In the first part of this series, we discussed the challenges facing an insurance business looking to develop an in-house regulatory compliance team in today’s highly competitive labor market. One of the key takeaways was, Don’t let a lack of industry experience eliminate a candidate from consideration. But if we don’t hire for insurance knowledge, having a robust compliance training program becomes even more crucial.
Insurance regulatory compliance can be taught. Depending on the individual, it can take from 6 to 12 months for someone to be able to work independently. It’s also important to remember that the education needed to succeed as a compliance expert never really ends. State laws and regulations constantly change to respond to market behaviors and to leverage new technologies.
Innovative Training Ideas
There are many different approaches to training that may work for a given team. I want to share two innovative ideas that ILSA implemented with very positive results. Feel free to adapt them to your organization’s particular needs.
Boot Camp
Regulatory compliance isn’t for everyone. At one point in ILSA’s growth, however, we found that for every three new employees hired, only one was still on the job a year later. Given the costs to recruit and train a new hire, that outcome was obviously less than ideal!
Consequently, we created the ILSA Boot Camp. This 2-week intensive training course addressed one of the root causes contributing to the high turnover rate. Many people in the geographic area where we recruited had limited exposure to insurance as an industry – mostly as policyholders. (This was before the widespread adoption of remote working.) They underestimated the complexity of the challenge they undertook in joining our team.
Boot Camp focused on essential business skills, general insurance knowledge, and industry terminology. The program included role-playing exercises to test trainees’ newly acquired understanding and to simulate the stresses of working with clients and regulators. Successfully completing the program enabled new hires to work in a variety of departments. When they moved on to their final role, their new colleagues could focus on training for job-specific skills.
We found that this approach both increased the employee’s immediate value to their department and vastly improved long-term retention rates.
Training Wheels
Despite the name, this program didn’t focus on supporting newer employees until they gained greater confidence in their skills. Instead, it encouraged the ongoing professional development of more experienced team members. As humans, we have a tendency to stick to our comfort zones. But once an employee achieves expertise in their current role, it is our job as mentors to challenge them to continue growing.
The Training Wheels harnessed the power of gamification to do just that. Each team within the company created detailed descriptions of the skills, attributes, and knowledge needed to achieve expertise in their area. Once an employee demonstrated their proficiency – either through sustained performance or by passing a test – they filled in that “wedge” of their training wheel. Employees who cross-trained in other departments could collect wedges in those areas as well.
The program tied eligibility for raises and promotions to filling in the training wheels. While business needs still determined the availability of such opportunities, employees gained far greater control over their advancement prospects.
Training Resources
Regardless of how you structure your program, the quality of outcomes depends a great deal on the resources available to support trainers and trainees. Fortunately, there are a lot of great training resources available for compliance personnel. Many are available at no charge. You can also create your own tools, specifically tailored to your business’s needs. Here are a few that our team has found useful over the years:
Guides and Checklists
These can be powerful tools for your team, reducing errors and ensuring consistency. That’s only if they are kept up to date, however. Additionally, guides need to be simple enough to be usable, but thorough enough to be effective. While most teams eventually develop their own, there are several commercially available guides that can be extremely helpful.
SILA Digest – This online library of downloadable guides covers a wide range of compliance topics. Experts update the information periodically throughout the year, making it one of the most accurate of the published resources. While this resource is only available to members of the Securities & Insurance Licensing Association (SILA), the annual membership fee is well worth it.
Licensing and Surplus Lines Laws – Compiled annually by the National Underwriter Company, this resource details the procedures to obtain/maintain a variety of resident and nonresident license types. It also provides information on surplus lines licensing and tax compliance procedures. Covering all U.S. states and territories, its consistent layout makes it easy both to find specific information and to compare the requirements of different jurisdictions. While users can purchase the print version, the ebook version is less expensive and includes access to an online version that is updated throughout the year. (A print + online option is also available.)
What Constitutes Doing Business – Published annually by the Wolters Kluwer Company, this guide explains the different U.S. jurisdictions’ standards for when a non-domiciled entity must register with the Secretary of State’s Office in order to operate legally.
Looking for more great resources? Be sure to visit the ILSA Newsroom for the latest regulatory bulletins as well as blogs on a wide range of compliance topics. We also have an extensive library of videos on our YouTube channel.
The Human Factor
When looking for guidance on how to handle a thorny compliance issue, don’t overlook the value of colleagues and mentors. In addition to SILA, there are a number of other professional associations that offer help both in terms of training materials and in building a network of experts willing to share their knowledge. Many have state and even local chapters in addition to a national presence.
LinkedIn, Facebook, and other social media platforms can also provide a way to build relationships with other insurance and compliance professionals. In particular, look for online groups for the insurance industry. Many of the best require an invitation to join, so you may need to do a little groundwork first.
Lastly, don’t forget about state regulators. Industry newcomers sometimes view them as the “enemy,” but nothing could be further from the truth! You can always reach out to them for answers to your questions and guidance on how regulations are applied. After all, having knowledgeable and compliant agents and brokers makes their job of protecting consumers easier.
Training, Like Compliance, Is an Investment
Compliance departments don’t generally generate revenue. That can lead to a perception that they are “less valuable than” production departments. But if compliance isn’t handled appropriately, NO ONE WORKS. As an agency owner, insurance company executive, or state official, you must commit to your team’s ongoing development. That includes providing resources, including time, to continue their education. For a supervisor or manager, it may also mean being willing to “lose” a top performer as they advance in their career. In the long run, however, both the compliance team and the business as a whole will be better off for it. After all, as we like to say here at ILSA, If you think handling compliance the right way is expensive, wait until you see how much it costs to do it the WRONG way.