A review of how states are complying with uniform producerlicensing standards shows high compliance on 26 of 37 benchmarks,according to the National Association of InsuranceCommissioners.

"This self-assessment outlines where we stand today in terms ofcompliance with the Gramm-Leach-Bliley Act's reciprocityrequirements and uniform resident licensing standards," said NewHampshire Insurance Commissioner Roger Sevigny, who chairs theNAIC/Industry Producer Licensing Coalition.

"It also provides an independent legal review and on-site peerassessment of our licensing laws, regulations, practices andprocesses," added Mr. Sevigny, who is president-elect of the KansasCity, Mo.-based NAIC.

The NAIC conducted the review via a team of volunteer regulatorswho visited 52 jurisdictions to examine compliance with 2002 NAICreciprocity standards among states. The standards were developed sothat states would be in compliance with the Gramm-Leach-Bliley Actof 1999, which required states to establish reciprocity to avoidestablishment of a federal licensing body--the National Associationof Registered Agents and Brokers.

The NAIC team defined "high compliance" as fulfillment of thestandard by 35 or more states. The NAIC also checked on how statesare using electronic tools to ease the licensing process (seeaccompanying graphic).

The Feb. 19 NAIC report also pointed out as indicators ofsuccess the fact that in an effort to address privacy concerns andmove away from state-specific licensing numbers, 47 states havedropped the use and disclosure of Social Security numbers and haveimplemented--through its affiliate, the National Insurance ProducerRegistry--the use of a National Producer Number.

In addition, according to the report, 45 states have implementedthe electronic, centralized NAIC's Address Change Request system,through which a producer may notify all appropriate states.

Appointment and termination enhancements have also been put inplace, with 41 states using NAIC/NIPR to electronically processappointments and terminations, while six states (and soon to bemore) electronically process appointment renewals. Only two otherstates require appointment and termination transactions but do notleverage NIPR.

Consumer protection--an area insurance commissioners point to asa key reason why state regulation needs to be retained, rather thanrelying on a federal system--has been enhanced by a state trackingsystem, according to the NAIC report.

As evidence, the report cites the NAIC's "2006 InsuranceDepartment Resources Report," which found that states took thefollowing actions against producers:

o 1,694 license suspensions

o 1,509 license revocations

o 473 cease-and-desist orders

o 1,108 license denials

In addition, states levied fines of $19.8 million againstproducers and recovered $61.6 million in restitution for consumers,the report noted.

The NAIC team found that among noncompliant states there was awillingness to move toward compliance. For instance, it reportedthat four states identified as not checking work authorizations forresident applicants who were non-U.S. citizens indicated they would"immediately change their processes."

Twelve standards had "low compliance," identified as less than35 states being in compliance, but reasons were more complicatedthan simply changing administrative procedures, according to theNAIC report.

Reasons ranged from legislative hurdles, the interpretation ofuniform licensing, and the lack of concern among the local industryregarding noncompliance.

As an example, continuing education standards fell into thiscategory, "where full exemption or fewer hours are required forproducers who are over 65 or have been licensed for 30 years ormore."

As an example of the complexities of determining requirements,39 states were found to be out of compliance with fingerprintstandards. Twelve states said there would be opposition to anyfingerprinting requirements from their local industry, trade andproducer groups, while three states noted opposition from statelegislatures. Ten said they could not comply with the standarduntil there was a central depository, while six states expressedconcern about protecting those fingerprints.

The NAIC had attempted to create a central fingerprintdepository but was met with industry opposition.

Four states that were found to be in compliance do not submitfingerprints electronically, while two states that do not submitprints totally electronically were found to be out of compliance,suggesting an area of inconsistency.