Designated responsible licensed producers (DRLPs) are much like a designated driver. They make sure everyone gets home safely and serve as a sober, level head in the insurance space.
OK, that may be somewhat of an imperfect analogy. But it is fair to say that a DRLP’s responsibilities are an important part of keeping an agency on the right track, and DRLPs bear a heightened responsibility for keeping other agents in compliance.
Here, though, let’s drill down into some of the what-ifs and practical considerations for DRLPs. If you’re an agency or DRLP, you’ll need to be sure you’re doing your own due diligence and ensuring compliance with your particular jurisdictional authorities.
According to the Securities and Insurance Licensing Association, all states require business entities – what most in the industry call “agencies” – to designate a responsible licensed producer or responsible person to act as the authority of an agency.
Having a DRLP may not seem like an intuitive rule, but consider: Although agencies are regulated much like an individual person, without someone who has actual skin in the game, so to speak, businesses have a tendency to act with higher regard for the bottom line than for the basic interests of consumers.
By linking a DRLP’s success with agency compliance, states try to ensure that someone at the agency has compliance with the law – and, presumably, the interests of clients – on their radar.
The DRLP is responsible for compliance, meaning any other agents working downline at the agency should report to the DRLP in some capacity. They take their cues from the DRLP, and the DRLP should be involved in setting any policies that ensure compliance, such as monitoring license renewal calendars, or overseeing training for proper sales processes.
Most states require agencies to submit a record of their DRLP, and have pretty rigid expectations for keeping the DRLP’s basic information up-to-date with the state. This is partly because the DRLP will likely be the first point of contact if a state conducts an agency exam or audit.
In their guide to DRLPs, SILA recommends that more states adopt a standard across the industry that would make it easier to compare and identify DRLPs. One such adoption they recommend is standard reporting of DRLPs to the NIPR producer database.
Unfortunately, it can be all too easy to see the DRLP as a reporting requirement – something the agency fills in once and then moves on, forgetting. Yet, if you’re the person named as the DRLP, you have some very real responsibilities. Having the agency – or reporting agents – act inappropriately under your authority can have very real consequences for you and your licensing.
Remember, in most states, the consequences for a producer acting out of licensure aren’t just limited to those who knew about the actions. Punishments also apply to those who should have known.
So, if you’re in the position of being a DRLP, here’s a few questions for you to consider when you’re developing best practices standards for your agency:
In many states, DRLPs’ insurance licenses are synonymous with the agency license, including for line of authority (LOA). This has a few implications.
Firstly, it means in most states (granted, this is not universal), DRLPs have to have a license in the LOA they’re responsible for. If an agency works across multiple LOAs, they may have to have multiple DRLPs responsible for compliance in different areas.
Secondly, it means if a DRLP’s license is in jeopardy – if they miss a renewal deadline or engage in a bad transaction – it could jeopardize the agency’s ability to transact business in that LOA. This makes it particularly important for a DRLP to be current with their own license compliance, let alone those of their subordinate agents.
Imagine the implications of a large agency with a DRLP who loses their license. In some states, that could terminate the appointments and sales abilities of not just all the agents in that LOA, but possibly the entire agency.
Underlying many of the DRLP responsibilities is the premise that it pays to keep all your agents’ licenses in good standing at all times and to play by the rules.
If you could use some help keeping all these rules straight, see how AgentSync makes it easier to stay in compliance while you grow like crazybeans.