How insurance brokers can ensure consent and compliance in marketing

The insurance industry is changing in 2023. Analysts are predicting new challenges, such as rises in policy lapses, heavier regulation on artificial intelligence, and the need to introduce non-insurance services to offset declines in premiums.

Another challenge is the rising importance of practicing marketing compliance, which means ensuring your prospective customers are OK with receiving marketing messaging from you and that the messaging is truthful and not misleading. This includes not sending unsolicited emails and not writing advertisements that disparage your competitors.

There are also more regulations to stay aware of. Insurance brokers already have to deal with the Department of Insurance, FINRA, and other regulatory agencies' advertising and marketing rules and laws, but now legislative bodies are increasing the type and number of regulations governing marketing compliance. Insurance brokers must be more careful than ever not to misstep.

In a crowded market with declines in premiums and fewer guaranteed renewals, it’s also critical to cultivate a sense of trust with your consumers. That starts with marketing compliance.

Let’s explore the different regulations and the ways you can maintain consumers’ trust in your brand with compliance best practices.

In 2023, expect more regulations

As mentioned above, legislating bodies are moving to protect customers from harmful or potentially damaging insurance practices. The vast majority of insurance brokers are not intentionally taking advantage of customers, but the restrictions and regulations nonetheless apply to everyone.

For example, the Centers for Medicare and Medicaid Services implemented new Third-Party Marketing Organization requirements that affect all insurance agents and brokers. By definition, the CMS considers all insurance brokers to be third-party marketing organizations.

This requires changes now, including:

• Adding the TPMO disclaimer to your website and email communications.
• Disclosing to leads that their information will be provided to a licensed insurance agent for future contact.
• Identifying and listing all vendors, contractors and subcontractors you use for marketing, sales, lead generation and enrollment.

That’s a lot of change, and if you don’t get it right, you could face fines or other regulatory penalties.

Another example: the Department of Health and Human Services is changing rules in 2023 to stop insurance brokers from signing up leads for Affordable Care Act plans without consent.

Sabrina Corlette, a Georgetown University insurance researcher, told NPR that as things stand today, bad actors could potentially “fake an email address or phone number, fake someone's income to say they are eligible for a zero-dollar plan, and the person would never know." That’s what prompted this change.

Those are just two examples. New regulations are coming fast, and not adhering to them could mean a loss of license or incurred fines.

Consumer trust matters in a competitive market

Marketing compliance is more than just avoiding fines and legal issues; it’s also about maintaining trust with consumers. Consumer trust is an increasingly precious resource. As irritating as regulations might be, they are primarily there to help you communicate effectively and honestly with your leads about potential benefits and plans.

Previous generations were more trusting of insurance agents and brokers, but Generation Z is different. Research shows that younger customers don’t fully trust insurance agents. “Gen Zs are more likely to question intermediaries’ motives, [whereas] older consumers are more likely to trust the professionals,” writes Agentero, a digital insurance network, in its survey of Gen Z, millennial, Generation X and baby boomer consumers’ preferences for agents in real estate, insurance, and financial services.

With so many direct-to-consumer insurance options, it’s more important than ever to ensure that customers trust the value they derive from using insurance agents and brokers. The best way to do this is to:

• Market with consent. Only contact prospects when they have opted in. Don’t use misleading subject lines. Identify the message as an ad.
• Limit your marketing. Posting and emailing constantly is like knocking on someone’s door every day. Nobody likes that.
• Don’t trash the competition. Stay away from derogatory claims about your competitors. Not only is it against regulations, but it’s just a bad look.

By increasing trust, you can better educate prospects about the value you provide as an insurance broker or agent.

Don’t expect an easy ride in 2023

The insurance brokerage landscape is shifting. There are more regulations and an increased need to build trust. Plus, there are other challenges facing the industry, like climate change and inflation.

To succeed and survive as an insurance brokerage, one of the most important steps is to ensure consent and compliance when marketing to prospects.

Celeste Roberts is a content writer at ActiveProspect. She may be contacted at [email protected].

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