As part of our occasional series of conversations with compliance executives, we caught up with Lee Augsburger, chief ethics and compliance officer at Prudential Financial, and vice chairman of the newly established Global Insurance Chief Compliance Officers Forum. Established in January by a group of chief compliance officers from the insurance and reinsurance industry, the CCO Forum focuses on developing industry best practices in compliance. Augsburger provides insight on the objectives of the group and how it fills an important void in the industry.

How did the idea for the Global Insurance Chief Compliance Officers Forum (CCO Forum) come about?

The impetus for this came from conversations that I’d had with a number of CCOs for large global insurance companies. We started out sharing compliance practices on a range of topics critical to compliance programs in the insurance sector. We were comparing notes with each other, and we were meeting about once every six months informally. At some point, we said, “We really ought to get more formal about this, because it seems to us like there are some good things that would come out of this conversation.”

Out of that came the CCO Forum. It’s compromised of CCOs who are affiliated with large insurance companies with a global reach. The regulatory challenges we face in the insurance sector have nuances of their own, so having this group coming together and meeting on a regular basis, and putting together working committees to address different issues, we think is going to be very useful.

What are the core objectives of the CCO Forum?

In addition to sharing compliance best practices, we’re hoping to generate some thought leadership in those areas and share it with the industry through the CCO Forum’s website. In that way, we hope to educate the larger compliance profession. There is also a desire to have conversation and dialogue with regulators so that they have an understanding of what our thinking is as well.

Let’s talk about that. How important is it that the industry has a voice in the regulatory changes that are occurring on a global scale? 

The regulatory dialogue is vital. One challenge we face is that regulators will often find a regulatory violation, engage in conversations with the company, and focus on addressing the concerns of only that specific issue with a fine, a penalty, or a settlement of some sort. Very often in these settlements, the compliance department gets kicked in the teeth, because obviously the compliance department failed, otherwise the company never would have had a regulatory problem. That logic, certainly from the perspective of a compliance officer, is concerning. So one of the things we’re hoping to do is engage regulators in conversations about the role of compliance within a company, what it can and can’t do, what it should or shouldn’t be responsible for.


The Global Insurance Chief Compliance Officers Forum (CCO Forum) is a group of chief compliance officers from around the world who consider high level issues impacting the compliance function within an insurance or re-insurance group. 
The CCO Forum was formed in January 2015. Thomas Loesler, chief compliance officer of Allianz Group serves as the first chairman and Lee Augsburger, chief compliance and ethics officer of Prudential Financial was appointed vice chairman, both for an initial period of two years. There are 14 founding members of the group, all being large multinational insurance and re-insurance groups with numerous operations around the world.  The chief compliance officers of these members come together regularly to discuss key issues.
This is the first time such a group has been formed with a truly global representation.  The objectives of the group are to share global best practices on a range of topics critical to compliance functions in (re)insurance groups. One of the key outputs will be to support the education of all stakeholders in the sector about the roles of compliance functions and to participate in the future development of compliance and the compliance function for the insurance industry.
Source: CCO Forum.

As a compliance officer in the insurance sector, the idea of insuring regulatory compliance is not a policy I’m writing. Being a guarantor of all regulatory compliance is not something that I think any compliance officer will sign up for. I can identify the highest regulatory risks and make certain that the company has a meaningful program to monitor, report, and train on those risks—but to be a guarantor that none of those risks will be realized, that’s a dangerous posture for any compliance officer to be in.

So part of what we’re hoping to do is to engage in the conversation with regulators, not about a specific regulation, but rather the primary conversation we hope to get into is more about the role of the compliance officer and the role of the compliance program in the larger setting of the corporation.

How did you end up as vice chairman of the group?

Given the fact that the group is compromised predominately of European companies and American companies, the thought was that our initial chairperson would come from Europe, and the initial vice chair could come from the United States, and so that’s how I ended up as the vice chair of the CCO Forum.

How many members do you currently have?

There are 14 founding members of the group—all large multinational insurance and re-insurance groups with numerous operations around the world. 

What sort of qualifying criteria must insurance companies have if they’re interested in joining the CCO Forum?

We’re looking for chief compliance officers representing international insurance or reinsurance groups with operations in at least 10 countries and two continents and at least $10 billion in annualized reinsurance net earned premium, so you’re talking about really sizeable insurance operations.

In what ways have the roles and responsibilities of compliance officers in the insurance industry changed in recent years?

One significant change is that we’re much more focused on the banking governance concept of the Three Lines of Defense. This concept holds that in governing the actions of a company there are three active groups acting as a defense against problems.

The first is the business with its line manager, supervisor, and overseers. The second is the compliance department (for regulatory risk) and the risk management organization (for all other risks).  Finally, the third line of defense is the internal audit function.  

Five years ago, I don’t think any of us were thinking about the Three Lines of Defense. When there was no risk management function, the compliance organization knew exactly what they were doing. Now that you have risk management and compliance as the second line of the defense, there is more conversation about, “Which pieces do you have? Which pieces do I have? Where does your authority start and stop? Where does mine begin and end? Let’s make sure we’re not dropping anything in between.” That’s one of the nuances we’re seeing today that five years ago just wasn’t really part of the mix.

How does this CCO Forum differ from other types of industry bodies and trade associations out there?

We think it’s unique. We figure there are probably others out there, but I don’t know if there is going to be a lot of crossover in terms of regulatory concerns, because insurance does occupy a unique space in the financial sector.

How often does the CCO Forum get together?

We meet in person semi-annually, and we’re meeting by phone on a quarterly basis. There are also working groups that are meeting on a more frequent basis as needed, to move their agendas forward.

Any concluding thoughts that you’d like to leave compliance officers with?

There are times when the nuances of regulations dictate that you have these kinds of small groups. We really ought to be able to profit by being transparent about what we’re learning from the larger profession. I’m hoping it will create a larger benefit as time goes on.

Thank you, Lee.