To the editor: We read with obvious interest the Oct. 13 editorial, "NAIC: Step Up or Aside," and would like to set the record straight.

First, let us say that articles similar to this appearing in various publications over the past several weeks neither provide actual progress nor do they reflect the success of the NAIC's Producer Information Network Working Group. While the accomplishments of this group are not a secret, they certainly have not been recognized.

As you are aware, Congress is considering many changes to the financial services industry, including insurance. As the businesses of banking and insurance become more technical and more advanced, there is more of a push to modernize the regulation of these industries.

To many in the financial services industry, it means doing insurance without having to deal with state regulators. They claim state insurance regulators are an unnecessary barrier and merely get in the way. In our way of thinking, state regulators do not get in the way of commerce but in fact, help it thrive. State insurance regulators have a long and proud tradition of sound, effective oversight of the insurance industry. We in Wisconsin would put our record of protection up against that of the protections offered by federal savings and loan or banking laws any day of the week.

With respect to the current National Assn. of Registered Agents & Brokers proposal, state regulators working together have stayed ahead of the federal government. For years, agents have dealt with a traditional state licensing system. This whole process is developing into a streamlined, electronic system right before our eyes.

State regulators in association with the National Assn. of Insurance Commissioners have been working on projects called the Producer Database and the Producer Information Network. That PIN Working Group is three successful years into its original five-year plan charged with electronically connecting state licensing functions and streamlining the agent licensing process.

The first step took place two years ago, when a nationwide producer database was developed to facilitate states' and the industry's ability to track information regarding licensed agents. We are proud to say Wisconsin became the first state to join the PDB with our agent licensing information. Since then, Iowa, Washington, Florida, Missouri, Texas, North Dakota and Michigan have joined the database. We now have more than 900,000 agents online and have opened the door for companies to view the data. By the end of this year, Indiana, Colorado, Arizona, California, Minnesota, Connecticut, Ohio, New Jersey, Illinois and South Dakota will add their data as well, representing more than 70% of the agent population. The PDB is making great strides toward strengthening consumer protection by making more information available about agents and improving the regulation of agents.

In a continued effort to look to the future, state insurance regulators decided in the fall of 1996 to move forward with the PIN project by establishing the Insurance Regulatory Information Network, or IRIN, as an affiliate of the NAIC to manage the PIN project. IRIN is funded mainly through industry contributions and is governed by a nine-member board of directors consisting of four NAIC members, four insurance industry representatives, and the NAIC executive vp. PIN will link the states and the companies, establishing a system upon which other services can be added, such as electronic licensing and appointing of agents. PIN development already has begun a pilot project, testing the electronic appointment process, which is expected to begin the first quarter of 1998. In addition to managing the PIN project, IRIN oversees the ongoing development of the PDB.

In December of this year, the NAIC will take a big step toward making it easier for agents to operate in multiple states. During the NAIC winter meeting, commissioners will review a Universal Reciprocity proposal that would greatly reduce the barriers facing non-resident agents. This proposal includes:

A Declaration of Reciprocal Treatment for licensing agents in the major lines of life, accident and health, property and casualty.

A standard non-resident licensing application.

The proposal was the result of joint meetings between the PIN Working Group and representatives of the American Insurance Assn., American Council of Life Insurance, Council of Agents & Brokers, Independent Insurance Agents of America, National Assn. of Insurance Brokers, National Assn. of Independent Insurers, and the National Assn. of Life Underwriters. We anticipate that a vast majority of states will sign the declaration, which among other requirements mandates use of the new standard non-resident licensing application.

Next year, Wisconsin will again lead the nation into the next phase. We plan to launch a pilot project with Iowa to eliminate the need for Wisconsin and Iowa residents to provide each non-resident state with a letter of certification at renewal.

Our goal is to establish a network that will allow agents to electronically apply for multiple licenses at one point simply by logging onto the Internet and paying through an electronic funds transfer.

Still not a believer?

Our office sends about 12,000 letters of certifications a year to resident agents attempting to receive a non-resident license in another state, or to renew an existing license. Soon, those letters will be a thing of the past. Add to that the cost savings for the insurance companies that will be able to appoint or terminate agents online through the Producer Information Network, the creation of hot links to each state's home page, which includes licensing and appointment information, and the ability to electronically request information changes such as name or address.

The current NARAB proposal basically sets out to accomplish what the states have been working toward and soon will have accomplished. The real difference is that we realized the need for this move several years ago and are nearly there. Technological advances are no longer a dream but becoming a reality. That is because state-based regulation allows for the flexibility to respond to changing environments. Couple that with the linking of state regulators provided through the NAIC, and we have one fantastic system.

One piece that we would appreciate assistance with involves the federal crime bill passed a few years ago. That piece of legislation requires states to review the criminal background of producers and provide companies "permission" to hire such individuals. This is not an easy charge, as a majority of states are not allowed access to the National Crime Information Center. Short of requiring fingerprint cards (an expensive and lengthy process), we have proposed that access to the NCIC be provided to regulators through the PDB. Perhaps the organizations trying to create the federal regulation of agents would be better served by redirecting their energy to convince Congress that NCIC access must be provided to the states to better serve our public.

In addition, it may also be beneficial for those organizations to use their lobbying efforts within the states whose laws will require modification to accommodate the proposed Universal Reciprocity declaration.

Josephine W. Musser

Commissioner of Insurance

State of Wisconsin

Madison, Wis.

President

National Assn. of Insurance

Commissioners

Laurna J. Landphier

Chief, Agent Licensing Section

State of Wisconsin

Madison, Wis.