Today, benefits and pension programs are in a state of flux, and compliance and risk management are becoming higher profile. That said, insurers have to be prepared, said Karen Christie, assistant vice-president, compliance and risk management, group retirement services, Sun Life Financial, speaking at the LOMA Canada conference in Toronto.
With changes to the CAP Guidelines, increased scrutiny for mutual funds and sales practices, and reports of yet another high-profile scandal(think Enron), there is increased public awareness and skepticism. Christie discussed four issues – offshoring, total benefits & plan sponsor expectations, fraud & identity theft, and transparency – that insurers(and ultimately plan sponsors)face today.
Offshoring
As companies look to secure their bottom line, offshoring – outsourcing business to places outside of Canada – is increasing. Under public sector privacy acts, companies cannot keep plan member information outside of Canada or make it accessible, Christie said. A plan sponsor needs permission from the plan member. “In some cases, written consent is required,” she said.
Total Benefits & Plan Sponsor Expectations
A growing trend in insurance, according to Christie, is total benefits. Usually pensions and group benefits are two separate entities, meaning two websites, two statements, two contacts, etc. Consumers like one-stop shopping, she emphasized. So combining the two will allow plan members to get all the information from one website, one contact. But will plan sponsors get a price break? “Theoretically for the client there should be a better price,” she said, but did not comment further.
Plan sponsors want all the information, too. They are increasingly expecting S.5970 certifications from their insurers. Christie said sponsors won’t necessarily read them, but want to know that the audit page is in good standing. Insurers also need to distinguish between insurers and financial entities such as trust companies or banks. They have different rules, and insurers need to know when the rules apply and to whom, she said.
Fraud & Identity Theft
With scams everywhere from voice mail to email, fraud and identity theft run rampant. Insurers must safeguard personal information for their customers and themselves. And they must educate their customers about this, too.
Although historically SINs were used as plan member identification, this is becoming less so and is expected to continue, said Christie. Now SINs are only used for tax reporting and other “prescribed” purposes.
Transparency
Do sponsors know what their plan advisers make? Probably not. There are increased expectations that advisers be open about their compensation with plan sponsors. The Canadian Life and Health Insurance Association is trying to standardize some wording and is encouraging all companies to include it, Christie said.
Christie notes that these issues wouldn’t have arisen 10 years ago, except maybe for SINs. But these are changed times. And insurers(as well as plan sponsors)must keep up to speed.
To comment on this story email brooke.smith@rci.rogers.com.