Brokerage Ops the December 2022 issue

State of Play

NAIC preps for 2023, and NIPR works toward digital future.
By Scott Sinder, Cari Lee Posted on December 1, 2022

And while major prognosticating on the impact of the election outcomes can wait for a later date, one thing is certain: the election should not impact the governance of the National Association of Insurance Commissioners in the near term, as all of the current NAIC officers will retain their state office. All of the directly elected insurance commissioners that were up for reelection retained their seats, and, although four state governorships have flipped parties, which will likely result in the appointment of new commissioners, none are in states with commissioners who currently serve in influential NAIC positions.

That said, it is a good moment to take stock of where The Council’s work with the NAIC stands and what we can expect to see in 2023, with a deeper dive into some potentially very positive National Insurance Producer Registry developments.

National Association of Registered Agents & Brokers implementation—In early November, the Biden administration sent a formal request asking the NAIC to submit a slate of commissioners it recommends to serve on the NARAB board. Under the NARAB statute, the NAIC has 15 days to submit that list for the president’s consideration. The president is not bound by the NAIC’s recommendations and may nominate any currently serving state insurance commissioner. If not enough commissioners are willing to fill the eight board seats designated for insurance commissioners, the president may fill the balance of those seats with former commissioners as long as they do not currently work for the insurance industry. The Council has been in close communication with the NAIC leadership on this initiative and is hopeful the NAIC will submit its slate of recommended candidates to help advance this process in the most efficient way possible.

NIPR plans to develop a new Producer Data Base (PDB) experience for industry customers to improve usability and value.

Surplus Lines Model Act revisions—The NAIC is updating its Surplus Lines Model Act, and The Council has been advocating to allow unaffiliated groups to get the same single state regulatory treatment as affiliated groups and to streamline the declination process.

Unfair trade practices regulations—In 2022, the NAIC began discussing improper marketing of Medicare Advantage products and health insurance in state-regulated markets. The NAIC is evaluating whether to address perceived marketing abuses through Unfair Trade Practices Model Act amendments, including adding requisite oversight over aggregators and third-party marketing activities.

PBM transparency—The NAIC Regulatory Framework Task Force had been considering updating the PBM model law, but it now appears they will not advance an update in 2023. Instead, they plan to publish a PBM white paper providing a regulatory overview of PBM practices and state legislative efforts.

NAIC president and Idaho director Dean Cameron, in part at our urging, appeared at a recent National Council of Insurance Legislators meeting to speak on the essential work agents and brokers play in the insurance ecosystem. He cautioned the legislators that excessive and burdensome regulation on commissions and compliance harms the customers they are trying to serve both because it devolves resources away from client services and because it can unnecessarily limit client service options.

NIPR’s Bridge to the Future

As The Council’s director of state government affairs, Cari Lee continues to serve on the NIPR board alongside insurance commissioners and other industry representatives. Ensuring NIPR provides an efficient platform for insurance licensing and appointment compliance across all states has always been our top priority.

Other than New York, all jurisdictions use NIPR to some degree. This year, NIPR expanded services to California, Pennsylvania, South Carolina, Florida, Kansas, and Massachusetts (the last state to implement appointments through NIPR), with Hawaii on deck in 2023. With new states coming on board, The Council supported NIPR’s 2022-2023 Bridge to the Future accelerated budget request to improve the agent and agency user experience as quickly as possible. And in August, the board approved an additional three-year budget increase as an extension of this effort.

NIPR intends to use these funds to deliver new customer-centric features for seamless access to information, tools and services. First, they will enable proactive communication with producers by providing user account capabilities and removing barriers to entry for small business accounts through the automation of account activation and management processes.

Cameron cautioned the legislators that excessive and burdensome regulation on commissions and compliance harms the customers they are trying to serve both because it devolves resources away from client services and because it can unnecessarily limit client service options.

Today, agents and brokers must rely on individual state licensure look-ups and back-end procedures to ensure they are compliant. The enhanced capabilities will replace this cumbersome and essentially manual process with one-stop access to all of their licensing information for all the states for which they hold licenses. The goal is to enable agents, firms and/or their designees (including third-party administrators) to access their entire licensure and transaction history; to receive renewal, CE deficiency and other licensure-related notifications; and to easily manage their licensure-related compliance requirements across all their jurisdictions through a single online platform.

Second, NIPR plans to develop a new Producer Data Base (PDB) experience for industry customers to improve usability and value. As we know many of you appreciate, the PDB is the backbone of producer licensing compliance because it hosts all of the licensing histories in real time and is used by many companies to feed internal databases. For example, the PDB includes revocations, administrative actions, and appointments. The PDB also links participating state regulatory licensing systems into one common repository of insurance licensee information and includes enforcement data from the Regulatory Information Retrieval System (RIRS) to provide a more comprehensive licensee profile. Today, all states, the District of Columbia, Guam, Puerto Rico, and the U.S. Virgin Islands participate in the PDB.

Finally, NIPR will implement, modify, enhance or retire products or services based on internal reviews, user feedback, customer satisfaction ratings and net promoter scores. They also will continue to improve user satisfaction by defining, expanding and streamlining the role of NIPR’s customer relationship support team members.

Overall, these improvements should—we hope—lead to the long overdue modernization of the licensure compliance process and to a more satisfying NIPR user experience.

There is, as always, much to be done, and we will continue to do our best to keep you apprised of any material NAIC developments.

Scott Sinder Chief Legal Officer, The Council; Partner, Steptoe Read More
Cari Lee Director, Government Affairs & Public Policy Group, Steptoe & Johnson Read More

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