Address Change – Each state’s Department of Insurance and/or Secretary of State’s Office requires notification whenever an agent or agency changes their address. Most addresses at the Secretary of State can be updated with the annual report.
Adjuster – An adjuster is an individual or agency that investigates and adjusts losses or claims arising under insurance contracts on behalf of an insurer. They may receive compensation as an independent contractor or as an employee of the insurer.
Administrative Action Notification – All state departments of insurance require notification whenever an agent or agency incurs an administrative action or criminal penalty (other than a misdemeanor) in any state.
Administrative Dissolution – An involuntary dissolution of a corporation by an act of the Secretary of State or similar state authority, caused by the corporation’s failure to comply with certain state requirements. A corporation may be administratively dissolved for failure to file an annual report, to pay franchise taxes or maintain a valid Registered Agent.
Admitted Carrier – An admitted carrier is an insurance carrier that has been approved by the state department of insurance to underwrite insurance products in that state.
Amendment – An amendment formally changes the existing provisions of the articles of incorporation/articles of organization, name of an entity or change to the capital stock structure.
Annual Return (a.k.a. Annual Report) – An annual or biennial report is required by the Secretary of State’s Office in each state where an agency is qualified to do business. The report updates information about the agency’s corporate structure, officers and directors, shares information, the issue and holding of stock, etc.
Application Amendment Fee – When information included on any form completed by ILSA personnel must be changed because a client has provided us with incorrect or out-of-date information, an application amendment fee will be assessed. Costs vary depending on the nature of the changes needed.
Appointment – An appointment lets an insurance carrier tell a state’s Department of Insurance which agents and agencies are selling their products in that particular state.
Appointment Renewal – An appointment renewal is the process by which an appointment for an agent or agency is continued, typically consisting of payment of a fee and/or the forwarding of a current license copy to the insurance carrier.
Appointment Request – An appointment request is a written request submitted to an insurance carrier to have the carrier add an agent and/or agency to their list of representatives within a state.
Articles of Incorporation/Partnership – The legal documents filed with the Secretary of State Office in the business’ domicile state to legally document the creation of a corporation are known as Articles of Incorporation/Partnership. They describe the organizational structure, ownership and/or governance of the entity.
Assumed Name – See Doing Business As Name (DBA)
Authorized Shares – The maximum number of shares that a corporation may issue pursuant to its articles of incorporation
Background Investigation – Some states may require a check of federal, state, and/or local governments’ records to determine an agent’s or agency’s officers’ criminal history prior to issuing a license or processing an appointment.
Bond – In order to obtain certain types of insurance licenses, you may be required to obtain a bond. A bond is an insurance agreement pledging responsibility for financial loss caused to a state by the act or default of an agent or agency.
Bond Renewal – The payment of a premium, usually on an annual basis, to continue a required bond
Bond Cancellation – A bond cancellation is a written request to a bond underwriter to terminate a bond that is no longer needed.
Bond Rider – All amendments to a bond, name change, extension of the expiration date must be executed on a bond rider by the bonding company.
Business Registration – A business registration at the Department of Revenue is a business tax account application. A business registration at the Secretary of State is the process of registering an entity for a certificate of authority to transact business in that state.
C Corporation – A C Corporation is the most common corporate structure, also known as a general corporation. A C corporation may have an unlimited number of stockholders. It is usually chosen by companies planning to have more than 30 stockholders or large public stock offerings. A C corporation pays tax on its own income.
Calendar Year – An accounting period that ends each December 31st is known as a calendar year. This is the period most S corporations must adopt as a permitted year.
Carrier Contract – A carrier contract is paperwork submitted to an insurance carrier to contract an agent or registered representative under an existing selling agreement between the carrier and an agency or broker/dealer.
Certificate of Authority – The Secretary of State Offices issue a Certificate of Authority verifying approval for a non-resident, also known as foreign, corporation to transact business in the state.
Certificate of Good Standing (CGS) – A certificate issued by a state official as evidence that a corporation exists or is authorized to transact business in the state is known as a certificate of good standing.
Common Shares – A class of shares that has no special features and possesses no greater rights than any other shares except for Preferred Shares. All capital stock except for preferred stock is considered Common Shares.
Compliance Gateway – The online licensing database offers a read-only view of information about license, appointment, continuing education, bond, and tax filing statuses, provided free of charge by ILSA to the authorized representatives of our clients.
Consent of Use of Name (a.k.a. Name Approval) – The first step of the corporate qualification process is name approval. Proposed names for a business entity are submitted to various state agencies to ensure that the name is distinct from those already in use within the state.
