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Terminology A
Address Change
– A filing required by a state’s Department of Insurance and/or
Secretary of State’s Office whenever an agent or agency changes
his/her/its residence, business or mailing address
Adjuster
– An agent or agency that, for compensation as an independent
contractor or as an employee of an independent contractor, for fee
or commission, investigates and adjusts losses or claims arising
under insurance contracts on behalf of an insurer
Adjuster Licensing -
Licensing an agent or
agency that, for compensation as an independent contractor or as an
employee of an independent contractor, for fee or commission,
investigates and adjusts losses or claims arising under insurance
contracts on behalf of an insurer
Administrative Action Notification
– A filing required by ALL
state departments of insurance whenever an agent or agency incurs an
administrative action or criminal penalty (other than a misdemeanor)
in ANY
state
Admitted Carrier
– An insurance carrier that has been approved/licensed by the state
department of insurance to underwrite insurance products in that
state
Affiliations
- An association between the Insurance Agency and the Insurance
Producer or Agent
Annual Return (a.k.a. Annual Report) – An annual or biennial report required by the Secretary of
State’s Office in each state where an agency is qualified to do
business that updates information about the agency’s corporate
structure, officers and directors, the issue and holding of stock,
etc.
Application Amendment Fee
– A fee assessed by ILSA when information included on any form
completed by ILSA personnel must be changed because a client has
provided us with incorrect or out-of-date information; costs vary
depending on the nature of the changes needed
Appointment
– A filing required by
certain state departments of insurance from an insurance carrier
indicating that a particular agent or agency solicits and/or sells
the carrier’s products in that state
Appointment
Cancellation -
an agreement between the carrier and the insurance producer/agent
and or agency that business can be transacted. Without this,
business cannot be conducted through that carrier.
Appointment Renewal
– The process by which an appointment for an agent or agency is
continued, typically consisting of payment of a fee and/or the
forwarding of a current license copy to the insurance carrier
Appointment Request
– A written request submitted to an insurance carrier to have the
carrier add an agent and/or agency to their list of representatives
within a state
Articles of Incorporation/Partnership – The legal documents filed with the Secretary of State Office
in the business’ resident state which describe the organizational
structure and ownership and/or governance of the entity
B
Background Investigation
– A check of federal, state, and/or local governments’ records to
determine an agent’s or agency’s officers’ criminal history; may be
prerequisite to the issue of a license or the processing of an
appointment
Bail Bond
License
-
Licensing any person or corporation which will act as a surety and
pledge money or property as bail for the appearance of a criminal
defendant in court
Bond
– An insurance agreement pledging surety for financial loss caused
to a state by the act or default of an agent or agency; a
prerequisite to obtaining certain types of insurance licenses
Bond
Renewal
– The payment of a premium, usually on an annual basis, to continue
a required bond
Bond
Cancellation
– A written request to a bond underwriter to terminate a bond that
is no longer needed, either because of a change in state
requirements or because the agent or agency is no longer transacting
business in a state and has chosen to terminate his/her/its license
there
C
Carrier Licensing-
The process by which an insurance company applies for, and is
approved by each state Department of Insurance to write specific
lines of business in that state.
Certificate of Authority
– A certificate issued by certain Secretary of State Offices
verifying approval by that office for a non-resident corporate to
transact business in the state; a prerequisite for corporate
licensing in certain states
Consent of Use of Name (a.k.a. Name Approval) – The first step of the corporate qualification process,
involving the submission of proposed names for a business entity to
various state agencies to ensure that the name is sufficiently
distinct from those already in use within the state; incurs a
separate fee only when a client plans to submit the corporate
qualification requests themselves
Continuing Education
– A requirement typically imposed by an agent’s resident state, to
complete courses of study to ensure knowledge of current insurance
laws and procedures; may also be imposed by non-resident states
under certain circumstances
Copy
of Legal Documents Fee
– A per page fee assessed by ILSA for the copying of legal documents
(i.e. Articles of Incorporation, documents related to administrative
actions or criminal penalties, etc.) when copies of such documents
must accompany an application for corporate qualification, an
individual or corporate license application, or the request for
renewal of an individual or corporate license
Corporate Affiliation
– The process of listing all individual agents associated with the
agency that sells, solicits, or negotiates business
Corporate Data Form
– An online information
form, submitted by a client via ILSA’s secured Internet connection,
that provides ILSA with the information necessary to complete
corporate license and license renewal applications, corporate
qualification forms, and other filings
Corporate Tax Return Filing
– A tax filing required
from a business entity to report income earned, if any, within the
state. This is to satisfy compliance annually for the corporate
qualification. These reports are submitted to the Department of
Revenue.
