A lot has been made about insurers' attempt to comply with federal regulations, such as The USA Patriot Act and Sarbanes-Oxley, but lost often in the shuffle are the ongoing state-level regulations with which insurers must contend.
Adhering to regulations that govern rate and form filings can be akin to attempting to strike a moving target, inasmuch as these brand of regulations can not only differ from state to state, but even within each state the regulations have a tendency to change on a regular basis.
Complying with the bylaws that govern state-level producer appointments can also be a challenge, says Gary Gummig, vice president of e-government for Okemos, Mich.-based Innovative IT Solutions. The timetable to receive state approval for a new producer to an agency is often lengthy. When a new individual joins an agency, they must apply for a license in the home state, and in addition to the application must engage in competency testing and background investigation. This usually takes eight to 12 weeks.
Once licensed, the new producer must become "established" with a carrier. The carrier must "appoint" the producer through the state regulator and when the state approves the appointment the carrier then must complete the transaction with the agency--a process that can take another three to four weeks, says Gummig.
But this process involves a ripple effect: one producer, one carrier in one state requires at least six transactions. This becomes exponentially unwieldy when the situation involves multiple carriers, multiple producers in multiple states. And there are state requirements for producer renewals and terminations on an annual basis. "Good technology can shorten the cycle time for this process from weeks to days," says Gummig. "Just a couple years ago, a non-resident producer that applied for a license in an adjoining state would have to wait a long time to get approval. Many producers just opted not to apply. But now, there are 30-plus states that provide electronic issuing of licenses, and producers are jumping on the bandwagon. The rules are more simplified."
To support these efforts, insurers need tools and technologies that are not only cost-effective but easy to use.
Innovative IT Solutions offers to insurers proprietary software and Web-based solutions to support regulatory compliance efforts. The company serves as a clearinghouse for insurance regulatory transaction and record-keeping among producer, agencies/brokers, carriers and state insurance regulators.
One such product, Sircon DB, is a "soup to nuts" data base that provides information on about 4 million producers nationwide including appointments, licenses, qualifications--all integrated with state insurance department data bases and offered by way of business lines sold, explains Gummig.
In synergy with the data base is the company's Sircon Web portal, a front-end tool that enables both insurers and producers to manage regulatory issues on a state level. "Insurers use Sircon to manage regulation changes and thereby avoid fines and penalties due to error checking and validation capabilities," says Gummig. "Sircon offers direct access to national and state databases on rate and forms filings as well as producer appointment schedules."
Sircon's Web portal has increased its subscriber volume 20% over the past year, and currently has about 1,800 insurers on board. Producers can also use the portal, but don't have to become subscribers. Gummig says producer adoption of the Sircon portal is the fastest-growing segment of the two user groups.
