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PIA Presents Member Feedback on Producer Licensing to NAIC Working Group

The NAIC Producer Licensing Working Group wishes to specifically identify the issues and states that have not yet refined their non-resident licensing systems. In...
June 12, 2007

The NAIC Producer Licensing Working Group wishes to specifically identify the issues and states that have not yet refined their non-resident licensing systems.  In preparation for the recently concluded June meeting, PIA invited PIA affiliates, leaders and members to share both their challenging and positive experiences with non-resident licensing systems, and in doing so to provide specific details.  PIA National submitted a summary report to the NAIC Working Group during the June meeting.  Thanks to those PIA members and affiliates who took the time to inform us of their experiences.

PIA National noted that the number one frustration with the process is the states' general commerce foreign corporation process, as applied to non-resident insurance producers.  PIA National advised that historically these states' requirements were vested in and coordinated through the DOIs.  However, since 1996, Secretaries of State have been more aggressive in this licensing process and applied it to non-resident insurance producers.  This causes several contortions to the insurance non-resident licensing process that are not in the control or authority of the DOIs (at this time) to pre-empt.  It subjects non-resident insurance producers to a dual "foreign" entity process.  It negates several of the key non-resident licensing liberalizations that DOIs have achieved through passage of the NAIC Producer Licensing Model Act.  And it can subject non-resident insurance producers to gross sales receipt taxes owed on the commissions they "earned" in the non-resident state, a tax that has already been paid by insurers.

PIA National was asked and is providing a thorough outline of the issues, historical process, current situation and suggested reforms to realign the non-resident licensing process.  This will be submitted to the NAIC (and PIA leaders) at the upcoming June 20 special NAIC EXCOM meeting with producer trades (see related article).

PIA Letter to Rosanne Meade, assistant insurance commissioner of the Iowa DOI and chair of the NAIC D- Committee Producer Licensing Outreach Subgroup (PDF file; June 2, 2007)

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