Corporate Qualification
– The process of applying for a certificate of authority to transact
business in a non-resident state; prerequisite for agency licensing
in many states
Corporate Qualification Audit
– The process of verifying in which states a business entity is or
has been granted permission to transact business and the standing of
the entity within those states
Corporate Tax Return Extension Request – A filing with the Department of Revenue’s Office to request an
extension of the filing deadline for a Corporate Tax Return
D
Data
Entry Fee
– A fee assessed by ILSA when the online individual and corporate
data forms are available to a client but are not used
DBA/Fictitious Name Filing
– The process for
registering names of a business entity, other than that listed on
the entity’s Articles of Incorporation/Partnership, with various
state offices
Department of Insurance (DOI)
– The state office responsible for issuing insurance licenses and
monitoring the activities of insurance agents and agencies doing
business in the state Department of
Revenue -
for those states in which your agency holds a certificate of
authority; The Department of Revenue requires annual corporate
income tax returns based on business conducted in their state.
It is very important that these filings are made timely each year.
Failure to file Corporate Tax Reports in a timely manner can result
in penalty fees, loss of good standing and revocation of the
client’s certificate of authority to do business in that state for
non compliance. Reinstatement of your corporate qualification
would be necessary at that point. This process varies from
state to state.
Designated Producer
– An individual agent, usually an officer, who assumes
responsibility for all business conducted on behalf of the agency.
The designated producer is licensed for the same lines of authority
as those requested for an agency license and listed on the agency’s
license application
Duplicate License Request
– A written request submitted to a state department of insurance to
have another copy of a previously-issued license be sent to an agent
or agency E
Errors and Omissions Declaration Page
– A certificate issued by the underwriting insurer to a business
entity verifying the currency, amount and deductible of errors and
omissions insurance coverage
F
Follow-Up Fee
– A fee assessed by ILSA
to follow-up on submissions previously made by a client to a state
office
G,
H,
I
Gramm-Leach Bliley Act -
(GLBA) is a
federal law requiring financial institutions to develop, implement,
and maintain safeguards to protect the private information of
customers. Passed in 1999, the act
compelled states to modernize a number of state laws, in particular,
the laws governing the licensing of agents, brokers, and surplus
line brokers.
Individual Data Form
– An online information
form, submitted by a client via ILSA’s secured Internet connection,
that provides ILSA with the information necessary to complete an
individual’s license applications
Initial License
-
Of,
pertaining to or occurring at the beginning; first: the initial step
in the licensing process; to grant authoritative permission to
license in the beginning
J,
K,
L
License Cancellation
– A written request to a
state department of insurance to terminate a license that is no
longer needed without prejudice to the agent or agency
License Reinstatement
– The process by which a lapsed insurance license can be
re-activated; typically available only within a short period after
the renewal deadline
License Renewal
– The process by which an insurance license for an agent or agency
is continued, usually on a biennial or annual basis
Lines
of Authority
– The general types of insurance products that may be solicited
and/or written under an insurance license
M
Managing General Agent (MGA)
– A person or firm authorized by the state to exercise general
supervision over the business, or any part of the business, of one
or more admitted insurers and performs administrative functions
normally performed by the insurer including claims administration
and payment, marketing administration, agent appointment, premium
accounting, premium billing, coverage verification, final
underwriting authority and certificate issuance
Master Service Agreement
– A self-renewing contract between ILSA and its client that
describes the terms and conditions governing both parties
Minimum Capital Requirement-
For purposes of Carrier Licensing, the statutory minimum amount of
capital and surplus required by each state before the carrier can be
approved for licensure in that state. Requirements vary by
state.
Multi-State Placement Policies
- Surplus Line
policies that contain risk locations in multiple state
jurisdictions. The premium of many of these policies will need to be
allocated to all states in which there is risk. This is most
commonly applied to property policies but can apply to some
liability policies as well.
N NAIC
-
The
National Association of
Insurance Commissioners (NAIC) is an Internal Revenue Code
Section 501(c)(3) non-profit organization which seeks to organize
the regulatory and supervisory efforts of the various state
insurance commissioners from around the
NASD -
National Association of Securities Dealers (NASD)
An association of over-the-counter brokers and dealers that
establishes legal and ethical standards of conduct for its members.
NASD was established in 1939 to regulate the OTC market in much the
same manner as organized exchanges monitor actions of their members.
