Agent Appointment Rules Reconsidered

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At least one major insurer group is peeved and worried by thedecision by state regulators to send back one important aspect ofuniform producer licensing rules for further consideration–theagent appointment process.

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The reason given by the Executive Committee of the NationalAssociation of Insurance Commissioners for remanding the issue tothe NARAB Working Group was to clarify certain data provisions ofthe model appointment form, according to the Alliance of AmericanInsurers in Downers Grove, Ill.

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However, the Alliance is concerned that this could serve as anopportunity to revisit a contentious issue with which the insuranceindustry and regulators had wrestled for at least two years.

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Larry E. Kibbee, Alliance vice president and regional manager,told National Underwriter that the NAICs ProducerLicensing Model Act specifies that “going forward,” agentappointments will be by company.

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However, a number of states insist that they want to keep makingappointments by line of coverage, he reported. Although thesestates contend it is a matter of consumer protection, Mr. Kibbeebelieves the real issue is revenue-generation, as appointments byline of coverage generate more fees per company in thosestates.

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After numerous discussions of the issue over the years in theUniform Producer Licensing Working Group, the NARAB Working Group,and the Financial Services Modernization (G) Task Force, theinsurance industry believed that a consensus had been reached andthat the Executive Committee would be voting on all aspects ofuniformity in agent licensing, Mr. Kibbee said.

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But when the matter was before the Executive Committee at theNAIC's meeting earlier this month in New Orleans, a few committeemembers said they had concerns about the ability of some states tocomply with certain data elements included in the proposed modelagent appointment form.

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What makes Mr. Kibbee concerned, if not suspicious, is that theExecutive Committee remanded the entire appointment process issue,instead of accepting the process and just sending back the formissue for further review.

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Noting that it was the same three states–Florida, Kentucky andVirginia–that had “dragged their feet” on the appointment issuethroughout the working groups proceedings, Mr. Kibbee toldregulators in several meetings in New Orleans that both theindustry and the NAIC should monitor “what these folks are doing tomake sure its not a bigger issue than what they claim it is.”

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He stressed that the appointment process “is the single mostcritical issue that companies have with uniformity” in terms ofagency licensing. He said that the industry does not want to rehashappointment and renewal issues that had already been resolved.

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“My point is, lets deal with these data elements in the formwithout delay, and get the appointment process back before theExecutive Committee for review as soon as possible,” he said. Ifthe states “are intent on these other issues, then were back tosquare one,” he added.

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NARAB stands for the National Association of Registered Agentsand Brokers, an entity that would have been created under thefederal Gramm-Leach-Bliley Act had at least 29 jurisdictions failedto meet standards providing for reciprocal treatment ofnon-resident producers by Nov. 12. The NAIC officially certified inNew Orleans that 35 states had met the GLB's reciprocity threshold,thus averting a federal takeover of the producer licensingsystem.

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However, the Washington-based Council of Insurance Agents andBrokers noted that much work remains to be done to achieve GLB'sactual goal of national agency licensing uniformity, since four ofthe largest states–California, Florida, New York andPennsylvania–have failed to take proper action to permit reciprocallicensing, accounting for nearly 30 percent of the insurancemarketplace. (See NU, Sept. 16, page 34.)


Reproduced from National Underwriter Property &Casualty/Risk & Benefits Management Edition, September 23,2002. Copyright 2002 by The National Underwriter Company in theserial publication. All rights reserved.Copyright in this articleas an independent work may be held by the author.


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