Five Emerging Tech Trends that Will Disrupt the Insurance Industry

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.

For some general background on agency responsibilities, including DRLPs and agency affiliations, check out our other blog.

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.

Insurance 101: DLRPs

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DRLP and compliance responsibilities

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. 

Duck and ducklings

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. 

DRLP’s responsibilities and best practices

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:

  • What is your involvement in the business? Many agencies name primary owners of the business as DRLPs. Sometimes, those owners are people who have little to do with the daily operations of the business. They’re nearing retirement and have little interest in monitoring the CE requirements or training for the agents they’re responsible for. If you don’t want the responsibility, you may want to re-examine the structure of the business.
  • How often do you meet with other business team leaders? Do you meet with someone from accounting regularly? How about from each division of LOA? A DRLP should have some idea of who is doing what in the business, any challenges to their operations, and meet periodically – monthly or quarterly – to get an accounting of what’s going on in terms of people, process, and profitability.
  • Do you have an agnostic source of verification? As Ronnie Reagan said back in the days of the Cold War, “trust but verify.” While you should absolutely have someone reporting to you about what’s going on in the business, it’s doubly important to have an independent way to validate what they’re telling you. 
  • How transparent is your organization? Do you have processes and tools in place that allow you or independent auditors to easily access information for audit and exam purposes? Do you have a sales process for your agents to follow? Do you have the ability to occasionally sit in on client meetings or sales presentations? It may be tempting to have an “ignorance is bliss” attitude, but we’d suggest maybe thinking of it more like “ignorance is a lawsuit that just hasn’t been served yet.” Remember, bad actors at your agency are people you bear a responsibility for.

DRLP licensure and line of authority

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.

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