Insurance License 101

Learn About Being a Licensed Insurance Provider in the U.S. Insurance Industry 

 

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What is an Insurance Producer’s License?  

A person who has received a license from the department to sell insurance in that state is an insurance producer (sometimes known as an agent or insurance broker).

An organization can only function as an insurer or an insurance agent after meeting specific requirements, and this is indicated by a regulatory body’s certification of the relevant authority, called an insurance license.

States have different standards for insurance agents’ licenses, insurance, and bonding. It could be necessary for some positions in the insurance business to have the appropriate insurance and bonding, which can assist in keeping you financially secure.

Types of Insurance License  

Licensing for businesses can be difficult. In more regulated industries, businesses also need to comply with industry-specific licenses and standards on top of state and jurisdiction licensing, which can be burdensome.

Here are some of the licenses that insurance providers need to have:

Agency and Individual Resident License

To conduct business within state boundaries, insurance agencies and individual agents must first obtain an agency or individual resident license from their home state.

Agency and Individual Non-resident License

An insurance company cannot provide services to clients in more than one state without an agency or individual non-resident license. Non-resident licenses, on the other hand, are required if an agent-owned an insurance agency in Delaware and also wanted to conduct business in Pennsylvania, New Jersey, and Maryland. There are additional fees and regulations for each additional state in which a business is licensed.

Policy Specific Licenses

Depending on the types of insurance policies the agent offers, many states have various forms of insurance licenses. These permits frequently call for additional payments and qualifications. Several instances include:

  • Personal lines
  • Life-only agent
  • Fire and casualty
  • Limited lines automobile
  • Accident and health

Fire & Casualty is the most general and inclusive license. It entitles the agent to offer policies including flood, vehicle, and personal property insurance. This is the license you’ll need if you’re launching a business in the insurance industry. The scope of the other licensing classes is more constrained, and they often limit the kinds of insurance that an agent can sell. A life-only agent, for instance, specializes in selling life insurance.

Surplus Lines

Surplus lines are used when an insurer refuses to accept the risk on a certain line of authority because it doesn’t match the state’s established guidelines. Therefore, a second license is needed—either from an authorized producer or from a surplus-line producer—so that they can obtain an insurance policy with a higher level of risk.

Adjuster

Insurance or claims adjusters are individuals who visit clients to determine how much their insurance will cost and how much it will cover. They’re individuals that settle insurance claims. As a result, adjusting requires its own license.

Third-party Administrators

Third-party administrator (TPA) licenses are available to companies, brokers, or individuals who manage different claims-related administrative tasks. For example, employers that choose to self-insure must get a TPA license before they can file claims on behalf of their employees.

Appointments

Appointments license allows a specific firm’s policies to be sold by an individual or agency linked to that company. For instance, if John Smith can sell State Farm’s various insurance coverages because he has the appropriate appointments license.

How Much Does It Cost to Get An Insurance License?

Depending on where you live, passing the state licensure exam might cost anywhere from $40 to $150. You’ll also have to pay an application fee ranging from $30 to $200, and in some cases, a background check is required.

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Which Insurance Jobs Require a License?

Insurance Agents

To discuss insurance products or make sales, insurance agents must be licensed. The license requirements vary by state. Operating without a license may result in sanctions or legal action.

Financial Representatives

A Series 63 license is required in every state for financial advisors to operate legally there. You must pass this test in addition to the Series 7 or Series 6 exam.

Actuary

The Joint Board for the Enrollment of Actuaries of the U.S. Departments of Labor and Treasury normally issues licenses to pension actuaries. It is strongly recommended that all actuaries become certified. They gain certification by passing a number of tests.

Claims Adjuster

No matter what type of adjuster you are, you will almost always need a license because most of professionals work in multiple states. A nonresident Designated Home State (DHS) license can be obtained by residents under certain jurisdictions.

Personal Finance Advisor

A Series 63 license is required in every state for financial advisors to operate legally there. You must pass the test in addition to the Series 7 or Series 6 exam.

Reasons Why an Insurance Producer Might Lose Their License

  • Intentionally falsifying the details of a current or prospective insurance contract or insurance application;
  • Having received a felony conviction
  • Having acknowledged to or been proven to have engaged in any insurance fraud or unfair business practices;
  • Using unethical, coercive, or dishonest methods, or acting with ineptitude, dishonesty, or financial irresponsibility in the course of conducting business here or elsewhere;
  • Having an insurance producer license, or its equivalent, rejected, suspended or canceled in any other state, province, district or territory;
  • Adding someone else’s name fraudulently to an insurance application or other document related to a transaction involving insurance;
  • Using notes or any other study aids improperly to pass a test for an insurance license;
  • Knowing that a person without a license is offering you insurance.
Insurance license 101

Insurance License Renewal

Renewal – Keeping the license or appointment active after its initial expiration date.

Most resident individual renewals have a continuing education requirement that must be satisfied before the state can accept the license renewal request. Renewals can range from annually to every four years.

First Time License / New License / Reinstatement / Add Line of Authority:

A first-time applicant is someone who must meet the requirements for the state’s license and is applying for an insurance license for the first time in that state.

Some states may also require the submission of a new licensing application if a license is not renewed within the renewal period.

Change Contact Information:

Actively licensed individuals may make requests to amend their physical addresses, email addresses, and phone numbers via the contact change request tool. View the list of participating states and their business regulations on the Contact Change Information page for changes to business entities.

Frequently Asked Questions

How do insurance agents get paid?

An insurance agent receives a commission when they sell you a policy. Additionally, there are guaranteed benefits that are provided in addition to commissions for the sales goals they hit.

Is insurance a good career path?

The U.S. Bureau of Labor Statistics projects that employment of insurance sales agents will increase by 5% by 2030, which is good news. This figure equals 27,500 additional jobs, which represents a faster growth projection than the national average for all occupations.

What is the difference between an insurance broker and an insurance agent?

Although both agents and brokers deal with insurance providers and consumers, they are different in terms of whose interests they are promoting when a customer is buying insurance. In contrast to an insurance broker, who represents the insurance buyer, an insurance agent represents each insurance carrier they do business with.

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