Help

BI’s Article search uses Boolean search capabilities. If you are not familiar with these principles, here are some quick tips.

To search specifically for more than one word, put the search term in quotation marks. For example, “workers compensation”. This will limit your search to that combination of words.

To search for a combination of terms, use quotations and the & symbol. For example, “hurricane” & “loss”.

Login Register Subscribe

NIPR@10

Reprints

During the past decade, the National Insurance Producer Registry has revolutionized the producer licensing process by harnessing the speed and efficiency of an Internet-based system for producers seeking licenses, insurers making appointments and regulators overseeing both.

The unique public/private partnership last year earned more than $16 million in revenues as an independent affiliate of the National Assn. of Insurance Commissioners. It also has fostered an unusually high degree of commitment and collegiality among its 13-member board of directors, according to some current and former board members who include all types of system participants.

"It's our vision to become the online, one-stop shopping solution for all electronic producer licensing-related transactions," said Maryellen Waggoner, executive director of the Kansas City, Mo.-based NIPR. "Our vision of the NIPR includes all states participating in the electronic processing of appointments and terminations, non-resident and resident licensing, licensing renewals and appointment renewals," she said.

PAST SUCCESS

While achieving that vision remains a challenge for the future, most sources agree that NIPR has made significant progress in the past 10 years in saving insurers and producers time and money, reducing their paperwork, and providing a fast and efficient way to update and verify the status of producers' licenses.

NIPR "was one of the few dot-coms that was a magnificent success," said David Gates, the Kansas City, Mo.-based senior vp, general counsel and secretary of Generali USA Life Reassurance Co. Mr. Gates, a former Nevada insurance commissioner and NAIC president, was instrumental in creating the entity now known as NIPR and has participated on its board for several years, most recently as a representative of the American Council of Life Insurers.

In part, NIPR's development was fueled by problems insurers had in keeping track of agent appointments and monitoring agent sales practices, Mr. Gates said.

At the same time, agents and brokers sometimes had to wait months to obtain licenses in states where they and their customers lived, said Wesley Bissett, senior vp of government affairs and state relations for the Alexandria, Va.-based Independent Insurance Agents & Brokers of America Inc. Also, most states required that a producer's home state issue a letter certifying he or she was in good standing before the producer could obtain a license in another state, added Mr. Bissett, who is NIPR board vp.

The process "was quite burdensome, inefficient and expensive," said Ms. Waggoner.

Frustration, which grew among various industry groups and reached Capitol Hill, resulted in provisions of the 1999 Gramm-Leach-Bliley Act that gave the NAIC three years to get 29 jurisdictions to enact reciprocal or uniform licensing laws. Otherwise, the National Assn. of Registered Agents & Brokers would essentially create a national licensing option for producers.

The NAIC mobilized to fight that threat and responded by encouraging states to adopt the association's model Producer Licensing Model Act that then was under discussion. It encouraged reciprocity through more uniform procedures as well as development of a national database of producer licensing data, which Ms. Waggoner, as a former deputy commissioner with the Colorado Insurance Department, helped the NAIC oversee.

"I think that NARAB was one of the things that helped the producer database take off," said Nichole Allen, director of government and external affairs in the Washington office of Allianz of America Corp. She has served as an NIPR board member for about six years, representing not only the American Insurance Assn., but previously the Council on Insurance Agents and Brokers.

IN the beginning

What is now NIPR began in October 1996 as the Insurance Regulatory Information Network. Startup funding came initially from the insurance industry charter members, primarily from members of the Washington-based American Council of Life Insurers, who donated about $3 million. An agreement allowed donors to get credit for those donations against future fees that IRIN would otherwise have charged them.

IRIN launched its database in March 1997 with producer information from three states. IRIN changed its name two years later; three years after that, all states along with the District of Columbia and Puerto Rico were contributing producer information.

"It was a race to get a critical mass of states and agent information online before we ran out of money," Mr. Gates said.

