May 19, 2015

Just-In-Time Appointments Update

By: Patrick Masi

My last post talked quite a bit about how a carrier might track securities registrations for independent reps. This is just one of many operational issues that Sircon will be discussing with the industry at this year's IRI Ops & Tech Conference, this week in Nashville, TN.  In addition, we expect that Just-In-Time Appointments will continue to be a hot topic. In fact, significant questions about this practice were raised during last year's SILA national education conference – questions that are still waiting for answers.

What's happened since SILA?

The NAIC Producer Licensing Working group met on Sunday, April 26th in Kansas City. Part of the meeting agenda included a discussion and proposal for a survey about the appointment process; specifically Section 14 B of the Producer Licensing Model Act:

"To appoint an agent, the appointing insurer shall file, in a format approved by the insurance commissioner, a notice of appointment within 15 days from the date the agency contract is executed or the first insurance application is submitted."

The PLMA was written at a time of mostly manual processes, so the advent of automated appointing and producer lifecycle management is another factor driving this issue.

There is also some debate on what PLMA and state adoption of it has to say about appointing agencies verses appointing brokers. PLMA language says brokers do not need to be appointed, but some states say they do, and some carriers interpret that way as well.

Of course, what it means to be acting as a broker isn't always clear in actual practice versus contractual language either. For example, if a producer places a majority of a type of business with one carrier, is that an indication of agency relationship, even if the contract between them may say the relationship is a broker relationship?

That's just one of a number questions we're left with.

The main question, however, is whether the industry has a choice on appointment timing. Did the state implementations of PLMA allow for this perceived choice of contract date versus first insurance application date? Or did the state impose stricter rules requiring appointments during initial contracting and onboarding? If it's to be the contract date, will the agencies be held responsible for notifying carriers within the appointment window? 

Operations and IT professionals are hanging on the answers. The best approach, of course, is that we need to be ready to change quickly, since either outcome is possible and could be different from state to state.

From that perspective, how would you assess your own producer authorization processes?  Are your systems and procedures capable of shifting a single state from JIT to not-JIT overnight?  If agencies submit an agent onboarding request on day 15 of the 15 day window, could you actually get the appointment request submitted that day?

In any event, we seem to be getting closer to settling this issue that has been building up for quite some time. Neither carriers nor state regulators are comfortable with the degree of uncertainty regarding this process. 

What do you think?

Consider joining the Vertafore Sircon team at IRI Ops & Tech this year to discuss ways to handle rapid operational shifts caused by change regulations.

We would love to hear what you've come up with.

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