attachment one draft: 6/23/17 - naic.org · draft: 6/23/17 . producer licensing (d) ... (id); ken...

Attachment One

© 2017 National Association of Insurance Commissioners 1

Draft: 6/23/17

Producer Licensing (D) Task Force Kansas City, Missouri

May 23, 2017

The Producer Licensing (D) Task Force met in Kansas City, MO, May 23, 2017. The following Task Force members participated: Elizabeth Kelleher Dwyer, Chair (RI); Larry Deiter, Vice Chair (SD); Lori K. Wing-Heier represented by Chris Murray and Katie Damian (AK); Allen W. Kerr represented by Peggy Dunlap (AR); Dave Jones represented by Keith Kuzmich and Charlene Ferguson (CA); David Altmaier represented by Matt Tamplin (FL); Gordon I. Ito represented by Paul Yuen (HI); Dean L. Cameron represented by Lisa Tordjman (ID); Ken Selzer represented by Nancy Strasburg (KS); James J. Donelon represented by Lorie Gasior and Barry Ward (LA); Patrick M. McPharlin represented by Michele Riddering (MI); Mike Rothman represented by Peter Bratsch (MN); Mike Chaney represented by Wanda Magers (MS); Chlora Lindley-Myers represented by Angela Nelson (MO); Jon Godfread represented by Kelvin Zimmer (ND); Bruce R. Ramge represented by Kevin Schlautman (NE); Barbara D. Richardson represented by Justin Dyczewski (NV); Jillian Froment represented by Karen Vourvopoulos and Tynesia Dorsey (OH); Julie Mix McPeak represented by Kim Biggs (TN); TBD represented by Mike Carnley (TX); Todd E. Kiser represented by Randal Overstreet (UT); Jacqueline K. Cunningham represented by Mike Beavers (VA); Mike Kreidler represented by Jeff Baughman (WA); Allan L. McVey represented by Elizabeth Webb (WV). 1. Adopted its Spring National Meeting Minutes Mr. Baughman made a motion, seconded by Mr. Zimmer, to adopt the Task Force’s April 8 minutes (see NAIC Proceedings – Spring 2017, Producer Licensing (D) Task Force). The motion passed unanimously. 2. Discussed a Proposal to Eliminate Pet Insurance as a Limited Line of Insurance

Superintendent Dwyer said Uniform Licensing Standard 37—Standards for Non-Core Limited Lines reads as follows: “A state is not required to implement any non-core limited line of authority for which a state does not already require a license or which is already encompassed within a major line of authority; however states should consider products where the nature of the insurance offered is incidental to the product being sold to be limited line insurance products. If a state offers non-core limited lines such as pet insurance or legal expense insurance, it shall do so in accordance with the following licensing requirements.” Superintendent Dwyer said Nationwide Insurance would like to eliminate pet insurance from this standard. Phil Grevin (Nationwide Insurance) said insurance must be sold by licensed insurance agents, with some exceptions for limited lines insurance. Mr. Grevin said Nationwide does not believe pet insurance should be sold under a limited lines license. Melissa Crawford (Nationwide Insurance) said the first pet insurance policies were sold in 1982 and all jurisdictions, except three, require pet insurance to be sold by fully licensed property/casualty (P/C) agents. Ms. Crawford said three states have adopted limited lines licenses for the sale of pet insurance. Ms. Crawford said pet insurance is a P/C insurance product but more closely resembles health insurance. Ms. Crawford said pet health insurance is sold by approximately a dozen companies and is distributed through a variety of channels, including direct telephone, internet, veterinarian clinics and group employer voluntary benefit plans. Ms. Crawford said there are a variety of coverage options, which makes pet insurance more complicated than other limited lines. Randall Doctor (Doctor Law Group LLP) said limited line insurance products are designed to be incidental to the sale of another product and the cost of these insurance products is low relative to the cost of what is being insured. Mr. Doctor said this is not characteristic of pet health insurance, noting that the cost of pet health insurance is usually far greater than the cost of the pet. Mr. Grevin said there are a wide variety of policies with different reimbursement models, which is different from other limited lines of insurance. Mr. Grevin said different pet health insurance policies may have different exclusions, such as pre-existing conditions, congenital conditions based on breed or veterinarian exams/office visits. Ms. Crawford said there has been tremendous growth of the pet insurance industry over the past 30 years, and she believes it is vital consumers receive the proper advice about the pet insurance products.

