In today’s world, it isn’t unusual for an insurance agency to have clients in several different states, if not all 51 jurisdictions. It could be that your agency functions as a program administrator, a call center or as a managing general agent. If so, your agency needs insurance licensing in all states where you are writing business.
A lot of agency owners think as long as they personally hold an insurance license, the agency doesn’t need to hold a license. It’s a common misconception. All states offer an agency license, but only a handful make it optional to hold one if doing business in their state.
So now that you know you need an agency license in a non-resident states, let’s discuss the insurance licensing process. Unfortunately obtaining a non-resident agency license can be much more difficult that obtaining non-resident individual licenses. Here are a few things you need to know about insurance licensing for agencies…
Certificates of Authority – When filing for the insurance agency license, several states require proof that the agency holds a Certificate of Authority with that state’s Secretary of State’s office. A copy of the Certificate of Authority must be submitted with the agency license application.
Name approval – A few states require the agency name to be approved by either the Secretary of State or the insurance department prior to application. In addition, some states have specific guidelines on the words used in the agency name. For example, one state mandates the name clearly indicates the licensee is an insurance producer. Other states prohibit certain words from being used in the name of the agency.
Designated Licensed Responsible Producer – Also known as the DRLP, this is the individual responsible for the agency’s compliance with state insurance laws, rules and regulations. Most states require the DRLP hold the same lines of authority as the agency. Check out this blog post for more information regarding DLRPs and insurance licensing.
Officers/Owners – The agency will need to list all owners, officers, directors and managers of the agency on the non-resident application. It is mandatory that social security number, resident address and date of birth be listed for each.
One last thing…most state refer to agencies as business entities. The terms are used interchangeably in the insurance licensing world.
In the next several weeks, we’ll dive into these topics in more detail, so keep checking our blog for more information regarding insurance licensing for agencies.