Issues In Multi‐State Producer Regulation

Oversight of the producer licensing process is a vital regulatory function aimed at protecting public interests inherent to insurance transactions. The National Association of Insurance Commissioners (NAIC), through a separate business entity formed in conjunction with private business, the Insurance Regulatory Information Network (IRIN), recently implemented a new program designed to allow better tracking of “rogue” agents, eliminate costly and error‐prone duplicate data entry, and streamline the producer licensing and continuing education processes among/across the states. The heart of the NAIC effort is a wide‐area client/server electronic network built around their Producer Data Base (PDB), which is designed to provide both regulators and industry with detailed, timely information on individual producers. The PDB spans a wide spectrum, from personal demographics to licenses and professional designations held, continuing education progress, and agency appointments, renewals and terminations, as well as complaints registered with and disciplinary actions taken by other regulators. This research investigates the development and implementation of the PDB/IRIN project. Though likely to be effective as a regulatory tool, we find significant risks exist in IRIN with regard to privacy, breach of confidentiality and reduced due‐process protection, as well as threats to important private personal interests such as individual credit histories. The expanded role of NAIC reflected in IRIN may run counter to the federalist ideal of continued state control of insurance regulation. We also anticipate structural changes, such as displacement of smaller, local producers and continuing education providers.