Attachment One


Mr. Doctor said the California Department of Insurance was concerned with the high number of consumer complaints related to exclusions in pet insurance. Because of this, California mandated certain disclosures regarding pet health insurance. Mr. Doctor said Nationwide supported this initiative. As a result, California has seen a decrease in consumer complaints. There are now similar bills pending in Massachusetts and New York. Mr. Doctor said regulators have seen a need for more oversight of pet insurance as the market has grown. Mr. Doctor said several of the comment letters oppose the elimination of pet insurance as a limited line because of how this could impact consumer access to pet insurance. Mr. Doctor said this is not a concern because pet insurance is available through multiple distribution channels, including the phone, the internet, pet stores, veterinarian office and animal shelters. Mr. Doctor said Birny Birnbaum (Center for Economic Justice) supports Nationwide’s position and encourages state insurance regulators to support pro-consumer sales facilitated through fully licensed agents. In response to Superintendent Dwyer’s questions about market share and distribution, Mr. Grevin said Nationwide has less than 50% of the market for pet insurance. Nationwide’s market share has been decreasing while the overall market size and premiums have been increasing. Mr. Grevin said Nationwide markets pet insurance through veterinarian clinics, employer groups and call centers. Mr. Baughman said Washington requires a P/C license for individuals who sell pet insurance and asked what the next step would be if pet insurance is eliminated as a limited line of insurance under the NAIC’s Uniform Licensing Standards. Mr. Grevin said Nationwide initially wanted to explore the possibility of creating a separate line of pet insurance that would have education and training requirements similar to a P/C license. Mr. Grevin said this would not be necessary if pet insurance is removed as a limited line of insurance. Mr. Doctor said there could be a request to add a question about pet insurance to the existing state exams for a P/C license. Mr. Doctor said Nationwide only hires licensed individuals and provides two weeks of training to a person before he/she can sell pet insurance. In response to Superintendent Dwyer’s question about how veterinarians are compensated for the sale of pet insurance, Mr. Grevin said product brochures are placed in veterinarians’ offices, but veterinarians do not sell the product or receive compensation as a result of a sale. Mr. Grevin said veterinarians are not licensed and it would not be appropriate for them to sell the product or receive a commission. Mr. Grevin said a veterinarian’s office may have product brochures from multiple companies. Mr. Birnbaum suggested the Task Force ask other parties that submitted comments about whether they receive revenue from the sale of pet insurance. Superintendent Dwyer said multiple comments have been submitted, noting that the Task Force will not make a final decision today. She said the Task Force will hear comments from other interested parties at the Summer National Meeting. 3. Received a Briefing on the Activities of its Working Groups

a. Uniformity (D) Working Group Mr. Kuzmich said the Uniformity (D) Working Group has nine members, in addition to California, and plans to meet June 8 via conference call. During this call, Mr. Kuzmich said the Working Group will review the prior work and priorities of the disbanded Producer Licensing (EX) Working Group and discuss the Uniformity (D) Working Group’s priorities for 2017 and 2018. Mr. Kuzmich said the Working Group will review potential next steps for the State Licensing Handbook, the review of the uniform licensing applications, state compliance with the Uniform Licensing Standards and state requirements for business entity affiliations.

b. Uniform Education (D) Working Group Ms. Riddering said the Uniform Education (D) Working Group has eight members, in addition to Michigan, and plans to meet via June 6 via conference call. Ms. Riddering said the Working Group will discuss the potential revisions to the Uniform Continuing Education Reciprocity Course Filing Form and the NAIC CE Reciprocity Agreement, as well as the draft “Recommended Topics Approved/Not Approved for CE Credit” document. In response to Superintendent Dwyer’s question, the Working Group will confirm which states have not signed the NAIC CE Reciprocity Agreement. Superintendent Dwyer said she believes two jurisdictions have not yet signed the agreement.

Attachment One


c. Independent Adjuster Licensing (D) Working Group Mr. Baughman said the Independent Adjuster Licensing (D) Working Group has 15 members, in addition to Washington, and met May 17 via conference call. Mr. Baughman said the Working Group is reviewing its charges and draft work plan. Mr. Baughman said the Working Group is seeking comments on the work plan and revisiting the chart addressing how the states address the use of a designated home state by individuals seeking an independent adjuster license. The chart tracking the reciprocity framework for the licensing of independent adjusters will be recirculated to the states. Superintendent Dwyer recognized there are 34 states that license independent adjusters, noting that it appears half of these states are members of the Working Group. Having no further business, the Producer Licensing (D) Task Force adjourned. W:\National Meetings\2017\Summer\TF\PLTF\PLTF Mtg - May 23\PLTF Minutes 052317.docx

