New to the world of insurance? Here are five common misconceptions/myths about insurance compliance that you may not know.
Myth #1: You can wait until the next renewal date to report name or address changes.
If you have changed your name for any reason, you must report your name change to the Department of Insurance. You’ll need a copy of your marriage license, divorce decree, or legal name change certificate within thirty days. The same rules apply to address changes. Always update your resident license with the new address first. Then once that is complete, update your address in the non-resident states where you hold a license. You should do this within 30 days from the actual date of the change. You can usually report an address change online through NIPR or the Department of Insurance websites if you are an individual moving within the state. If you are an individual moving to a different state or submitting an address change for a business entity, many of them require a paper application.
Myth #2: Any criminal history prohibits an agent from being licensed.
Traffic violations and a first offense DWI don’t typically affect your ability to obtain an insurance license. For other criminal charges, the probability of getting a license is on a case-by-case basis. After you take your exam or prelicensing course and pass, you will then need to submit your application. The application has a section that specifically asks about your background/criminal history. If you answer “yes” to any of those questions, you will have to submit additional documents to supplement your responses. Once you provide the appropriate supporting documentation, it is up to the Department of Insurance whether or not they issue your insurance license. Where a state may allow you to have an insurance license despite any criminal history, obtaining a carrier appointment could be a little harder, depending on circumstances.
Myth #3: You can use any name for your insurance agency.
It’s your insurance agency, your baby, so you would think you can choose any name you want for it. However, before you can use the name of your choice, you will have to get it approved with most Department of Insurance and/or the Secretary of State offices before you can settle on your name and obtain your insurance license. Most states won’t approve your name if it sounds even remotely similar to an already active agency to avoid customer confusion.
The NAIC has a compiled list of name requirements by state, so check it out if you’re thinking about the name of your next insurance agency.
Myth #4: When an agency changes its Tax ID, it’s no big deal, they can keep original licenses.
Your Tax ID, or FEIN, is tied to your agency’s licenses. You cannot sell insurance policies for your new agency using your old licenses, as insurance licenses are NON-transferrable. If you are planning on changing your Tax ID, be prepared to have to pay for new license applications. And you may have to wait for your licenses to be issued before you start doing business.
Myth #5: All licenses renew at about the same time.
If you have been selling insurance nationwide, you already know that the states all have different rules and requirements. Renewal dates all depend on the individual state and your license type. Your license may expire annually, biennially, or it may be perpetual, meaning it doesn’t have an expiration date. However, you still may have to keep up with education or appointment requirements.