Producer Licensing Model Act (PLMA)

How does PLMA affect me? 

         Reciprocity (the acceptance of the domicile state’s licensing requirements as satisfying the licensing requirements of the non-domicile state) and uniformity (standard licensing requirements accepted by all states) have been issues for producers and states for years.  The NAIC adopted the Producer Licensing Model Act (PLMA) to provide uniform standards for individual and agency licensing.  Those standards included who should be licensed, license classifications, lines of authority, and license applications.  Most of the states, including Utah, have now adopted or are in the process of adopting PLMA.  
      Concurrent with the development of the PLMA, the NAIC developed the Producer Data Base (PDB) and an electronic non-resident licensing process through National Insurance Producer Registry (NIPR).  Efforts have also been made to provide reciprocity for continuing education providers.  Utah has been at the forefront of all of these efforts. Prior to the requirement for reciprocity in individual and agency licensing imposed by the federal Gramm-Leach-Bliley Act, Utah had removed all barriers to non-resident licensees and were in practice reciprocal with all other states.     
      Utah has added or modified definitions and added or modified sections of the Insurance Code to be compliant with PLMA. 

What does PLMA do?

·        Replaces license classifications of agent and broker with license classification of producer.  

·        Provides a common definition for a producer as a person who sells, solicits, or negotiates insurance.

·        Provides a common standard for major lines of authority.

·        Required states to grant non-resident surplus lines authority.

·        Provides a common standard for limited line credit line of authority.  

What does PLMA not do?

·        Does not address consultant, adjuster, third party administrator, managing general agent, or reinsurance intermediary license classifications.

·        Does not provide common limited lines license lines of authority.

·        Does not provide for common continuing education requirements.

Questions and Answers

1. Q: I have had an agent’s license and a broker’s license.  When do 
         I receive a producer’s license?

A:    We converted all agent and broker licenses to a producer license in our database. 

2. Q: Without a separate brokers license, how do I broker insurance 
          business?

A:     Any producer can broker insurance business.  Brokered insurance business is conducted when a producer obtains a product needed by his insured from an admitted insurer with whom the producer does not have a contract and appointment.  For the brokered product, the producer may receive compensation other than commission in the form of a brokerage fee if proper disclosure is made to his insured.

·        NOTE: If the product is obtained from an insurer with whom the producer has a contract and appointment, the producer is operating as the agent of the insurer and not operating as an insurance broker.  If this is the case, only commission compensation is allowed.  

3. Q: What is the common standard for major lines of authority?

A:     As a producer you have the option of being licensed in any or all of the following lines of authority:

o       Accident and Health – requires successful completion of an examination.

o       Life – requires successful completion of an examination

o       Variable Contract – requires NASD license and registration with the Utah Securities Division.

o       Property - requires successful completion of an examination.

o       Casualty – requires successful completion of an examination.

o       Personal Lines - requires successful completion of an examination.   

·        NOTE:  Utah will continue to have the additional lines of authority of:

o       workers compensation for licensees that do not wish to qualify under the casualty line of authority – requires successful completion of an examination;

o       surplus lines broker – requires successful completion of an examination and three years experience as a producer.

·        NOTE: Utah will continue to have combined line of authority examinations for the following lines of authority:  life plus accident and health and property plus casualty plus personal lines. 

4. Q: I have had a property-casualty line of authority.
         What do I have under PLMA?

A:    Your current property-casualty line of authority has been split into three lines of authority: property, casualty, and personal lines.  You will now be uniform with producers in other states should you desire a non-resident license in another state. 

5. Q: I have a surplus lines brokers license.  Under PLMA, how
         do I do surplus lines business?

A:     If you have a producer license and you are obtaining the non-admitted insurer’s product from a surplus lines broker agency, you do not need a surplus lines brokers line of authority.  The surplus lines broker agency is authorized to share commissions with a producer.  If you are obtaining the non-admitted insurer’s product directly from the non-admitted insurer, you need a surplus line brokers line of authority.