Attachment Two

© 2017 National Association of Insurance Commissioners Page 1 of 2

LIMITED LINES UNIFORMITY STANDARDS – EXCERPT FROM NAIC UNIFORM LICENSING STANDARDS 33. Definitions of Core Limited Lines: A state shall have nine or fewer limited lines, which include the core limited lines. A state shall adopt definitions for car rental, credit, crop, and travel that are consistent with the definition of the core limited lines adopted by the NAIC in Appendix A. The state must have Credit as defined in PLMA. 37. Standards for Non-Core limited lines: A state is not required to implement any non-core limited line of authority for which a state does not already require a license or which is already encompassed within a major line of authority; however states should consider products where the nature of the insurance offered is incidental to the product being sold to be limited line insurance products. If a state offers non-core limited lines such as pet insurance or legal expense insurance, it shall do so in accordance with the following licensing requirements.

A. A limited line license for non-core limited lines identified by the Insurance Commissioner may be issued to a person or entity, inclusive of profit and non-profit, who sells solicits, or negotiates the limited line insurance.

B. A business entity may act as a Limited Line Insurance Producer if it:

(1) Has obtained the Limited Lines Insurance Producer License by submitting the appropriate application form and paid all applicable fees as set forth in applicable state law;

(2) The business entity has designated an individual Limited Lines Insurance Producer to act as the business entity’s Designated Responsible Producer (DRP) and who would be responsible for the business entity’s compliance with insurance laws, rules and regulations of the business entity’s resident state.

(3) The designated individual must meet the requirements for a DRP pursuant to the insurance laws, rules and regulations of the business entity’s resident state.

(4) The business entity DRP and officers must comply with the fingerprint requirement applicable to insurance producers in the resident state of the business entity; and

(5) The licensed business entity keeps a register of each employee that offers Insurance on the licensed business entity’s behalf. The licensed business entity shall also certify that the registered employees comply with 18 USC 1033. The licensed business entity shall submit such Register within 30 days upon request by the state insurance department.

C. An employee of the limited lines insurance producer business entity that offers and disseminates limited line insurance on behalf of the business entity and under the direction of a Limited Line Insurance Producer is not required to be licensed if the employee: (1.) Receives a program of instruction or training subject to review by the insurance department prior to receiving

permission to operate on behalf of the business entity and under the direction of the DRP; and (2.) Does not receive a commission or compensation that is dependent on the placement of the insurance product.

D. Individuals who sell, solicit or negotiate insurance or who receive commission or compensation that is dependent on

the placement of the insurance product must obtain a limited line insurance producer license. The individual applicant must: (1) Obtain the Limited Lines Insurance Producer License by submitting the appropriate application form and paying

all applicable fees as set forth in applicable state law; and (2) Receive a program of instruction or training subject to review by the insurance department

E. No prelicensing or testing shall be required for the identified non-core limited lines insurance. All employees offering

the products; individuals licensed to sell, solicit or negotiate; insurance producers and all DRP’s shall receive a program of instruction.

Definitions for legal expense and pet insurance are provided for guidance and states are encouraged to adopt the same or substantially similar terms. States may elect to add a miscellaneous limited line to issue a nonresident license for those nonresidents who have requested a line of authority outside the major or core limited lines and not offered by the state. A state must issue the nonresident a license in compliance with GLBA.

Attachment Two

© 2017 National Association of Insurance Commissioners Page 2 of 2

APPENDIX A: Recommended Definitions for Certain Non-Core Limited Lines Adopted by NAIC Full Membership in August 2011

(1) “Limited Lines Pet Insurance Producer” means an insurer designee, such as a managing general underwriter, managing general agent, or limited lines producer of Pet Insurance.

(2) “Pet Insurance” means health insurance coverage including but not limited to coverage for injury, illness, and wellness, for pets such as birds, cats, dogs, and rabbits.

(3) “Legal Expense Insurance” means a contractual obligation to provide specific legal services, or to reimburse for specific legal expenses, in consideration of a specified payment for an interval of time, regardless of whether the payment is made by the beneficiaries individually or by a third person for them, but does not include the provision of, or reimbursement for, legal services incidental to other insurance coverages.; or consultation or advice in connection with, or a part of referral services. Legal expenses insurance does not include a retainer agreement directly between the lawyer and the client, where no third party is at risk.

