NCOIL At NAIC Session Backs Agent License Uniformity

SAN FRANCISCO--A state legislators' organization told the nation's insurance regulators at a meeting here that they fully support efforts to create standardization among states in licensing insurance agents and brokers.

"We're fully behind you on producer licensing; we need to get more states behind you," said Rhode Island State Rep. Brian Kennedy, D-Hopkinton, who is president of the National Conference of Insurance Legislators.

Mr. Kennedy's comments came at a Saturday briefing session for legislators at the National Association of Insurance Commissioners meeting.

At the meeting, New Hampshire Insurance Commissioner Roger Sevigny said producer licensing reform was moving ahead on many fronts and needed their support.

"It's a critical role you play helping state regulators and producers," he said after outlining the NAIC's efforts to create licensing uniformity.

He said the NAIC producer licensing working group was addressing standards for testing and background checks and was working with producers and trade organizations to make sure they could embrace the framework that was being developed.

Mr. Sevigny said the NAIC is hoping to approve adoption this year of a first edition of a producer licensing handbook.

He also related that a working group involved with the proposed National Association of Registered Agents and Brokers producer licensing effort was busy with the issue of state compliance on uniform standards. The group has held meetings and phone conferences and is focusing on making standards comply with the federal Gramm-Leach-Bliley Financial Service Modernization Act, he said.

The NAIC's Industry Producer Licensing Coalition, said Mr. Sevigny, is working with the insurers to learn what the industry feels it needs for an easier licensing process as well as how regulators can manage to better promote licensing regulation.

Further, the coalition is examining how to get all 50 states involved in the uniformity effort and how to get "congressional empowerment," Mr. Sevigny explained. He emphasized to the lawmakers from the four states attending the session that state legislators, by providing support for the NAIC producer licensing reform effort, could play "a big role" in its success.

Maryland State Sen. Delores Kelley, D-Baltimore, who is involved with banking regulation in her state, remarked that requests to supply data could be seen as "scary and costly."

After a briefing on NAIC plans to centralize and collect insurance company data for a Market Conduct Annual Statement, Rep. Kennedy said his group had only recently learned of the effort and "we're concerned it was moving at lightning speed."

In response, regulators reassured him that the effort has been in the works for several years and that industry participants were well aware of it.

NAIC President Sandy Praeger, who is also Kansas insurance commissioner, and Joel Ario, acting Pennsylvania insurance commissioner, responded to questions from Mr. Kennedy about how the annual conduct statement information would be handled.

Ms. Praeger said NAIC had no intention of selling the data and that it would cost more to publish the data than any income it would bring in. She said there is a deadline now of July 1 to adopt a reporting format so the NAIC can negotiate with vendors who would produce a form. Insurers would also need advance notice to be in a position to report the material.

Mr. Ario labeled the idea that the NAIC would be unable to keep confidential any privileged trade secret material it collected for the conduct statement "absurd." He noted that the organization routinely keeps a lid on information about financially troubled insurers and "nobody has ever had a problem." The issue, he said, is specious--"a red herring."

Representatives of the Property Casualty Insurers Association of America (PCI) said later that NAIC's confidentiality had never been put to the test with a subpoena and that salary information, which the group originally said would be kept confidential, was released.

At the close of the session, Mr. Kennedy remarked that lawmaker dialogues with the NAIC are important particularly with the U.S. Treasury Department supporting the concept of federal authorities taking on state insurance regulation. He urged commissioners to encourage the chairs of legislative insurance committees in their various states to attend NAIC meetings and perhaps offer them briefings at NAIC headquarters in Kansas City, Mo.