When a licensed producer joins your firm, you need to affiliate them to your agency’s license. So what’s an affiliation? In short, it’s a notification sent to a state’s insurance department (DOI) by the agency. It establishes the professional relationship between the licensed individual producer and the licensed insurance agency. In other words, affiliations let the insurance department know who works for whom.
There are a few things you need to know about affiliations:
Currently, about half of the states require them.
An individual can only be affiliated for those lines of authority held by both the individual and the agency. An agency can affiliate multiple individuals to ensure that it covers all of its lines of authority.
In some agencies, branch offices have their own licenses. If so, producers need to affiliate with the branch office’s license rather than the one for the home office.
An agency needs to affiliate a licensed producer within 30 days of hiring them. If the producer’s license is still pending, complete the affiliation within 30 days of the license issue date. The same timeframe applies if a producer adds a license later.
If a producer leaves an agency, their affiliations need to be terminated within 30 days.
Affiliations and DRLPs
Probably the most important affiliation for your agency is the Designated Responsible Licensed Producer (or DRLP). The state insurance departments may issue licenses to agencies; but if there’s a problem or complaint, they want a real, live human being to take responsibility for handling it. That’s where the DRLP comes in.
State regulators take keeping DRLP information up to date VERY seriously. For example, in 2017, Virginia threatened to terminate over 800 agencies’ licenses for failing to do so. Fortunately, the state eventually relented. However, it could have put each of those agencies out of business for a minimum of 30 days. (The DOI refused to accept re-applications for that period.) That’s in addition to imposing an administrative action that an affected agency would need to report in every state it held a license!
How To Affiliate Producers
Methods for affiliating producers vary. In some states, you file an affiliation request through the insurance department’s website. Other states contract with Sircon or a similar third-party vendor to manage their affiliation process. A surprising number of states still use paper forms for affiliations and affiliation terminations. Visit the DOI website for the state(s) where you plan to do business for details.
Some states charge a fee for affiliations. These fees range from a few dollars to $100! And once you submit the request, you’ll need to follow up on the approval. This information also appears on the state’s website.