PRODUCER INFORMATION NETWORK
NAIC project affects us all
By Joel Volker
One of the principal missions of the National Association of Insurance Commissioners (NAIC) is to simplify and standardize regulation among this country's states and territories. The regulators, however, need to provide the industry with independent and, at the same time, separate oversight. The most significant accomplishment of this organization in decades is the development of the Producer Information Network (PIN). The completion of this project in 1999 will have a significant, positive impact on both insurers and producers.
Computers and the electronic transfer of information have emerged as the dominant modes for transacting business in today's economy. The use of the Internet is just the latest innovation. Within this rapidly evolving technology environment, many aspects of insurance regulation continue in a paper and manually intensive manner. With respect to agent licensing, PIN allows us to move away from that cumbersome and time-consuming approach.
In development since 1994, PIN is an Internet-based system whose foundation is the Producer DataBase (PDB). Throughout the past year, state insurance departments supplied the NAIC with the records of each licensed producer (agent, agency and broker). Information about continuing education, complaints, license status, penalties, fines and other relevant data was provided to make up the PDB. As a result, all of the records relating to the tens of thousands of licensed producers will, for the first time, be available through one source, PIN, early in 1999.
A better way
From both an insurance company and agency perspective, the effect will be astounding. Currently, an insurer wishing to check the records and background of an individual producer must contact as many separate state regulators as seem to be relevant. In some instances, a licensing manager may feel that all states should be surveyed, since it is not unusual for a producer to lose a license in one state and immediately apply for a license in another state thousands of miles away. With the completion of the PDB project, one request to PIN will provide everything necessary to verify activities in every state and territory.
Individual states also have different licenses. For example, one state may offer a property and casualty license, an accident and health license, and a life insurance license. Another state may require separate licenses for property and casualty, bonding, health, life, annuities and other categories. Further, each individual producer desiring to sell insurance in more than one state must apply to each state separately for each separate license.
Once obtained, a producer license permits an individual to sell and service insurance in one line of business in one state. However, the license does not pertain to any individual insurer. Each company must appoint each producer in each line and each state. Each year insurers process more than 14 million agent appointments and cancellations.
Tangible benefits
State requirements vary, and since each separate appointment must be done through each separate regulator, the paperwork and processing time is enormous.
The introduction of PIN, however, will enable insurers to:
* Send all agency appointment information over the PIN system one time, regardless of the number of jurisdictions involved
* Eliminate redundancy in appointment renewal and termination procedures
* Eliminate duplicate data entry and reduce the amount of paperwork
* Reduce processing time of appointments and renewals
* Reduce authorization time
* Make state requirements and producer information more available and accurate
* Reduce the amount of information returned by the regulators due to missing data
* Eliminate postage and paper processing
Benefits to producers are equally significant, particularly those doing business in multiple jurisdictions. Soon a single, uniform, multistate non-resident license application will be available (22 states have already "signed on"). This single application can be transmitted over the PIN just once, and the NAIC will distribute copies electronically to each relevant jurisdiction. Eventually, PIN also will support the electronic transfer of funds and the processing of imaged information, including photos, fingerprints and form copies. Once these processes are in place, applications, appointments and cancellations can be accomplished with just one transaction per person. Applications for residence license and license renewal also will soon be available.
Monitoring PIN's progress
To ensure the success of this project, NAIC created an organization called Insurance Regulatory Information Network (IRIN). IRIN is independent of NAIC and separately financed. It is IRIN's responsibility to maintain the network or gateway to PIN, implement the data standards, and monitor the travel of transactions sent and received over PIN.
From the beginning of the PIN project more than five years ago, insurers, agents, associations and vendors have assisted NAIC in the implementation of this important innovation. Input from all of these entities was received enthusiastically, and as a result, modifications were made.
PIN is truly an all-industry effort, with benefits to every participant in the insurance process.
More information about IRIN, PIN, PDB, and future additions to these systems can be obtained by calling IRIN products at (913) 599-8085. *
For more information about regulatory trends, attend ACORD Conference '99 workshops, "NAIC: Regulatory Trends" and "NAIC Uniform Agents' Licensing and Appointments, Uniform State Filings--A Real Win for the Industry."
 The author
Joel Volker is staff counsel at ACORD, responsible for forms development and maintenance. |
