The Pacific Research Institute just completed a much-needed report on insurance licensing reciprocity. As a conclusion, the institute’s Breaking Down Barriers said the current system is causing more harm than help.
The study found the average claims adjuster — for example — has to have between 10 and 12 state licenses to do their jobs. Each license sets the adjuster back financially up to $1,000. In addition to making it more difficult for the adjuster to work across state lines the additional cost to them drives up the cost for consumers.
It also limits the number of new claims adjusters coming into the business.
The study found — from stats compiled by the Association of Claims Professionals (ACP) — that 34 states require adjusters to hold a license for their state. And each state has different licensing requirements which make it difficult for the 125,000 independent claims adjusters working in the U.S. today.
Institute spokesman Dr. Wayne Winegarder — who authored the study — said this is a huge problem. “The current patchwork of overlapping licensing laws and regulations prevents qualified adjusters who work out-of-state from being able to timely process insurance claims, he said.
Help may be coming. A bipartisan bill — Claims Licensing Advancement for Interstate Matters (CLAIM) Act — is currently being considered in Congress. It gives states four years to make the processing of claims smoother. When done it allows adjusters to use their base state license in other states.
If the state does not set up a reciprocation process during that time period then the independent claims adjuster can apply for an interstate license from the National Association of Registered Agents and Brokers.
“The study’s findings show that licensing reciprocity for claim adjusters can improve efficiency, reduce costs, and improve the quality of the services provided by these professionals to the great benefit of consumers,” Winegarden added.
Claims specialist firm Broadspire’s CEO Danielle Lisenbey agrees. She said, “Consumers’ ability to receive quick and effective claims adjusting services shouldn’t be dictated by state borders. We must empower states to adopt uniform and reciprocal licensing laws so adjusters can timely and efficiently process claims.”
When it comes to producer licensing, the PIA supports increasing uniformity and reciprocity. However, the PIA would prefer changes come through state insurance departments.
Targeted federal legislation — like this bill — is okay depending on how the bill is written and how much federal involvement is in the bill. The PIA opposes interference in insurance regulation by the federal government and has called for the elimination of the Federal Insurance Office (FIO) and does not support the CHOICE Act passed by the House that establishes an Office of the Independent Insurance Advocate.
However, PIA National notes the passage of the Gramm-Leach-Bliley Act in 1999 requires states to enact uniform or reciprocal license standards for producers. Strides have been made but regulatory redundancies, inefficiencies, and inconsistencies continue.
PIA National says they result in unnecessary costs and burdens on insurance producers and consumers.
Source link: Insurance Business America, PIA National