Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: MONDAY, September 4, 1995 TAG: 9509060005
SECTION: MONEY PAGE: 6 EDITION: HOLIDAY
SOURCE: JANE BRYANT QUINN WASHINGTON POST WRITERS GROUP
DATELINE: NEW YORK LENGTH: Medium
But after the sound and fury die, what happens to those agents whose clients cried foul? Some flee the business. Some are kicked out. But others bounce back into new insurance sales jobs. Maybe the companies chose to give them a second chance. Or maybe they didn't know that the agents had blots on their records.
So-called ``company jumping'' is one of the industry's sorrier secrets. An insurance agent facing complaints at Company A can jump to a job at Company B with no one usually the wiser. If asked for a reference, the companies merely verify employment. They don't tattle, for fear the agent will sue.
State insurance departments keep lists of agents with formal disciplinary records. To check someone out, call or write the department, located in your state capital. But the public record usually won't include pending actions or customer complaints. Those usually are kept on a separate list, for only the regulators to see. Your agent could come up clean on paper, yet be a weasel in reality.
Contrast this with the way the securities industry keeps the book on rogue stockbrokers. Every broker, good or bad, has a rap sheet on file with the National Association of Securities Dealers. It's known as the Central Registration Depository.
To check a broker's file, just call your state securities office.
Odds are, you'll find only biographical information. But if there's any dirt, you can count on the registration depository to dish it. You'll find out if your broker has ever been fired and why; if any customers have complained; what happened in each case; whether he's under investigation; whether he's been fined.
Some insurance agents also fall under the sway of the NASD. That happens because they choose to sell variable-life insurance and annuities - products invested in stocks and bonds. For that, a securities license is needed. With it comes a file at the CRD.
If your own agent has a securities license, there's no better way to check him out. There's an eye-popping difference between what your state securities department discloses and what you can get through most state insurance departments. The insurance department may tell you ``no problem''; the registration depository may reveal an entirely different story.
There's yet another reason for seeing your agent's record, if he happens to have one. Securities administrators have been quicker to punish crooks.
To take one example, insurance agents are sometimes caught stealing their customers' funds. The NASD holds hearings and usually bars them forever from selling variable-life and annuities. State insurance departments, however, tend not to follow these cases up, so the agent might keep his regular insurance license. The theft punished by the NASD might not even be entered into the agent's insurance record. Only the agency's files would tell you the risks you run.
A national data base exists of all state insurance actions taken against bad agents and firms. Another data base covers investigations pending. Neither is open to the public. They're maintained by the National Association of Insurance Commissioners to help with law enforcement. Still, a bad record in State A isn't always a bar to entering State B. Another sorry secret is that agents can readily ``state jump,'' too.
The insurance commissioners are trying to speed the states' exchange of information. This month, five states will start using its pilot Producer Information Network - the first step toward linking state data bases electronically. Within two years or so, most of the states should be on line, says North Dakota insurance commissioner Glenn Pomeroy.
by CNB