One major advantage to membership is that members sell securities at
wholesale to other members but at retail to nonmembers.
Name
Approval Requirement-
For purposes of Carrier Licensing, the process by which an insurance
company, attempting to gain approval to be licensed in the state,
has their suggested name submitted for review and approval by each
state. Requirements vary by state.
Name
Change –
The process by which the name of an individual or corporation is
updated with all state departments that record this information
National Association of Insurance Commissioners (NAIC)
– An association representing the various state commissioners of
insurance that promotes uniformity of insurance licensing procedures
and governing law and regulations
Newspaper Publication
– The public notice in local newspaper(s) required prior to the
issue of certain types of corporate qualifications and/or licensure.
Some secretary of state offices require for these updates to be made
annually to maintain the corporate qualification.
National Insurance Producers’ Registry (NIPR) – A business entity created by the NAIC to oversee the
electronic licensing process and maintain a database of agents’ and
agencies’ licensing and appointment statuses in the various states
Non-Admitted Carrier
– An insurance carrier that, although it has not been
approved/licensed by the state department of insurance to underwrite
standard insurance products, may underwrite certain excessive risks,
i.e. surplus lines policies if on the approved list of the DOI
O
Online Licensing Database
– The read-only view of
information about license, appointment, continuing education, bond,
and tax filing statuses, provided free of charge by ILSA to the
authorized representatives of our clients
Ordering of Legal Documents Fee
– A fee assessed by ILSA to order certified copies of legal
documents from the appropriate state office and/or criminal
jurisdiction
P, Q
Penalty
-
money or other cost one will pay for breaking a law or violating
part or all
Pre-licensing Requirements
– The course work on state insurance laws and procedures that must
be completed by a new agent, either online or in a classroom
setting, before application for a license can be made
Producer Database Report (PDB)
– A report extracted from the NIPR database showing the address,
licensing and appointment information for an agent or agency, as
reported to the NIPR by the various state departments of insurance
Project Cost Analysis
– A written description that outlines the estimated ILSA service
fees and state fees for the project as discussed by the client’s
representative and an ILSA specialist
R
Random Usage Surcharge
– A fee assessed by ILSA for the occasional use of certain services
Registered Agent
– A resident individual or entity authorized by a non-resident
business entity to receive legal notices and other official
communications from the Secretary of State’s Office and/or the
Department of Insurance, which are then forwarded to the
non-resident entity for action; a pre-requisite for non-resident
corporate licensure in many states
Regulations
- Rules used to carry out a law; act of administering a law. Many
government
agencies prepare regulations to administer a law.
Reinsurance Licensing -
Insurance license that is purchased by an insurance company
(insurer) from a reinsurer as a means of risk management, to
transfer risk from the insurer to the reinsurer. The reinsurer and
the insurer enter into a reinsurance agreement which details the
conditions upon which the reinsurer would pay the insurer's losses
Reordering of Supporting Documents/Letters of Certification
Surcharge
– A fee assessed by ILSA when a delay in response by a client
results in the expiration of time-sensitive documents prior to their
submission to the state
Reports in Lieu of Online Database Fee – A fee assessed by ILSA to provide custom reports to a client
and/or to provide reports of information available via the Online
Licensing Database
Research/Resolution Fee
– An hourly fee assessed by ILSA to research topics falling outside
the normal scope of ILSA services and/or resolve issues arising from
actions or oversights by a client Resident License - The license you acquire based on your business entity’s resident state’s requirements
Restricted State
– A state that requires the approval of an agent’s or agency’s
request for appointment before any insurance policy is solicited or
written
Returned Check Charge
– A penalty fee assessed by ILSA when a client’s check is not
honored due to insufficient funds Risk Purchasing Group (RPG) - purchase insurance from an insurer, which issues the policies and serves as the risk bearer. They do not maintain risk and do not underwrite their own coverage. Risk
Retention Group
-
Risk Retention Groups are owner-controlled insurance companies authorized
by the Federal Risk Retention Act of 1986. An RRG provides
Liability Insurance to members who engage in similar or related
business or activities for all or any portion of the exposures of
group members, excluding first party coverage's, such as property,
workers’ compensation and personal lines. Authorization under
the federal statute allows a group to be chartered in one state, but
able to engage in the business of insurance in all states, subject
to certain specific and limited restrictions. The Federal Act
preempts state law in many significant ways. An insurer chartered
and licensed in its state of domicile to write only liability
insurance.
