Producer License Verification Three Ways

This put up is a part of a collection sponsored by AgentSync.

When a producer writes enterprise or receives a commissions payout, the very first thing an operations staff must do is look to see two issues; 1) is the producer appointed with the service to promote the product they bought within the state the place the applying was signed, and a couple of) is the producer licensed to promote the product they bought within the state the place the applying was signed.

That doesn’t sound so dangerous, however keep in mind, these license particulars must be verified for every producer each single time they write enterprise and, in lots of states, each time they’re paid commissions. That’s a number of verification checks. And for those who’re studying this pondering, “Completely not, there’s no strategy to test licenses that continuously,” simply know that you simply’re unnecessarily opening your self as much as regulatory threat.

Right here’s why:

There are a number of alternative ways to go about license verification. Carried out proper, producer license verification could be a seamless test to guard in opposition to compliance mishaps (and sure, this implies checking licensure of each producer each time they write enterprise). Carried out mistaken, producer license verification could be a unending venture that drags on compliance groups, leads to regulatory actions, and limits development.

Let’s take a look at a few of these choices beneath.

The onerous methods to method producer license verification

Producer license verification checks aren’t something new. So, it is smart that there are handbook legacy processes for license verification that embrace paper paperwork, spreadsheets, and re-keying information. These processes can do the job, and generally they are often carried out properly. However the subject is that they’re typically very time-consuming and may go away an organization uncovered to the danger of pricey human error. Right here’s what we imply:

1. Guide checks

Some firms require producers to ship in a replica of their license in each state wherein they’re licensed. That sounds cheap sufficient: Share compliance tasks with the producers.

However there’s a value related to managing license copies: Producers must pay for every license copy pulled via the producer database (PDB), plus firms must make use of a big sufficient staff to precisely carry on prime of producers and ensure they’ve despatched of their most recent licenses and course of the license copies as soon as acquired (all earlier than greenlighting them to promote).

This technique depends on the honour system, which raises a number of pink flags. What if there are adjustments to a producer’s license between once they wrote the enterprise and once they obtain fee payouts? Who’s ensuring the license on file is correct and up-to-date? What if a producer receives a regulatory motion and has their license suspended? There’s no assure that the producer will stop writing enterprise and replace the carriers or MGAs they work with. That’s a number of “ifs.”

With regards to regulatory actions, all events concerned are at fault. With that in thoughts, handbook checks expose firms to pointless threat. Not one thing we’d suggest.

2. PDB pulls via NIPR

As an alternative of turning to producers to tug their very own license copies via the PDB, different firms will go on to NIPR and pay a price for a one-time PDB pull.

The issue is, generally it takes a short while for states to put up up to date licensing info to the PDB. Consequently, if an organization chooses to handle PDB pulls themselves however there’s a discrepancy between the licensing particulars a producer says they’ve and people posted to the PDB, then they’ll want to return again and pay for extra PDB pulls till the state posts the up to date info.

A waste of each money and time.

Additionally, we’ve discovered that among the greatest violations in regulatory compliance happen when an agent will get paid a fee however isn’t licensed or appointed. Whereas that will appear to be a minor slip-up, these errors include some big-dollar fines. Doing a one-time PDB test received’t let you know if one thing lapses months or years later.

The simple strategy to method producer license verification

Not that we’re biased or something, however there’s just one straightforward strategy to method producer license verification, and that’s with licensing software program, corresponding to AgentSync.

3. Producer licensing software program

With AgentSync, clients onboard their brokers and get a right away producer sync that exhibits precisely which licenses and appointments are energetic at that time limit. Plus, with our day by day replace and notifications dashboard, clients can see what adjustments have occurred for the reason that final PDB replace.

On prime of that, AgentSync additionally syncs (we’re aptly named) with different techniques to do issues like robotically cease fee payouts that may violate licensing and appointment legal guidelines. Et voilà, downside solved.

In case you’re thinking about taking the simple path to efficient license verification, try a demo.