• Consumers


  • Producers/Agents


  • Companies


Common Compliance Problems


As a result of the examination of several preneed funeral establishments and/or cemetery authorities, the Alabama Department of Insurance (ALDOI) has noticed several areas of concern with regard to compliance with the Preneed Funeral and Cemetery Act, ALA CODE § 27-17A (1975). It should be noted that all entities selling preneed funeral and/or cemetery services and/or merchandise are required to comply with all requirements of that law. A preneed entity is defined as any funeral establishment, cemetery authority or third-party seller that is selling preneed services and/or merchandise as defined under ALA CODE § 27-17A (1975). Those areas of concern are as follows:

  • Selling Preneed Contract without COA
  • Unregistered sales agents selling contracts
  • Using contract forms not approved by ALDOI
  • Not trusting funds within the required time-frame when the contract is paid in-full
  • Not purchasing an insurance policy for the full amount of the contract
  • Not completing the contract form fully (i.e. no signature, etc.)
  • Not accounting for Preneed contract funds separately
  • Not maintaining individual contract payment records
  • Not including preneed contract assets and liabilities on end of year balance sheet
  • Not maintaining quarterly (at least) statements from trust companies or insurance companies if insurance is used to fund contracts
  • Not having end of year financial statements prepared using GAAP
  • Not submitting Preneed activity reports to ALDOI by April each year as required
  • Contributions to Endowment Care Trust Funds not made as required
  • Using Preneed contracts containing a non-refundable clause
  • Improperly merging preneed contracts funds from pre May 2002 contracts with post May 2002 contracts
  • Not having a published price list available
  • Not maintaining detail deposit records for preneed monies
  • Not maintaining agreements with insurance companies used to provide policies to fund preneed contracts
  • Inadequate documentation maintained in preneed contract file, (i.e. no copy of Insurance policy, payment record etc.)
  • Failure to respond to correspondence from ALDOI