The following article has been reproduced with permission from the IAB of PA, DE and MD. Some links may require a user login for www.iabforme.com
July 17, 2017 2:25 PM
Understanding the current (admittedly time-consuming and at times expensive) non-resident licensing rules remains a necessity as efforts to streamline the process continue at a painstakingly slow pace.
HOW DOES IT WORK NOW?
There’s no singular process since producer licensing laws vary by state. However, there are several common points to consider:
Exemption: If a commercial client is expanding to another state, check for the applicability of a non-resident commercial multi-state exposure exemption. The need for a license depends on the state, the type of policy and how the out-of-state risk is covered.
Rules: The National Insurance Producer Registry website provides a “state matrix of business rules” with a checklist of state-specific requirements to apply for an individual and/or business entity license. (As a reminder, every individual producer who will sell, solicit or negotiate in that state and, in most cases, the agency must obtain licenses.)
Registration: The Department of Insurance in the non-resident state usually will require the agency to obtain a business entity license, which triggers registration with the Department of State. To register, the Secretary of State will require a “registered agent” (meaning an address) in the non-resident state. Most agencies rely on the services of a registered-agent company.
An Ask Our Experts answer on our website provides additional details on considerations when securing a non-resident license.
HOW – AND WHEN – WILL IT IMPROVE?
The National Association of Registered Agents and Brokers (NARAB) Reform Act aims to establish true licensing reciprocity among states. Once the NARAB entity is fully functional, agents may choose to become members, which will allow them to handle non-resident licensing needs for different states simultaneously and identically.
Under the law, the NARAB Board of Directors must be comprised of 13 members. While appointment of the directors was to occur within 90 days of the law’s enactment (in January 2015), President Obama nominated only five directors before his term ended. Then the new Congress triggered the appointment process to restart, so even those already nominated must resubmit their applications.
We’ll continue to monitor the progress of NARAB implementation and provide updates as they become available, although at this time, there is no indication of when the nomination process will reconvene.