WINTER 2022 33
Just in time !
Details on just-in-time appointments
When done well — just-in-time can be very effective and can provide a favorable agent experience as well as balancing compliance costs .
John Paddock , VP Customer Experience , Vertafore
Girtha Perkins , Sr . Regulatory Compliance Analyst , Vertafore
Both work to provide customers expert guidance in matters related to regulatory compliance . Combined , they have more than 50 years of insurance industry knowledge . www . vertafore . com .
There ’ s specific language in the PLMA , or the Producer Licensing Model Act , that ’ s widely interpreted as being the linchpin for just-in-time appointment processing . This process has been widely adopted , and the economic benefit it ’ s given to carriers has been very significant . For very large carriers , it ’ s a savings on the order of millions of dollars on an annualized basis .
Many carriers have 10 , 20 , sometimes even 30 or more writing companies . If you were to appoint everybody in the old manner — where everybody held an appointment , everywhere that you wrote business — the cost adds up dramatically . Just-in-time allows you to target your investment , or target your compliance spend , to your actual new business .
The problem is not every state adopted the entirety of the PLMA , and there are different variations of the model . Just-in-time is an industry concept , so you will not find it in the regulations anywhere . It ’ s not a regulatory thing .
When is it right ?
In a lot of states , where the PLMA provides for you to be able to work for more than one company if you ’ re not a captive agent , then those secondary appointments and those nonresident appointments are an excellent use of just-in-time .
Some carriers have taken the approach of saying ‘ we want to have them appointed ,’ so they ’ ll appoint them to one writing company , typically in their resident state , and then use just-in-time everywhere else . That still has a huge economic benefit . That one appointment threads the needle for some carriers , and it just comes down to what ’ s right for them .
What to avoid ?
When you use just-in-time and run up against a timing problem , you could be tempted to do something bad . That ’ s called backdating . Don ’ t do it , and don ’ t ask a regulator if you can backdate , because then you ’ re falsifying documents .
Points around appointing Agents will frequently move from one agency to another . When they make those changes , the obligation is on the agency and the individual to tell the carrier , but 99 % of the time they don ’ t .
It ’ s the agency ’ s responsibility to add that member and inform the state to submit the notice of affiliation . But you also don ’ t want to blur the lines between a broker and an independent agent . If that broker who has a producer license is getting paid by fees from the policyholder , then they shouldn ’ t be appointed .
Never assume
Don ’ t assume your state ’ s compliance rules are pure Model Act . They may or may not be . You should know if you ’ re in a state that says ‘ appoint upon contracting ,’ ‘ first insurance application ,’ or ‘ whichever occurs first .’
With states that say ‘ whichever occurs first ,’ that ’ s a timing issue , and contracting always comes first . Does the agent bind the company ? If that ’ s the case , then just-in-time won ’ t work . When done well — with the right tools , techniques , and policies — just-in-time can be very effective and can provide a favorable agent experience as well as balancing compliance costs .