This post is part of a series sponsored by AgentSync.
One of the more difficult aspects of compliance administration and producer management for shippers is meeting producer deadlines. Sure, if your carrier only operates in one state, this can be a minor hassle – a set of rules to remember and follow. But for airlines operating across national borders, the different country regulations can be nauseating.
It’s not just the different state laws that make this area difficult for compliance. There are also just-in-time appointments, which allow carriers to wait to appoint a producer until they have submitted the deal. There are also “brokers” who have yet to be appointed in some states, cannot be appointed in some states, and do not even exist in some states. And there are registry states that do not require you to proactively inform the states of your appointed representatives, but do require you to maintain internal appointment registries. And it’s the fact that a state’s laws may not exactly align with its business rules in the National Insurance Producer Registry (NIPR) Gateway.
However, in our opinion it is better than expert licensing.
Today we’ll dive into the nuances of how states handle appointments through the NIPR Gateway, how backdating factors into the equation, and provide pro tips for staying compliant when managing state appointments for your downstream producers.
Existential Crisis: What is an Appointment?
A designation is broadly an acknowledgment to the state that an individual manufacturer or company is acting on behalf of an insurance carrier.
We say general because there are some variations on this theme. In many states, the appointment is simply filing with the state. Sometimes this means appointing an agency and then allowing that agency to cover all downstream producers. Sometimes an appointment is specific to each individual downstream producer and agency, or perhaps a state does not appoint any agencies, so appointments only designate individual producers.
Another consideration is that this relationship is not always called a date. In Georgia, for example, a carrier designates a downstream relationship with a manufacturer through what is known as a “certificate of authority.” This is confusing because the Certificate of Authority is also a document that allows trucking companies to operate in any state.
While most states view themselves as the arbiters of whether an air carrier has appropriately named its producers, New Jersey takes a different twist on the issue. According to a call with New Jersey regulators, the state believes that registering an appointment with the state is largely a formality since it is the airline that plays a role in the appointment. (We’ll discuss this in more detail later.)
Just-in-time appointments
Just-in-time appointments, sometimes called “advance appointments,” are appointments where a state allows shippers and producers to establish a relationship before the shipper is required to appoint the producer. In this case, the carrier could wait until a producer submits their deal before communicating the status of the appointment (and paying the appointment fees).
This provision of state law is intended to help trucking companies save money. If a carrier took a proactive approach in every state and appointed every downstream producer that made them feel comfortable coming here, a carrier could pay tens of thousands of dollars to appoint producers that never gave them a dime of business. By instead waiting until a producer has signed a contract in a particular state, the carrier can avoid paying for appointments that will not pay them back.
Sounds amazing, right?
Unfortunately, the ambiguity and nuances of government regulations, coupled with the sometimes slow internal processes of multi-layered and manual onboarding, mean that few carriers can take advantage of just-in-time appointments.
In most states that have just-in-time appointment laws, there are some variations of this language:
“To appoint a manufacturer, the insurer must file a notice of appointment with the Commissioner within 20 years [x] Days from the date of signing the agency contract or submitting the first insurance application.”
Some states, such as Washington, indicate that the trigger for appointment should be “whichever comes first,” but in most states, carriers can choose whether to use the contract date or the deal filing date as the trigger for select the appointment. And states differ on whether the deadline for appointment is 15 days, 30 days or more.
NIPR Gateway backdating rules for appointments
State laws and notices are all important, but where the rubber meets the appointment road is the NIPR Gateway. This is where carriers actually submit appointment requests for most agencies, or they do so through a reseller (such as cough cough AgentSync). And these rules are those that give order, form and meaning to what the states have written in their laws.
NIPR does not make these rules. And sometimes a state’s written regulations do not align with the business rules it has established through NIPR. Of course, NIPR builds the technology and maintains the infrastructure that supports these rules, but ultimately the National Insurance Producer Registry reflects what each state requires of it. So if you’re wondering about a backdating rule or rule change, or think that a set of rules seems particularly confusing, your problems may be best addressed by the state in question.
Case in point: In 2023, Washington ended NIPR Gateway’s backdating of appointments, which caused quite a stir among us nerds in the industry. Are they still a just-in-time state? Does this mean we need to appoint everyone proactively? WHAT DOES THIS ALL MEAN?!?!
We interviewed regulators in Washington to get their thoughts. If you’re interested in the longer version, you can read it here.
But the short version is that Washington is actually doing what many states are doing. Your laws already state that you are in compliance if you reported the appointment within X days of the trigger. So backdating is not necessary!
Through the NIPR Gateway, 27 states and jurisdictions allow backdating in some form, and 18 states and jurisdictions do not allow backdating (and you have all those daggum registration states). So if you operate in multiple states, there’s a good chance you’ll be working with a mix of different regulations, the backdating of which could extend to 60 days or to zero.
So why the discrepancy?
We surveyed more than 25 states, a mix of states that allow backdating through the NIPR Gateway and those that do not. For those states that identified themselves as just-in-time or pre-appointment states and did not allow backdating, the rules were clear. They expect carriers to submit the appointment within the statutory deadline from the “trigger” for the appointment (depending on the state, this may be the manufacturer’s contract or the manufacturer’s first business filing). And as long as a Department of Insurance enforcement officer can double-check that the appointment was within the specified time frame, the carrier is golden.
For the Just-In-Time states that allow backdating, the answer has generally been the same: If the appointment date a carrier submits to the state is after the appointment trigger, it is considered OK as long as it is still within the legal limit time frame. However, with backdating, a freight forwarder can also choose an effective date that corresponds to the release date. However, according to the states we spoke to (not all states, but a good sample), it is not absolutely necessary for carriers to backdate the appointment through the NIPR Gateway.
However, it’s worth highlighting New Jersey’s remarkable approach to appointment scheduling here. Our contact at the New Jersey Department of Banking and Insurance said that carriers are encouraged to backdate their appointments because the time limit for backdating is quite generous and is 60 days. Our contact at the state noted that state regulations require shippers to name their producers within 15 days of the conclusion of the contract or initial business submission. They said the 60-day backdating period allows carriers to wait to report their appointment until after the initial business submission, but then backdate the appointment up to two months in advance to reflect their prior relationship, when more consistent with the contract date of the manufacturer’s specifications.
However, it is worth noting that New Jersey appears to be an outlier in their view of Gateway backdating.
Arrange just-in-time appointments correctly
It can be daunting to make the right appointments, but states aren’t out to get you – they want insurers in their state to be compliant, and they’re generally willing to communicate when necessary to help you to bring there.
Don’t let the complexities of state appointment laws keep you from the real savings that Just-In-Time appointment provisions provide. With AgentSync, customers have developed processes that enable time and cost savings on JIT appointments while appropriately appointing their producers for a fully compliant sales force.
Learn how AgentSync makes appointment management and other parts of your distribution easier and more efficient. View a demo today.
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Carrier Washington New Jersey
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2024-06-26 04:07:21
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