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Wide Range of Issues at NAIC Fall Meeting

The Producer Licensing (EX) Task Force meeting focused on how to create greater uniformity in business entity licensing. The regulators also passed the Producer...
September 29, 2009

A wide range of issues was discussed at the NAIC fall meeting, held September 21-24 at National Habor, Maryland. Here's a brief summary:

The Producer Licensing (EX) Task Force meeting focused on how to create greater uniformity in business entity licensing.  The regulators also passed the Producer Licensing Working Group's recommendations on state background checks and considered a proposal to enhance greater uniformity in limited lines licensing.

The Task Force adopted the Producer Licensing Working Group's Uniform Criminal History & Regulatory Actions Background Review Guidelines. These guidelines emphasize deference to the resident state so that non resident jurisdictions can defer to the resident jurisdiction for licensing determinations whenever possible. 

The Task Force also adopted a Timeline for Reciprocity Certification based on their 2009 Reciprocity Report.  According to the timeline, the NARAB Working Group will provide notice to all Commissioners of the GLBA Reciprocity Recommendations.  After hearing back from the states regarding their compliance with GLBA reciprocity requirements, the NAIC will issue a report on the Certification of States as Complying with Requirements of Producer Licensing Reciprocity with the goal of the report being adopted by the August 2010 National Meeting.

During the NAIC's Producer Licensing Assessment and Outreach, continued variations among the states' business entity licensing processes were identified.  The regulators are tackling this issue head on and are attempting to establish some uniform standards for the licensing of business entities.  PIA has been asking for this for years, so we welcome this development. PIA members have been very active in these discussions and we will continue to make recommendations that will lead to greater uniformity and reciprocity in licensing.

The NIPR (National Insurance Producer Registry) Board of Directors convened just prior to the NAIC fall national meeting to conduct normal business, including receiving a quarterly report on NIPR Financials, Transaction Volumes, User Participation and the State Implementation Plan (SIP).

PIA serves on the NIPR board and we are pleased with the progress that is being made. Every jurisdiction is now participating in NIPR for at least one product. We are now working on expanding the number of products offered.  Producers can apply for an individual license in almost every jurisdiction through NIPR.  This system makes obtaining and maintaining producer licenses much easier for producers and regulators. 

One new product just released by NIPR is the Attachments Warehouse; a secure regulatory database which electronically receives, stores, and shares licensing documents with the state regulators.  This one time filing may be used to allow insurance producers to satisfy their regulatory requirements for the notification and reporting of administrative and criminal actions to the insurance commissioner.  Insurance producers may send the required notification and documents to the Attachments Warehouse electronically instead of faxing or mailing it to every jurisdiction that may want it. 

The Crop Insurance (C) Working Group met to discuss regulators' concerns with the inevitable preemption of crop insurance adjuster licensing. Congress, through the Risk Management Agency (RMA), could preempt certain states licensing authority in this area beginning as early as July 1, 2011. The NAIC previously surveyed all states to assess whether they could allow a third-party to test crop adjusters to obtain a license. These results indicated that as many as 14 states could be preempted.

The working group received an updated report from NAIC staff on states' efforts to avoid federal preemption of crop adjuster licensing. All 14 states plan to implement changes so that federal preemption will not occur. NAIC staff will look into investigating changes that might be needed to the NIPR Producer Database (PDB).

The Surplus Lines (C) Task Force discussed the progress made investigating a surplus lines producer licensing exemption and the results of a working group's study on a universal form for allocating multi-state surplus lines premium taxes. The Task Force also discussed the status of H.R. 2571, the Nonadmitted and Reinsurance Reform Act of 2009 that was approved by voice vote in the House and sent for committee assignment in the Senate.  The NAIC opposes the reinsurance portion of this bill and has offered their alternative proposal. 

The Task Force is considering a proposal that would extend the commercial multi-state license exemption of the Producer Licensing Model to apply to nonresident surplus lines brokers. The regulators wanted more time to discuss this and give more states a chance to respond to the survey questions sent out by the NAIC.  The Surplus Lines Premium Tax Working Group did not meet during the Fall Meeting, but will convene again by conference call before the Winter Meeting.

PIA has been working with the NAIC on this issue and will continue to assert our preference for resolving this issue at the state level.

The Workers' Compensation (C) Task Force met to receive the State-of-the-Line annual report on workers' compensation from the National Council on Compensation Insurance (NCCI). Updates were also provided regarding H.R. 635 - the proposed federal bill to establish the National Commission on State Workers' Compensation Laws, and a draft National Conference of Insurance Legislators (NCOIL) Independent Contractor Model Law.

PIA opposes H.R. 635 and we are working with our legislators and regulators to demonstrate that the states are capable of handling these insurance issues. In addition to recognizing our opposition, the NAIC also recognized the American Insurance Association (AIA), the U.S. Chamber of Commerce, and the Property Casualty Insurance Association of America (PCI) as opposed to this bill.

Please continue to send comments to: David Eppstein, Assistant Vice President for Regulatory Affairs, at