Many insurance businesses operating outside their domicile state need to secure the services of a Registered Agent in those other jurisdictions. A Registered Agent (or RA, for short) is a person or entity, physically resident in the given state. The business authorizes the RA to receive important tax and legal documents, such as a service of process, from state regulators on its behalf. The RA then forwards such documents to the entity for appropriate action. Additionally, when you are asked to provide a physical address in a foreign state, you can use your RA’s address.
Choosing a Registered Agent
Selecting your Registered Agent is an important decision. They need to be reliable because it’s still your responsibility as the licensee to respond to letters of inquiry and legal notices – even if the RA fails to forward them. Remember, too, that most correspondence from regulators is time-sensitive.
A registered agent does not need to hold an insurance license in the state. In fact, in most states, anyone can serve in this role. However, they must be available during specified business hours, usually 9:00 am to 5:00 pm, Monday through Friday. (Check with each state to be sure.) In a few states, including New York, the Secretary of State serves as the RA for all foreign entities registered for a Certificate of Authority. There are also several companies that offer professional RA services nationwide.
Whoever you pick to be your registered agent, be sure they consent to serve in this capacity. Simply naming someone as your RA doesn’t legally obligate them to act on your behalf. They can file a Rejection of Appointment with the state regulator, leaving you non-compliant.
Finally, be aware that your registered agent is legally required to represent your agency for up to 5 years after you withdraw your business registration in a state, or your Certificate of Authority is revoked or administratively dissolved.
Getting the Best Value from a Commercial Service Provider
If you choose to use a commercial RA service, expect to pay from $50 to $500 per state per year. Fortunately, consolidating your foreign states with a single provider not only makes record-keeping easier; it can also save you money. Many providers offer discounts to clients who enroll in multiple states.
Additionally, most RA service providers bill for their services annually. (This doesn’t always coincide with the calendar year.) Some companies offer pro-rated fees for customers who enroll part-way through the billing cycle. Be sure to ask about this when choosing a service provider. Remember, too, that registered agent fees are usually tax-deductible as a business expense.
Keeping Your Information Current
It’s very important to keep track of who your RA is in each state where your agency holds a COA. If you don’t know who your RA of record is in a particular state, you can usually find this information on the Secretary of State’s website. A lot of information about your business registration, including contact information for your RA, is available there.
If you change registered agents, you need to notify the Secretary of State’s Office promptly. Most states require you to report such changes within 30 days, so typically you’ll use a special form to give notice rather than waiting until the next annual return filing. If your registered agent changes their address or any other required contact information, you have 30 days to report this change as well.
One of the great things about using a professional RA service is that often they handle such notifications for you, including absorbing any state fees charged to make the change. Even if your RA handles the notification for you, though, it’s a good idea to double-check that the filing is processed in a timely manner. After all, you don’t want to miss an important communication!
Beware Change of RA Schemes
Lastly, while there are a lot of reputable RA service providers out there, you may occasionally encounter one that’s a little less ethical in its marketing. If you receive an “invoice” for RA services from anyone other than your chosen provider, read it carefully. It may be a stealth solicitation.
By paying the invoice, you can wind up changing vendors without meaning to. Switching back to your previous vendor takes time. If there are state fees, you may have to pay them since technically you chose to go with someone else. For this reason, it’s a good idea to be sure that everyone on your team – especially the people who process incoming mail and emails – knows who your Registered Agent is and what they do for your agency.