It may become
registered in other states, however, it differs from a licensed
insurer, or surplus lines company, in that Federal law, to a large
extent, prohibits state, other than the state of domicile, from
financial regulation of a risk retention group.
S
Sanctions Surcharge
– A one-time fee charged by ILSA to cover additional labor costs
arising from “yes” answers to the background questions developed by
the NAIC
Seasoning Requirement-
For purposes of Carrier Licensing, the amount of time set by state
Department’s of Insurance that an insurance company or, in some
cases, it’s holding/parent company has maintained a sustainable and
solvent business in their domicile state that makes that company
eligible to expand into non resident states. Requirements and
waivers vary by state.
Secretary of State’s Office
– The state office
responsible for authorizing resident & non-resident business
entities to do business in the state
Selling Agreement
– The contract between an insurance carrier and an agency defining
the terms and conditions under which the agency and its agents may
represent the carrier’s insurance products; typically defines
marketing procedures, terms and schedules for compensation, and
binding legal responsibilities of both parties
Statutory Membership Requirement-
For purposes of Carrier Licensing, each state’s individual varying
requirements for the aspiring carrier to join and maintain
membership with specific associations or organizations.
STOLI
–
Stranger (investor) Originated Life Insurance. This type of policy
is generally used to circumvent the “insured interest” requirement
by loaning the insured the money for the life insurance policy; most
states do not allow this type of activity.
Surety
Bonds -
A bond issued by an entity on behalf of a second party, guaranteeing
that the second party will fulfill an obligation or series of
obligations to a third party. In the event that the obligations are
not met, the third party will recover its losses via the bond.
Surplus Lines (a.k.a. Excess Lines) – The license class that enables an insurance agent and/or
agency to place large and/or hard-to-place insurance risks with
non-admitted insurance carriers
Surplus Lines Report
-A report that summarizes all surplus lines business written within
a specified time frame by a surplus lines licensee. A
requirement by most states even when no business has been written.
Surplus Lines Tax Filing
– A tax filing required from a business entity or broker to report
premiums written by it's surplus lines licensee's. These filings and
reports are determined on a case by case basis depending on the type
of coverage and where the risk is located.
T
Termination of Corporate Affiliation
– The process of disassociating an individual agent’s state
license from the license of an agency in the same state
Third
Party Administrator (TPA) – An individual or entity licensed by the state to perform
certain administrative functions, including claims administration
and payment, marketing administrative functions, premium accounting,
premium billing, coverage verification, underwriting authority or
certificate issuance on behalf of insurance companies
U, V
UCAA – Uniform
Certificate of Authority Application (UCAA) - The Uniform
Certificate of Authority Corporate Amendments Application is
designed for use by an existing insurer for requesting amendments to
its Certificate of Authority. A
The Uniform Certificate of Authority Corporate Amendments
Application can be used to file more than one change in the same
submission. The applicant should mark all changes being filed on the
application form and submit all items required for those changes in
one package.
Variable Annuity -
A variable annuity is a contract between you and an insurance
company, under which you make a lump-sum payment or series of
payments.
Variable Life -
is a type of whole life insurance that allows one to invest in
various combinations of stocks, bonds and money market funds (chosen
from the funds offered by the insurance company). Viatical Settlements Model Act - was issued by the National Association of Insurance Commissioners. It defines good business practices such as licensing, prohibited practices, advertising guidelines, fraud prevention, and unfair trade practices. Recent revisions strengthen several consumer protections and address concerns about "stranger-originated life insurance" (STOLI) by imposing a five-year ban on settling life insurance policies. Link to this information (2001)
Viatical Settlement Broker (AKA Life Settlement Broker)-
Individual that negotiates the sale of a life insurance policy via
Viatical Settlement contract.
Viatical Settlement Provider (AKA Life Settlement Provider)-
Individual or Company that purchases or provides funding to
purchase a life insurance policy via Viatical Settlement contract;
this individual or company is required to make premium payments
after purchase.
Viatical Settlement Representative- A person that is an authorized agent of a Viatical Settlement
provider or broker that acts or aids in any manner in the
transaction of a Viatical Settlement contract but is NOT a person
acting as an attorney or an accountant, or a person exercising a
power of attorney granted by a viator or insured.
Viator-
Insured or original owner of a life insurance policy who enters into
a Viatical Settlement contract with a Viatical settlement provider.
W
Withdrawal of Corporate Qualification
– The process of terminating a business entity’s corporate
qualification in a non-resident state without prejudice to the
entity X, Y, Z |
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