The Evolution and Future of Uniform Licensing Applications

The Evolution and Future of Uniform Licensing Applications

July 25, 2024
Author: Kingston Koser, VP of Strategic Services

I began my career in insurance compliance in May 2002 when I joined the National Insurance Producer Registry (NIPR) as a Sales Account Executive. At that time, fewer than 40 state insurance departments were submitting data to the Producer Database (PDB), and fewer than 10 states were processing electronic non-resident license transactions. There were no electronic services available for resident licenses, renewals, address changes, etc. States wishing to participate in NIPR’s electronic licensing initiatives were required to adopt the NAIC Uniform Licensing Application.

The National Association of Insurance Commissioners (NAIC), through its Producer Licensing Working Group (PLWG), developed Uniform Licensing Applications (ULAs) with the primary goal of streamlining the licensing process for insurance producers (agents and brokers) across multiple states. Before the introduction of ULAs, each state had its own unique licensing requirements and forms, which created a cumbersome and time-consuming process for insurance professionals operating in multiple jurisdictions. This lack of uniformity also posed challenges for regulatory oversight and consumer protection.

The NAIC ULA aimed to address these issues by providing a standardized application form that states could adopt. By doing so, states could participate in NIPR’s electronic initiatives, facilitating faster and more efficient licensing processes for agencies and producers. As a result, the number of licensed producers increased from 1.93 million in 2002 to over 2.26 million by 2022 (17% growth). While this growth may not seem substantial at first glance, it’s noteworthy that in 2002, the 1.93 million producers held just under 1.9 million non-resident licenses. The streamlining of processes and removal of barriers for non-resident licenses contributed to an increase to over 10 million non-resident licenses by 2022 (526% increase).

However, the lack of updates to ULAs over the past decade has led to a regression in uniformity, as NIPR began allowing “non-uniform questions” to expedite adoption of uniform applications. Currently, NIPR’s non-uniform question document contains 1265 entries, impacting rules and compliance requirements for obtaining and maintaining licenses. This lack of uniformity presents challenges for the industry who must continually update applications and data repositories to capture and manage non-uniform information to ensure compliance.

To address these challenges, the NAIC Producer Licensing Uniformity Working Group (PLUWG) has been tasked with reviewing and recommending changes to ULAs. Recently, the PLUWG adopted changes that were initially proposed in 2018. Given the changes in the industry landscape since then, a deeper dive and discussion of these applications could prove valuable in reducing the burden of non-uniform question compliance. Redlined versions of the proposed changes can be found at: https://content.naic.org/exposure-drafts under the heading Producer Licensing Uniformity (D) Working Group.

The Producer Licensing Task Force (PLTF) will review the PLUWG’s recommendations at the NAIC Summer National Meeting in Chicago next month. As these issues impact everyone in the compliance space, I invite you to share your thoughts on the importance of uniformity or the challenges posed by its absence in producer licensing. Please feel free to comment on the LinkedIn post or email me at kkoser@us.rhoadsonline.com with your insights. I will be attending the NAIC meeting in August and will share your feedback with regulators. I will also report back following the meeting. Our industry won a hard-fought battle in the establishment of uniformity 20 years ago. Ensuring we can continue to build on that foundation for ever-increasing automation and efficiency is a meaningful conversation I hope you will all engage in.

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