Credit Insurance Sales Practices

It is every Bank’s goal to be viewed as a fair and honest financial institution. This goal should be reflected in all communications, notices, and forms presented to consumers. The goal of robust Credit Insurance Sales Practices is to uphold this fundamental notion, keeping both the reputation of the Bank and the needs of the customer at top of mind.  Recently, examinations have focused on lender’s sales practices.  Let us review three quick tips on how to best implement credit insurance sales.

Best Practices for Maintaining Compliance

1. Trained and Well-Informed Staff
A well-run insurance sales program starts with ensuring all staff are trained to know precisely what they can, and cannot, communicate to customers regarding the sale of insurance. We recommend implementing periodic insurance sales training conducted for those individuals licensed and qualified to sell insurance products. Consistency among staff in credit insurance sales presentations is key. Staff not licensed to sell insurance products must be made aware that even recommending these products can violate regulatory compliance and put the Bank at risk. For licensed salespersons, they must make it clear to consumers they are not obligated to buy the Bank’s insurance products, and that even though the Bank’s notices and forms contain this language, they must still clearly communicate this verbally. 

2. Clear and Concise Language
Another crucial component for maintaining compliance with insurance sales is the drafting and review process for all forms and communications with consumers about the solicitation of insurance products. The language included on these forms must be easy to understand and prominently displayed on all relevant documents, so consumers are well informed of their rights and do not feel obligated to purchase insurance products. Consumers should be advised early in the process that insurance is optional. This process protects both the Bank and the consumer, allowing you to maintain compliance while putting the customer at ease.

3. Monitoring & Audit
The two above recommendations are a great place to start when strengthening your insurance sales program, but you must also consider ongoing monitoring of these factors to keep your program strong. Reviewing insurance sales volumes for each qualified lender to identify anomalies, discussing their communication and sales approach, and monitoring feedback from consumers are effective ways to monitor compliance. Monitoring and audit need not be constant, but periodic review can provide peace of mind and assurance your Bank is meeting regulatory requirements.

We encourage you to reach out to Sentry Advisors with any questions about fortifying your Credit Insurance Sales Practices and maintaining full regulatory compliance.

Photo by Scott Graham on Unsplash

Copyright © 2021 Sentry Advisors, LLC, All rights reserved.

(No claim to original U.S. government material.)
All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, including electronic, mechanical, photocopying, recording, or otherwise, without prior written permission of the author and publisher. This article is intended to inform recipients of new or changed laws, rules or regulations. It should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own attorney concerning your situation and specific legal questions you have. Regulatory guidance is subject to change or modification, retroactively or prospectively, by varying interpretation and by subsequently issued pronouncements, legislation, and regulatory, administrative, or judicial decisions. Any such change or modification could affect the accuracy of this article.

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