A key decision to make before applying for a new license is what lines of authority (LOA) the license holder needs. I’ve previously described the various limited lines available, but most insurance professionals hold some combination of the six major lines. The LOA held always need to reflect the full range of insurance products that the licensee intends to sell in a particular jurisdiction.
Also, keep in mind that Adjuster, Surplus Lines, Third Party Adjuster, etc., aren’t lines of authority. They are license classes. Some of them do require licensees to hold an active license for certain major lines of authority as a prerequisite.
What Are Major Lines?
The NAIC’s Producer Licensing Model Act (PLMA) defines the six major lines of authority for insurance this way:
- Life – insurance coverage on human lives including benefits of endowment and annuities, and may include benefits in the event of death or dismemberment by accident and benefits for disability income
- Accident and Health or Sickness – insurance coverage for sickness, bodily injury or accidental death, may include benefits for disability income
- Property – insurance coverage for the direct or consequential loss or damage to property of every kind
- Casualty – insurance coverage against legal liability, including that for death, injury or disability or damage to real or personal property
- Variable Life and Variable Annuity Products – insurance coverage provided under variable life insurance contracts and variable annuities
- Personal Lines – property and casualty insurance coverage sold to individuals and families for primarily non-commercial purposes
Prior to a 2011 revision, PMLA included a seventh major line: Surety. Now, however, most states include surety in the Casualty line of authority.
Most states define their lines of authority very similarly. Still, if you have a question about which LOA you need for a specific insurance product, ask the underwriting carrier. You can also visit the state’s insurance department website to view the relevant state laws and regulations.
Make Mine a Combo, Please
While LOA definitions are fairly consistent from state to state, how DOIs group the various lines of authority sometimes isn’t. For example, some states offer Property and Casualty as separate LOA while others bundle them into a single Property & Casualty line. Furthermore, most states include Personal Lines in their P&C bundle; but in a tiny number of states, it’s its own LOA (or can be). The situation is similar for the other major lines.
While combos generally make LOA selection simpler, always check to be sure you have selected ALL the lines needed. Remember, having the wrong LOA is the same as not being licensed! Keep in mind, also, that the individual and agency must both hold the appropriate lines for the insurance products they sell.
Okay, it’s not exactly buy-one-get-one-free, but another important thing to keep in mind when deciding which LOA to apply for is this. Most states charge their fees by the application, not by the line of authority. Therefore, it’s more economical to apply for all the lines of authority you think you’ll need on the initial license application. It is possible to add an LOA to an existing license later, but that means another application and more expense.
With these key facts in mind, you shouldn’t have any problem choosing the major lines that are right for you and your agency. Happy selling!