Attachment Three


Conference Call

UNIFORMITY (D) WORKING GROUP June 8, 2017

Summary Report

The Uniformity (D) Working Group met via conference call June 8, 2017. During this meeting, the Working Group: 1. Discussed its charges for 2017:

A. Monitor the implementation of the Uniform Licensing Standards for best practices in examination development and the delivery of education materials for prelicensing education. Work closely with state producer licensing directors and exam vendors to ensure: 1. The states achieve full compliance with the standards in order to achieve greater uniformity. 2. The exams test the qualifications for an entry-level position as a producer (will coordinate these efforts with the

Uniform Education (D) Working Group). B. Continue to provide oversight and ongoing updates, as needed, to the State Licensing Handbook. C. Monitor and assess the state implementation of the Uniform Licensing Standards and update the standards, as

needed. D. Review and update, as needed, the NAIC’s uniform producer and adjuster licensing applications and uniform

appointment form (shared charge with Independent Adjuster Licensing (D) Working Group).

2. Discussed its “List of Uniformity Initiatives,” which included: 1) state-specific uniformity charts; 2) pet insurance proposal; 3) State Licensing Handbook; 4) review of NAIC uniform applications and appointment forms; 5) business entity affiliations; and 6) veteran’s exam reimbursement. The Working Group reviewed the comments received on this list and discussed necessary changes. An updated draft was distributed to Working Group members for comment with a deadline of July 14.

W :\Sum m er\TF\ PLTF\ Nat M tg M aterials\I AL W G Sum m ary 8. 6. 17. docx

Uniformity Working Group 2017-18 Initiatives

Initial Timeline dated 6/27/2017

Initiative

• State-Specific Uniformity

Charts

• Review of NAIC Uniform applications and appointment forms

• Exam Standards survey

• Pet Insurance proposal

Status

• The charts were last updated in

April 2016 and compliance trends reported at the Producer Licensing Working Group meetings.

• Next scheduled for review in 2018.

• States were last surveyed regarding their exam content and standards in August 2016.

• Nationwide Pet Insurance is proposing that pet insurance be removed as a non-core limited license line of authority (std. #37 – 1st paragraph, subsection E and appendix A #1, #2).

Timeline/Next Steps

• June 2017 – Sept. 2017 Greg

Welker will send state-specific Uniformity Charts to state licensing directors. Greg will provide results to working group. Working Group will reach out to states to identify reasons for noncompliance.

• July 2017 – Sept. 2017 Uniformity

working group will determine whether there are any substantive changes proposed to justify the review which requires significant resources from states and NIPR.

• July 2017 – Sept. 2017 Greg

Welker will send the same 12 question survey sent last year to state licensing directors. Results will be compared with last year and specific state improvements will be noted.

• August 2017 Proposal will be

further discussed and possibly put up for a vote at the Summer Producer Licensing Task Force meeting.



2

Initiative

• Business Entity licensing

• Veteran’s Exam Reimbursement

Status

• States were surveyed regarding

their business entity affiliation process and website instructions. Received responses from 37 states.

• Requested states to apply for certification for cost reimbursements from their respective Veteran’s Administration State Approving Agency. Surveyed states that showed 26 states either certified or in process to become certified. Should re-survey to determine current status.

Timeline/Next Steps

• August 2017– December 2018

Uniformity working group to analyze results of survey. Working Group to review previous proposals considered by the PLTF for business entity licensing standards; identify states’ challenges for complying with those proposed standards; and finally, recommend revised standards that will result in improved uniformity but not at the cost of compromising states’ consumer protection efforts.

• August 2017 – October 2017

Greg Welker will send survey out to states to determine current status. Survey will ask states not certified to explain their reason(s) for not doing so.



3

Initiative

• Insurance Producer

Interstate Relocation

• Individual Producer Name Change

• State Licensing Handbook

Status

• SILA subgroup heard from industry

representatives and surveyed states on their requirements for processing license applications when producers are changing their resident state. The subgroup identified state-specific requirements for interstate relocations.

• SILA subgroup surveyed states on

their requirements for processing individual name change requests.

• NAIC staff expects to print copies of the latest version of the handbook in June 2017. Electronic versions of the handbook will also be available to Licensing Directors. This version will reflect the edits made during the 2014-2015 PLWG review.

Timeline/Next Steps

• August 2017 – March 2018

Uniformity working group to review SILA data to identify requirements based on business rules that can be changed without a legislative or regulatory change. And, reach out to those states to assist in making changes.

• March 2018 – December 2018

The working group to review SILA data. If warranted from survey results, make recommendation for uniform licensing standard.

