This post is part of a series sponsored by AgentSync.
For carriers, one of the more challenging aspects of compliance management and producer management is maintaining a producer appointment. Sure, if the carrier only operates in one state, this is an easy task – there’s just one rule to remember and follow. But for carriers that operate across state lines, the differences in rules from state to state can be daunting.
It’s not just state law differences that make this area tricky for compliance. The existence of just-in-time appointments, which allow insurers to postpone appointing a producer until the producer has filed business, and the existence of “brokers,” who are still required to be appointed in some states but cannot or do not exist in others, also make this a compliance challenge. Registry Statusyou don’t have to proactively notify the state about the agents you appoint, but you do have to maintain an in-house appointment register. It’s also true that state laws may not be entirely consistent with the business rules of the National Insurance Producer Registry (NIPR) Gateway.
nevertheless, Adjuster LicenseOr so we speculate.
Today we’ll discuss how states process appointments through the NIPR Gateway, how backdating is taken into account, pro tips for staying compliant when processing state appointments for downstream producers, and more.
Existential Crisis: teeth Do you have a reservation?
An appointment, broadly speaking, is when an individual producer or company gives recognition to the state that they are acting on behalf of an insurance company.
I say broadly because there are several variations on this theme. In many states, the appointment is simply an application to the state. Sometimes this means appointing an agency and that agency’s appointment covers all downstream producers. Sometimes the appointment applies specifically to all downstream producers and agencies, and sometimes the state does not appoint an agency and the appointment only specifies individual producers.
Another consideration is that the relationship is not always called an appointment. For example, in Georgia, carriers designate their downstream relationship with producers through something called a “Certificate of Authority.” This creates confusion because the Certificate of Authority is also the warrant that allows the carrier to operate in each state.
While most states consider the carrier to be the arbiter of whether or not it properly appointed a producer, New Jersey takes a different view on this point. According to a conference call with New Jersey regulators, the state’s view is that since it’s the carrier that makes the appointment, recording the appointment with the state is largely a formality. (More on this later.)
Just-in-time booking
Just-in-time bookingAn appointment, sometimes called a “pre-appointment,” is an appointment that allows the state to establish a carrier-producer relationship before the carrier appoints the producer. In this case, the carrier waits until the producer files business before notifying the state of the appointment (and paying the appointment fee).
This state provision is intended to save insurers money. If an insurer takes a proactive approach in each state and appoints every downstream producer that is tempting, the insurer could end up paying tens of thousands of dollars to appoint producers that never write a cent of business. By instead waiting until a producer is writing business in a particular state, the insurer can avoid the expense of paying for appointments that will not generate profits.
That’s amazing.
Unfortunately, the vagueness and subtlety of state regulations, combined with slow internal processes with multi-layered, manual onboarding, means few carriers are able to take advantage of just-in-time bookings.
Most states with just-in-time appointment laws have some variation on this language.
“To appoint an agent, an insurer must file a notice of appointment with the commissioner within (x) days from the date the agency agreement is executed or the date the initial application for insurance is submitted.”
Currently, some states, such as Washington state, provide that the appointment trigger should be “whichever comes first,” but most states allow the insurer to decide whether to choose the contract date or the business filing date as the appointment trigger, and states vary in whether the timeline for an appointment is 15 days, 30 days, or more.
Retroactive Rules for NIPR Gateway Reservations
State statutes and state notices are all important, but the NIPR Gateway is where the actual appointment happens. This is where carriers actually submit appointment applications for most lines of authority, or through a reseller (such as AgentSync). These rules give order, form, and meaning to what the states have written into law.
NIPR doesn’t make these rules, and the rules states set may not align with the business rules you establish through NIPR. Of course, NIPR builds the technology and maintains the infrastructure to support these rules, but ultimately, the National Insurance Producer Registry reflects the requirements of each state. So if you’re struggling with backdating rules or rule changes, or if one set of rules seems particularly confusing, it may be best for your state to sort it out.
To give one example, in 2023 Washington will end retroactive NIPR Gateway appointments, causing an uproar among us geeks in the industry. Are they still a just-in-time state? Does this mean they have to proactively appoint everyone? What the hell does this mean?!?!?!
We interviewed regulators in Washington to get their thoughts. You can read it hereIf you’re interested in the longer version, check it out.
But the long story short is that Washington State is actually doing what many states are doing, which is that Washington State law already says that if you report a booking within X number of days of the trigger, you’re in compliance, so there’s no need to be retroactive.
Twenty-seven states and jurisdictions allow some sort of backdating via the NIPR Gateway, while 18 states and jurisdictions do not allow backdating (plus all of the registry states), so if you operate in multiple states, you’ll likely be working in a mixed environment of regulations that could extend backdating to 60 days, or even 0 days.
So why the discrepancy?
We interviewed more than 25 states, some of which do and some of which do not allow retroactive applications through the NIPR Gateway. I didn’t Whether or not retroactivity is allowed, the rules are clear: the insurer must file the appointment within the statutory deadline, whatever the “trigger” for the appointment (which varies by state, but could be the producer’s contract or the producer’s initial business filing), and as long as the insurance department’s enforcement officer can look back and verify that the appointment date was within that specified period, the insurer is fine.
In just-in-time states that allow backdating, the answers were generally the same: It is considered acceptable for an insurer to submit a reservation date to the state after the reservation trigger, as long as it is within the statutory deadline. can Also, choose an appointment effective date that coincides with the trigger date. However, according to the states we spoke to (i.e. all Some states have good samples, but strictly speaking need The carrier will retroactively make the booking through the NIPR Gateway.
But New Jersey’s notable approach to personnel is worth mentioning here. According to a New Jersey Department of Banking and Insurance official, insurers are encouraged to backdate personnel due to a fairly generous 60-day lookback period. The official said state regulations state that insurers must appoint a producer within 15 days of the contract or first business filing. The 60-day lookback period allows insurers to not report personnel until after the first business filing, and backdate personnel to reflect a prior relationship up to two months prior if that more closely aligns with the producer’s contract date.
It is worth noting, however, that New Jersey appears to be an exception in its approach to retroactive application of the Gateway.
Getting Just-In-Time Bookings Right
Getting an appointment right can be a pain, but states aren’t trying to screw you over: They want insurance companies in their states to comply with their regulations, and they’re generally willing to put in the communication necessary to get you there.
Don’t let the intricacies of state-by-state appointment laws put you off the real savings that just-in-time appointment provisions can provide. AgentSync allows clients to build a process that allows them to properly appoint producers for a fully compliant distribution force while saving them the time and cost of JIT appointments.
Find out how AgentSync can make booking management and other parts of distribution easier and more efficient. Watch the demo today.
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