2) Your Mission Statement, Vision Statement, and Bylaws each contain provisions requiring learning opportunities educational activities and a certification program. That thrills my heart! Today, you administer courses of study leading to the CE, ACP or the CCP designations. I note with great pleasure that the AICP Membership Directory identifies 700 members displaying one or more academic or professional credential following their name. In fact, Scott Hawthorne of USAA has earned an astounding 22 designations. Way to go Scott.

3) You have greatly expanded the scope of AICP to include many more aspects of compliance including market conduct, certificates of authority, acquisitions and mergers, health care reform, identity theft and much, much more.

4) You have enhanced the value and contribution of AICP Chapters. Today each chapter offers its members substantially more benefits and services than the national Society of State Filers offered its members in the first few years.

5) You have elevated the status and contribution of compliance professionals so that key levels of strategic planning and decision making increasingly and rightfully integrate compliance matters in the process.

6) You have helped achieve a healthy dialog and interface between regulators, industry, and service providers. I am amazed, yet very pleased to observe that some state regulators have even hosted conferences and workshops for both regulators and industry. That was virtually unheard of 25 years ago.

7) You have elevated The Journal for Insurance Compliance Professionals into a high quality comprehensive professional publication. It is a giant leap forward from the News & Views newsletter I published for the Society of State Filers.

Fourth and final point - Why not re·invent the AICp, re·define its vision and surmount fresh opportunities?

Albert Einstein said, "Imagination is more powerful than knowledge." Muhammad Ali said, "The man who has no imagination has no wings." Your founders believed those truths 25 years ago, and I believe they continue to be true for AICP today. We live in a fascinating world with endless possibilities. To stagnate is to die! A culture of ongoing change is essential to success. You have the potential right now to once again take charge and make a difference.

Think of 2010 as ground zero and be willing to jump out of your comfort zone. I challenge you to use your imagination unshackled by custom, tradition, culture, experience or even current regulation or statute. Consider re-inventing the AICP.

To get you started, I suggest a survey of all AICP members in order to identify the following:

1) Compliance issues currently being addressed that may no longer meet real need,

2) Compliance issues currently being addressed that should be done better,

3) Compliance issues not currently being addressed that could or should be addressed, and

4) Issues that are not exclusively focused upon compliance, but which nevertheless may be appropriate for AICP to address.

Ladies and Gentlemen, I have been disconnected from your professional world for many years. It would be very disrespectful and arrogant of me to infer that I know the needs of today's compliance professionals. I am also aware that AICP may have neither the current authority, industry standing, nor funding to implement certain desirable objectives. But. .. ifAICP so wills, it can serve as a catalyst in advocating progressive new ideas to others including regulators, legislators and industry organizations. Someone must lead...why notAICP?

Please indulge me as I share a few observations about issues, that to my knowledge, are not currently being addressed. My intention is to stimulate you to think outside the box. In fact, you may think that some of my examples are wavoutside. But that's my objective... to encourage each of you to think creatively and fruitfully. Let me prod your imagination by unveiling five proposals of my own.

1) Take advantage of the synergy that would be created by convening annual conferences concurrently with IRES, and the L&HCA. I can identify three benefits.

a) All conference planners know that there are economies of scale. The more room nights booked, meeting rooms reserved and catering functions scheduled, the stronger your financial bargaining position and the lower your costs.

b) There would be a greater availability of speakers by drawing upon each organizations presence.

c) There can continue to be plenary sessions as well as break-out and even closed sessions for the diverse audience.

2) Pursue a merger of AICP with the l&HCA? Both associations should be able to see it as a win-win, not a lose-lose

3) Become advocates for expanded multiple line legislation that would obliterate current distinctions between P&C and l&H insurers. There have been no real advances since 1949. Real progress will require concerted legislative (NCOll), regulatory (NAIC), and trade association action. So... work with these parties as partners to achieve success. Here is one hypothetical example of the type product I envision such expanded multiple line legislation could enable. Let's develop a new personal line all-inclusive package to be named "The Family Comprehensive Policy". It could include coverage options for automobiles, RVs, Homeowners, Personal Property, Umbrella Liability, domestic animal healthcare and mortality, travel accident, medical, dental and vision coverage, long term care, and Term Life. It could be a perpetual term with monthly premiums at the then current rates, just like a utility bill.

4) AICP, IRES, and IIA each offer programs leading to professional designations... and that is great. But I ask, "Which designation recognizes the consummate compliance professional?" A brief overview of course curricula for the various designations reveals commonality. Why not convene a meeting of the three credentialing bodies to consider the offering of one set or at least fewer sets of credentials for compliance professionals. Regulators are not so different from industry, and lH&A is not so different from P&C, that common ground is unachievable.

5) Let's approach this final proposal a little differently. In the previous four proposals I simply stated the proposition without conveying much personal conviction. If you expect to impel others to support your proposal, you must exude a personal passion about it. See if you notice a difference as I deliver this next proposal. It's time to repeal anti-rebating statutes state-by-state. They are archaic, anti-competitive, anti-consumer throwbacks to an era of strict price control. 48 states and the District of Columbia prohibit or restrict rebates. A number of price controlling agencies such as the Interstate Commerce Commission and the Civil Aeronautics Board were abolished years ago. Likewise, the stranglehold on insurance rates exerted by the old National Automobile Underwriters Association, the National Bureau of Casualty Underwriters and state fire insurance stamping offices and other organizations have long since been abolished. Only the National Council on Compensation Insurance still has a stranglehold on pricing. A mid-west state and a New England state recently justified their anti-rebating statutes as a means to level the playing field and to eliminate a competitive disadvantage among agents. But, I ask, "Why does a playing field have to be level? What's wrong with competition? What's wrong with putting the consumer's interest first by allowing insurance producers to rebate commission?" I maintain that anti-rebating statutes are contrary to the public interest in today's marketplace.

You may not feel any of my five proposals have merit, and that's OK. .. but if this exercise stimulated your own creative process then my objective has been accomplished.

In closing I want you to know that I am extremely proud of you all because of what you have caused AICP to become. But, the first twenty- five years is just the beginning. It is a solid foundation for your launch into the next twenty five years and beyond. Your leaders have done an outstanding job...but they ddn't have an exclusive lock on vision. Calvin Coolidge said, "Nothing in the world can take the place of Persistence. Talent will not; nothing is more common than unsuccessful men with talent. Genius will not; unrewarded genius is almost a proverb.

Education will not; the world is full of educated derelicts. Persistence and determination alone are omnipotent." Let me tell you two secrets about education. It goes without saying that both Bob Lennon and I were strong advocates of education and credentialing. Bob Lennon went to his grave without a college education. And I didn't earn a degree until I was 47 years old. We were simply young professionals that were too ignorant to realize that we weren't supposed to succeed because we didn't own the time-honored credentials for success...so we just forged ahead in our ignorance and succeeded anyway. The point is that the only thing that can hold you back is a lack of vision, courage, initiative, persistence and determination.

My friends, this one thing is certain. No matter what you are yet to become... my name will always be on your cornerstone, along with the names of six other founders. That will never change... and for me it is a most humbling and gratifying thought.

Thank you for inviting me to celebrate with you.

God bless you all!