Compliance 101 for Insurance Agents

Written by Gracie Kimble

March 22, 2019

Compliance 101 for Insurance Agents

Learning the details of compliance is one of the most important things an insurance agent can do. Following the best compliance practices is essential to ensure that your clients are receiving the most outstanding care. Selling health insurance plans may seem like an easy gig, but it’s more than just convincing a client to invest in a product. To build meaningful relationships with clients, you must have their needs in mind first. It is your job, as an insurance agent, to help your clients navigate through the difficult decisions that must be made when purchasing a health care plan. Like all other jobs and systems in the workforce, some rules and guidelines will affect how you perform. For insurance agents, those rules and guidelines can fall under compliance a lot of the time. To help you better understand the importance of compliance, we are going to talk about a few basic compliance rules every insurance agent should follow.

What CAN Insurance Agents Do?

First and foremost, insurance agents MUST be licensed in the state(s) in which they are selling. If one is caught selling without a license, it can result in legal consequences like fines and even prison time. Sounds scary right?

As you may know, insurance agents can sell many types of products from various carriers. It is crucial to be contracted with the company/carrier and complete any certification they require before you discuss their products with your clients. If you don’t follow these rules, it may result in the termination of your contract with that carrier/company.

One of the most essential things an insurance agent should do is stay compliant with all CMS (the Centers for Medicare and Medicaid Services) guidelines. As you may already know, CMS is the government sector that deals with Medicare and Medicaid. It is their job to ensure that beneficiaries are protected and that insurance issuers are following compliance rules. Their guidelines are listed here.

Insurance agents should always submit their applications promptly or when they are due. For example, an agent may want to get contracted with a new carrier – they must submit all applications on time in order to be considered.

Agents should always make decisions based on the client’s best interest rather than their own. If an agent focuses solely on selling and not on providing the best products for their clients, it is very likely that clients will notice and definitely not appreciate it.

 What CAN’T Insurance Agents Do?

Insurance agents are definitely not allowed to enroll a client into a plan without his or her permission. Doing this can result in serious corrective action or termination from an agency and carrier. Agents must always get a client’s consent before enrolling them into a health plan.

This may seem a bit obvious, but insurance agents should never lie to a beneficiary to get them to enroll in a plan. This is very unethical and can result in the loss of clients and damage to an agent’s or agency’s reputation.

Unless a client calls an agent specifically to sign up for a plan, agents are not permitted to sign them up over the phone. If the client calls the agent looking to purchase a plan, then it is completely fine for them to be signed up over the phone, but an agent cannot call a client and sign them up for a plan.

Like stated before, it is incredibly important for insurance professionals to stay compliant while on the job. Compliance is one of the most critical aspects of selling health insurance, and it is vital that agents pay attention to compliance guidelines and rules.

For more information on the details of compliance, give us a call at 800-962-4693 or check out our Code of Ethics self-study training course!


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