Question: If each state is responsible for regulating its own insurance industry, and there are 50 states in the U.S., how many different entities dictate insurance compliance?
Seems like a trick question? Along with each of the 50 state departments of insurance, the District of Columbia, and each of the five U.S. territories have their own insurance department or commission. Each state can, in theory, set entirely different rules for any producer who wishes to be licensed in that state. On top of that, the federal government can and does weigh in on insurance industry laws from a national level.
As you might imagine, the number of cooks in the kitchen when it comes to insurance laws can make the system difficult to keep up with. The National Association of Insurance Commissioners strives to bring some consistency to state insurance laws, particularly through its Producer Licensing Uniformity Working Group, but to date, there’s still a large level of variability from one state to the next.
This disparity makes complying with insurance industry laws and regulations a real pain point for many carriers, MGAs, and insurance agencies – particularly when it comes to insurance producer licensing.
Regulatory compliance in a connected world
In today’s remote world, it’s rare for an insurance agency to do business in only one state. The use of digital tools to connect with customers from anywhere opens up business opportunities that were not available to local agents twenty or thirty years ago. This opportunity, however, comes with the challenge of complying with more than one set of laws.
And, if trying to keep up with as many 57 different sets of rules was not enough, each state (and the federal government!) continues to make changes to their insurance laws – literally by the day. Whether it’s a legislative change, a judicial review that recharacterizes our understanding of existing laws, or guidance from a regulatory body, there are multiple ways for numerous regulators to disrupt your current understanding of insurance laws.
The unique challenges of insurance regulatory compliance
Imagine an insurance agency with 10 producers, and each only does business within a single state. This agency might feel that keeping records on a spreadsheet is the easiest way to manage their producer licensing and appointments. If a state or federal insurance law changes, they can adjust uniformly across their team.
Imagine now that an insurance agency has 50 licensed producers who are each licensed to sell various lines of business across various states and territories. When a law changes, the agency’s first task is to determine which of their producers these changes even apply to! That’s no easy feat if the agency doesn’t have a streamlined system in place.
Then, what happens when a producer who was previously not licensed in a particular state becomes so? Does the agency employ a compliance officer and is that person on top of every new state, or line of business, that each producer is writing business in at all times?
This doesn’t even touch on the question of what happens when one new law impacts how existing laws are expected to be handled. In all but the smallest agencies, the changing state of insurance laws and regulations has a ripple effect that’s hard to manage.
With the pace of change in insurance industry laws and regulations, the room for human error is just too great.
How technology solves the challenges of insurance producer licensing and compliance
When it comes to insurance producer compliance, having technology in place to eliminate the manual effort and guesswork can be a real lifesaver. Regulatory changes in the insurance industry are inevitable, but with the right technology, getting lost in a sea of laws and compliance issues doesn’t have to be.
Imagine an agency with 50 licensed producers appointed to sell various lines of business, with multiple carriers, across a large number of states and territories. Now, imagine that this agency has access to a bird’s eye view of every single producer’s licensing and appointment status for each line of business, in each state.
Imagine real-time updates from actual state-level data each time a rule or regulation changes, along with alerts that notify the agency if action is needed for any one of its 50 producers to remain in compliance with all applicable laws.
With AgentSync, none of these scenarios are limited to your imagination. AgentSync is truly an end-to-end producer licensing and insurance compliance management tool that will help you stay ahead of insurance compliance pitfalls. If you are ready to spend more time serving clients and building business and less time tracking the near-daily changes to insurance laws, visit the demo page to see how we can help.