Managing producer compliance and credentialing is inherently complicated—that’s why we’re working to make it easier. With the help of regulatory experts, we’ve provided answers to some common questions about the practice of just-in-time appointments.

Where did just-in-time appointments originate?

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, however, 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 should carriers use just-in-time?

When a company wants to introduce just-in-time into their policy and operations, they should set the policy based on their understanding of the regulations and requirements, and on having their legal and compliance team review the legislation.

Some carriers have taken the approach of appointing producers to one writing company, typically in their resident state, and then using 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.

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 non-resident appointments are an excellent use of just-in-time.

What should carriers avoid with just-in-time?

When you use just-in-time and run up against a timing problem, you could be tempted to backdate. Don’t do it, and don’t ask a regulator if you can backdate, because then you’re falsifying documents. If you have a window in which to appoint an agent and you’re one day off, it’s better to just let it be accurate. You’re probably not going to get a market conduct ding on a one-off, but a pattern of doing this may cause you some legal trouble.

What should carriers keep in mind when it comes to 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 say to the carrier that they’re leaving. 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. The right compliance solution can help keep you out of those weeds.

What else should carriers know?

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 uses “appoint upon contracting” language, “first insurance application,” or “whichever occurs first.”

With states that use “whichever occurs first,” that’s a timing issue, and contracting usually comes first. If the agent binds the company, then just-in-time won’t work.

When it comes to new business, it can go very, very well for an agent, or it could go very poorly. That’s a moment of truth for a carrier when they’re working with agents. Every carrier has an ease of doing business objective. Just-in-time practices are mature in this industry: agents are familiar with just-in-time, and there are more companies doing it than not these days. When done well—with the right tools, techniques, and policies—just-in-time can be very effective. It can provide a favorable agent experience while balancing compliance costs.

If you’re ready for forward-looking solutions with proven results, see how Vertafore can help.