Glenn Pomeroy, who was elected the board's first president, said: "We kidded that we were close to holding bake sales." The former North Dakota insurance commissioner and NAIC president knew the advantages of a streamlined producer licensing system from his previous experience as his state's securities commissioner. Mr. Pomeroy, who is based in Kansas City, Mo., is now head of regulatory affairs for the Americas for Zurich-based Swiss Reinsurance Co.

An additional $3 million infusion, primarily through an NAIC loan, was needed to help IRIN build its database. As the system demonstrated an ability to provide reliable producer licensing data to do relevant transactions in relevant states, there was "a snowball effect," Mr. Gates said.

By 2001, fee-generated revenue exceeded expenses for the first time and in 2003 NIPR was able to repay its debt to the NAIC and all its charter members. In 2004, NIPR was able to implement two price reductions, although board members were cautious about retaining enough funds to allow for equipment modernization and future growth.

leaps, bounds

In the past 10 years, the database has grown to include producer licensing information on more than 3.6 million agents. As of Oct. 1, the NIPR system transmitted appointments and terminations for 41 of 42 jurisdictions that require appointments. It allows non-resident licensing transaction for 44 jurisdictions and non-resident renewals for 24 jurisdictions, Ms. Waggoner said.

In 2005, about 1,400 companies made more than 5.3 million inquiries to the database, more than 6 million appointments and terminations were processed through NIPR, and more than 400,000 producers obtained non-resident licenses electronically, according to a NIPR statement.

The joint regulator/industry board has been a major factor in the success of NIPR during the past decade, sources said.

The original nine-member board consisted of four industry representatives, four regulators and the NAIC's executive vp. It was expanded to 13 members in 2002 with the addition of two representatives of insurance producer trade associations and two more regulators.

The industry's initial concern about regulatory dominance of the board is seen in a technical bylaws requirement that a "super-majority vote"--variously defined as more than a simple majority--is needed to pass important measures such as those relating to adoption of fees or expansion into new lines of business. However, the board has never had to rely on that super-majority provision to pass a measure, said Ms. Waggoner. "The way the board works and functions is very collaborative," said Ms. Waggoner, who supervises 44 employees.

"People understood their respective disciplines, but took off their lobbying hats and united behind the effort to make it a success," Mr. Gates said.

Early on, some challenges stemmed from part-time board members with disparate backgrounds learning to operate a technology-based company and make marketing decisions, Mr. Gates said. When NIPR became successful financially, board members then faced the challenge of deciding whether to refund money or add further enhancements, he said. "We had days when there was a lot of tension in the room (and days when) there was a lot of laughter," Mr. Gates said.

"There was camaraderie and a dedication to NIPR's mission that prevented unnecessary disagreement, or gridlock, from occurring," said Mr. Bissett. It is reinforced through an annual working retreat of board members.

John Fielding, who was the Washington-based CIAB board representative for the past two years, said: "There has been really good progress in the last five to 10 years, but the job is not done." More states need to be brought on board and more products launched, said Mr. Fielding, an attorney with The Scott Group P.L.L.C. in Washington.

TO-DO list

The IIABA had hoped that all states would be fully participating in NIPR by now, Mr. Bissett said.

NIPR shares that goal and is working to achieve it in addition to enhancing existing capabilities, Ms. Waggoner said.

For example, seven states do not participate in NIPR's non-resident licensing system, due primarily to technological or financial reasons, she said. Connecticut, though, is expected to be participating by the end of this year and Washington is in preliminary discussions, she said. The other states are Massachusetts, Michigan, Montana, New Mexico and Tennessee.

NIPR also is working on more product enhancements, including an address change capability that is expected to be implemented by the middle of next year, she said.

In January, NIPR will proudly launch its new domain name--nipr.com. "That will enhance NIPR's identity and make communication more convenient for consumers," Ms. Waggoner said.