Have you ever tried brewing beer at home? There are a ton of steps involved – cleaning the equipment, brewing the grains, adding the hops, cooling the wort, cleaning the equipment again, aerating the wort, fermenting the brew, cleaning everything again, bottling the beer, letting the bottles sit for two weeks – and even if you do every step perfectly, you may end up with exploding glass beer bottles stinking up your home.
Tracking National Producer Numbers (NPNs) on your own is a lot like this.
In all seriousness, though, NPNs are important. Very, very important. And accurately tracking them can be the difference between compliance and noncompliance. But that’s easier said than done.
What are NPNs and why do they need to be tracked?
NPNs are unique identifiers assigned to every individual and most businesses on the National Insurance Producer Registry’s Producer Database. Everyone involved in insurance-related activities regulated by a state insurance department needs an NPN, including adjusters, navigators, and producers.
NPNs are national, a rarity in the world of insurance regulation. While insurance is mostly regulated on a state-by-state basis, the purpose of having a nationally tracked number is to add consistency and oversight across state insurance departments.
For instance, imagine a producer is licensed in Nebraska and racks up a bunch of regulatory actions, which then makes their license inactive. Without a nationally recognized identifier, other states – and businesses within those states – may not know about those actions and may allow that producer to get licensed in their state.
Since every individual or entity in the insurance distribution chain is on the hook for compliance, it’s important to ensure everyone has the appropriate licensure. And by tracking NPNs – monitoring licenses – carriers, agencies, and MGAs/MGUs can ensure the producers and entity partners they work with meet the regulatory requirements to sell, solicit, or negotiate insurance.
This may sound simple enough, but lest there’s any doubt: It isn’t.
A sticky situation
And sure, carriers, agencies, and MGAs/MGUs don’t necessarily need to track all 2,236,000+ NPNs to remain compliant and avoid regulatory actions. But some carriers need to track the NPNs for thousands, if not hundreds of thousands, of producers. And some of those producers might be licensed in quite a few states or territories (56!) across multiple lines of authority.
That has the potential to add up to a sum total of a whole lot of data.
Tracking these NPNs and managing all of this data without a specialized technology solution – even if done meticulously – comes with a slew of costs.
Manually sorting through millions of data points takes a village. In fact, you’ll probably need to split the work across organizational teams or departments, including sales, business operations, marketing, engineering, and compliance.
Your sales team may need to verify they have the appropriate licensure for every state in which they operate before selling a policy. Are there any new regulatory actions? Is a license reaching its renewal period? A sales director or sales representative may need to log in to NIPR to check the status of applications and licenses. This takes time out of their day, time that could be spent running the sales floor.
And you’ll certainly need a compliance team to ensure a consistent compliance strategy across your company. But without a technology solution to facilitate the process of tracking NPNs, your compliance team will spend precious hours cross-referencing multiple spreadsheets against multiple websites. That isn’t very efficient and it isn’t a good use of your employees’ time.
Now, consider how many employees are currently involved in your NPN tracking process? Ten? Fifty? Salaries are expensive and that’s a lot of salaries. So what if you could cut that number down to half? Or down to a quarter?
The biggest price of tracking NPNs on your own is the cost of human error.
In 2019 there were 5,546 regulatory actions with a total of $30,441,868 in fines. Sure, some of these regulatory actions occurred due to intentionally shady behavior on the part of carriers, agencies, MGAs/MGUs, or producers, but most regulatory actions and fines are the result of mistakes.
It doesn’t need to be this way.
Invest in a tech solution
Fortunately, we have the technology to solve this problem.
With licensing software, companies can reduce the number of employees who need to have a hand in tracking NPNs and managing compliance. That doesn’t mean these employees are short of a job. Rather, they’ll have more time to spend selling insurance policies, developing state-of-the-art compliance strategies, or engaging in any number of creative and thought-provoking tasks.
Since computers are good at crunching numbers and comparing data points, using a software solution to help track NPNs will reduce the number of mistakes made in compliance management. That’s inarguably a good thing.