As you know, there are a number of steps involved in running an agency and selling an insurance policy. Some of those steps, like answering incoming calls, explaining claims procedures when interpretation is not required, and tending to administrative matters can be handled effectively and legally by unlicensed personnel. Other tasks, though, require that an agent be properly licensed. Examples include providing insurance quotes, accepting an application, and receiving premium payments. The distinction is pretty clear, and most agents are careful about the duties they ask their unlicensed office staff to perform. There are some pretty stiff penalties for selling insurance without a license.
It shouldn’t be hard to understand, therefore, that the legal profession has similar rules about what duties must be performed by a licensed attorney and what information can be shared by people without a license – people like insurance advisors, for example.
What does this mean for agents? Does it mean you should stop helping your clients with their questions about the ACA, the AHCA, or their compliance requirements? No, of course not, but it does mean that there are some things that are within the scope of our jobs as insurance advisors and others that are outside the scope. For those situations where it’s clear the client needs you to interpret the law for them, maybe it’s time to refer those questions to an actual attorney.
The same thing could be said for tax matters. Accounting is also a profession, and when your clients have detailed questions or need advice about their specific situations, it’s probably best to refer them to a tax professional.
Some agents try to help their clients by emailing them the actual wording of the law; often this means digging through the actual legislation or regulations and copying the sections they’re asking about. It’s worth pointing out, though, that even this level of guidance can be dangerous. The rules of the game frequently change, and those changes can come from any branch of the government:
- Federal regulators like HHS or the DOL can write new regulations.
- Congress can pass new legislation.
- And courts can issue decisions about how to apply legislation and regulations.
Insurance is a profession. So is law, and accounting. The best advice we can give is for you to act like a professional in insurance matters and do everything you can to help your clients within the scope of this profession, but be careful about venturing too far into the other professions. In the same way that you wouldn’t expect an attorney or an accountant to be in a position to provide sound insurance advice, agents aren’t really in a position to provide sound legal and accounting advice. It’s unfortunate that we’re put in a position where our clients are asking us these sorts of questions, but that seems to be the new reality. The best way around it is to provide general information that you know to be true and find trusted advisors that you can refer your clients to when necessary.
For example, the individual and employer mandates are tax laws, and we certainly don’t want to make the mistake of providing what could be interpreted as tax advice to our clients. However, we all know that most Americans are required to have minimum essential coverage or pay a tax penalty if they don’t qualify for an exemption. And we know that applicable large employers could get hit with one penalty if they don’t offer minimum essential coverage and a different penalty if they offer coverage that is unaffordable or fails to provide minimum value. Those are broad requirements that we should feel comfortable explaining to our clients.
But if an employer asks you to explain the detailed common ownership rules and wants you to determine if they’re part of an aggregated applicable large employer group when there are different business formats, owners, and ownership percentages across a number of companies, that’s the sort of question you should refer to a tax attorney. Your insurance training doesn’t qualify you to answer it and your E&O insurance won’t cover it if you answer incorrectly.
Similarly, if a client would like assistance completing their 1094Cs and 1095Cs, that’s the sort of thing you might want to refer to a third party administrator. The forms can be complicated, and you’re not paid for helping clients with compliance matters.
Agents these days have to wear multiple hats, and in a given day we’re part insurance advisor, part attorney, and part CPA. Just be careful when filling those other roles. You don’t want to say anything that could put you or your clients in jeopardy.