• March 2018 - May 2018

Uniformity working group will determine whether there are any substantive changes needed to the handbook. If, not the handbook will be revisited for review in 2020.

Attachment Four


Conference Call

UNIFORM EDUCATION (D) WORKING GROUP June 6, 2017

Summary Report

The Uniform Education (D) Working Group met via conference call June 6, 2017. During this meeting, the Working Group: 1. Discussed its charges and priorities for 2017. Its charges are: provide updated reciprocity guidelines and ongoing

maintenance and review of uniform application forms for continuing education providers and the state review and approval of courses; and coordinate with NAIC parent committees, task forces and/or working groups to review and provide recommendations on any new producer training requirements or continuing education requirements that are included in NAIC model acts, regulations and/or standards

2. Discussed the “Recommended Approved/Not Approved Topics for CE Credit” document. The Working Group continued

its review of the “Not Approvable Topics” list to determine whether any changes are necessary. The Working Group will distribute an updated draft for review and potentially finalize the document during its next conference call in August.

W:\Summer\TF\PLTF\Nat Mtg Materials\Attachment Four.docx

Attachment Five


Conference Call

INDEPENDENT ADJUSTER LICENSING (D) WORKING GROUP May 17, 2017

Summary Report

The Independent Adjuster Licensing (D) Working Group met via conference call May 17, 2017. During this meeting, the Working Group: 1. Discussed its charges for 2017 as follows: monitor state implementation of adjuster licensing reciprocity and develop

minimum adjuster licensing standards to ensure appropriate consumer protections are in place with the implementation of the use of “designated home state”; and review and update, as needed, the NAIC’s uniform producer and adjuster licensing applications and uniform appointment form (shared charge with Uniformity (D) Working Group).

2. Discussed its draft action plan, which included a goal to review/update the NAIC Independent Adjuster Licensing Reciprocity Framework Bifurcated Chart and three focus areas: continuing education; lines of authority; and designated home state. This document will be provided to the Producer Licensing (D) Task Force to share the Working Group’s intended direction for 2017. The action plan will remain an open document all year and will be updated as needed.

3. Discussed the NAIC Independent Adjuster Licensing Reciprocity Framework Bifurcated Chart. The Working Group will be updating the chart as necessary and distributing it to all states/jurisdictions to respond. The states/jurisdiction were asked to provide responses by July 19.

W:\Summer\TF\PLTF\Nat Mtg Materials\Attachment Five.docx

Comments on Pet Insurance

Crum & Forster is part of Fairfax Financial Holdings Limited. CoverX and CoverXSpecialty are trademarks of CoverX Corporation. C&F and Crum & Forster are registered trademarks of United States Fire Insurance Company.

August 6, 2017 Producer Licensing (D) Task Force Honorable Elizabeth Kelleher Dwyer, Chair RE: Comment Letter to Producer Licensing Task Force - Opposition to Eliminating Pet Insurance as a Limited Line of Insurance Dear Chair Dwyer and Task Force Members: On behalf of United States Fire Insurance Company, thank you for your continuing work on Producer Licensing. We are providing this letter to offer our opposition to a recommendation under review to eliminate pet insurance as a limited line of insurance and respectfully ask that the task force take no action on this proposal. Our concerns are as follows:

• We believe that the states should continue to have the option to consider allowing the limited line regulation of pet insurance.

• NAIC’s Producer Licensing Model Act does not contemplate or address pet insurance producers. • The limited lines framework was put in place for Pet as a result of the fact that the major problem in

getting a license to sell pet insurance is that most states treat pet insurance as a casualty line which requires a full lines license. This is a problem as none of the pre licensing education or continuing education is beneficial or remotely relevant to this product. In fact, there is nothing offered in the knowledge required to sell, solicit or negotiate other property and casualty products that would help a pet insurance producer in marketing pet insurance in a manner that would benefit a consumer. Therefore the notion that a consumer would be harmed is unsubstantiated.

• Pet Insurance is a product often made available through non-traditional distribution channels including veterinarian offices, shelters, or welfare groups for animals. Elimination of this option would eliminate competition in the market and only serve to limit product availability.

• Any assertion being made that the product is too complex to be understood is better addressed through product regulation but should have no impact on the current licensing standards.

We respectfully request that the taskforce deny the recommendation to eliminate pet insurance as a limited line and rather allow Pet Insurance to be a non-core limited line of insurance at the choice of the states. Very truly yours,

Caren Alvarado VP Regulatory Affairs & Compliance Crum & Forster A&H Division 732.676.9819 [email protected]

mailto:[email protected]

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