So, this is the year you take your agency nationwide. Congratulations! You’ve worked hard to get to this point. Now here are some questions to answer as you take your next big step. Your insurance licensing and compliance needs are about to get a lot more complex. Having the right answers to these questions will save you headaches, heartaches and probably even some money.
Is your agency name available nationwide?
First things first, you need to know if your agency name is available nationwide. It’s always best to research name availability BEFORE you begin submitting license applications. You may even be able to “reserve” a name for a brief period.
Some states have very specific rules for agency names. For example, California requires that the word “insurance” be followed by a descriptive word such as “agency,” “marketing,” “sales” or “services.” This is so consumers can easily identify your business as an insurance agency, as opposed to an insurance company. Other states have similar quirks. Even if a state isn’t as picky, most states require that a business’ name be sufficiently unique from others already in use in the state.
If the name you use in your resident state is “taken,” you’ll need to file for a DBA. You’ll need to go through the name approval process again for your proposed DBA. That’s why it’s best to check with every state before you begin submitting license applications. Having to use lots of different DBAs makes staying compliant so much harder!
You may also need to file your true name and DBA(s) with state regulators other than the DOI. (More about that later …)
Do you know the specific licensing requirements and procedures for the non-resident states?
NAIC proposed the Producer Licensing Model Act in 2005, with the goal of increasing uniformity of licensing requirements and procedures. For major lines of authority such as Property & Casualty and Life, Accident & Health, it has helped a lot. Most states now accept standardized electronic license applications and reciprocate pre-licensing and continuing education. Still, you can run into unexpected hurdles, such as fingerprinting requirements.
For limited lines and specialty license types, however, uniformity is still a work in progress. The Surety LOA, for example, is part of P&C in some states, a separate major line in others and a limited line in still others. Determining what products a particular limited line covers in specific state can be challenging.
Once you get into surplus lines licensing, there is a dizzying variety of requirements beyond the license application. States may or may not want pre-requisite licenses, fingerprints, bonds, appointments and surplus lines association memberships. It only gets more complicated for TPA, MGA and RPG licensing.
Regulators other than the Department of Insurance want to know you’re doing business in their state. Do you have a plan to meet their initial and ongoing compliance requirements?
Even if it’s not required to get your agency license, most states expect non-resident agencies to register with their Secretary of States Offices. If the SOS registration doesn’t automatically create a tax account for you, you’ll need to file a separate registration with the Department of Revenue.
In all but two states, the SOS requires you to maintain a physical presence within the state to receive Services of Process and other legal documents. This usually involves retaining the services of a Registered Agent.
How will you track your compliance needs?
Once you are licensed nationwide, your compliance schedule is going to get a lot more complex. In fact, in a recent interview, a compliance manager with over thirty years of experience named “calendars and tickler systems” as her most useful resource for keeping in compliance.
States don’t go out of their way to make tracking renewals easy. Some licenses renew on the anniversary of the original issue date. Individual licenses sometimes renew on the license holder’s birthday or last day of the birth month. Other states pick an arbitrary renewal date for all licenses to renew. A handful of states even issue perpetual licenses that don’t renew at all. Agency licenses may renew on the same schedule as individual licenses or at a completely different time.
Additionally, your non-resident business registrations bring their own list of compliance tasks. In most states you’ll need to file some sort of annual or biennial report. This filing updates information about your business’ ownership, corporate structure and leadership. You may also need to file foreign corporation or franchise tax filings. Each state has its own deadline for these filings which can vary depending on your corporate structure and financial year. The availability of tax extensions of varying lengths can make tracking filing deadlines even more difficult.
You’ll need to know your filing requirements and deadlines up front so you can give yourself plenty of time to respond. You’ll also need to ensure that you use the correct forms for the type of filing and your corporate structure.
Will your current CRM system and production processes scale to your new volume of business?
A robust Customer Relationship Management system is essential for taking your agency nationwide. You’ll probably need to collect more information about clients and their risks, especially if multi-state exposures are involved. You may also be offering different products or variants of products in different states, possibly even from multiple carriers. As the number of records in your system increases, loading and search times may increase. Data drift also becomes an issue as individual records are touched less frequently. Increasing the size of your staff can also stress your CRM as more users access databases at the same time.
Expanding your staff and the number of policies they handle can also reveal weaknesses in your production processes. Tasks that were “just a little inconvenient” when you had a thousand policies become system-breakers at 10,000 or 100,000 policies. Ensuring that all staff members know and follow best practices also takes more time.
Do you have the infrastructure to support a nationwide presence?
Now that you’ll do business nationwide, you need a way to connect with current and prospective customers. The best “bang for your buck” is online marketing. Gone are the days, though, when you could publish a website and then ignore it. Many agencies now forego a website completely. Instead, they actively engage with contacts on social media platforms like LinkedIn (for professional matters) and Facebook (for less formal business and social activities, among others. These platforms let you connect on a wide variety of devices with no special tech investment.
Social media platforms won’t work for you, though, unless you’re actively engaged on them. This means not just hitting the occasional “thumbs up” or “LIKE,” but participating in meaningful discussions about professional topics. It also means putting out your own original content that addresses topics of the day in your authentic voice.
If you do choose to have a website, you need to include regularly updated (i.e. “dynamic”), highly visual content. Your site must also be visible and usable across a wide range of devices. You’ll also want to be sure you’re taking full advantage of landing pages, tracking pixels, funnels and drip campaigns to maximize your engagement with visitors.
If it sounds like all this will take a lot of time and money, it can. But with the same careful planning and hard work that brought you this far – and some good advice – you’ll be a national player in no time!