Continuing Education – An agent’s resident state typically requires courses of study to ensure knowledge of current insurance laws and procedures; may also be imposed by non-resident states under certain circumstances.
Copy of Legal Documents Fee – ILSA assesses a per page fee for the copying of legal documents (i.e. Articles of Incorporation, documents related to administrative actions, etc.) when copies of such documents must accompany an application for corporate qualification, an individual or corporate license application, or a renewal request of an individual or corporate license.
Corporate Affiliation – An affiliation establishes a relationship between an agency and an individual. It lets the Department of Insurance know which individuals work for a particular agency.
Corporate Compliance Review – By request, ILSA specialists can verify which states a business entity is or has been granted permission to transact business with a corporate qualification audit.
Corporate Data Form – ILSA’s Corporate Data Form provides ILSA with the information necessary to complete corporate license and license renewal applications, corporate qualification forms, and other filings. The form is submitted by a client via ILSA’s secured Internet connection.
Corporation – An entity formed and authorized by, created under and governed by the laws of the state of incorporation to act as a single person even though it is constituted by one or more persons and legally endowed with various rights and duties including the capacity of succession.
Data Entry Fee – When the online individual and corporate data forms are available to a client but are not used, ILSA charges a fee for manual entry importation of client information from paper data forms.
DBA/Fictitious Name Filing – The process for registering names of a business entity, other than that listed on the entity’s Articles of Incorporation/Partnership, with various state offices
DBA/Fictitious Name Filing Renewal – DBA/Fictitious names may need to be renewed and appropriate fees paid in order to maintain the name for use in that state.
Department of Insurance (DOI) – The state office responsible for issuing insurance licenses and monitoring the activities of insurance agents and agencies doing business in the state
Department of Revenue (DOR) – The state agency responsible for handling revenue generated from the taxation of businesses
Designated Responsible Licensed Producer (DRLP) – An individual agent licensed for the same lines of authority as those requested for an agency license and listed on the agency’s license application as the individual responsible for agency business.
Directors – The individuals who, acting as a group known as the board of directors, manage the business and affairs of a corporation.
Dissolution – The statutory procedure that terminates the existence of a domestic corporation.
Doing Business As Name (DBA) – The operating name of a company, as opposed to the legal name of the company. DBA is also known as “Fictitious Name”, “Assumed Name” or “Trade Name”
Duplicate License Request – A written request submitted to a state department of insurance to have another copy of a previously-issued license copy sent to an agent or agency
Errors and Omissions Declaration Page – A certificate issued by the underwriting insurer to a business entity verifying the currency, amount and deductible of errors and omissions insurance coverage
Errors and Omissions Insurance (E&O) – a type of professional liability insurance that protects companies and their workers or individuals against claims made by clients for inadequate work or negligent actions.
Extension – When you need additional time to complete and/or file a corporate tax filing, you can file an extension with the Department of Revenue.
Fictitious Name – See Doing Business As Name (DBA)
Fiscal Year – A fiscal year is an accounting year that ends on a date other than December 31.
Follow-Up Fee – A fee assessed by ILSA to follow-up on submissions previously made by a client to a state office – this is also known as ‘client processed’.
Foreign Corporation – A foreign corporation is a corporation doing business in a state other than its state of incorporation.
Franchise Tax – A tax or fee usually imposed annually upon a corporation, limited liability company or similar business entity for the right to exist or do business in a particular state is known as a franchise tax. Failure to pay the franchise tax or similar fees may result in the administrative dissolution of the company and forfeiture of the charter.
Good Standing – A corporation is said to be in good standing when it has remained current with the necessary reports and fees required by the regulatory jurisdictions under which it operates.
Individual Data Form – An online information form, submitted by a client via ILSA’s secured Internet connection, that provides the information necessary to complete an individual’s license applications
Involuntary Dissolution – Involuntary dissolution is when the corporation’s legal existence is terminated pursuant to an administrative or court proceeding; the dissolution is forced rather than decided upon by the corporation.
Jurisdiction – A term used to describe which insurance regulatory body (such as a state insurance department) has authority.
License Cancellation – To cancel a license that is no longer needed, an agent or agency can submit a written request to the state(s) department of insurance.
License Reinstatement – License reinstatement is typically available only within a short period, usually 15 days to 1 year, after the renewal deadline. Reinstatement of expired licenses may require late fees in addition to the regular renewal fee.
License Renewal – The process by which an insurance license for an agent or agency is continued, usually on a biennial or annual basis
Limited Liability Company (LLC) – An entity created under and governed by the laws of the jurisdiction in which it was formed. Such entities are generally able to provide the limited personal liability of corporations and the pass-through taxation of partnerships or S corporations.
Limited Partnership – A limited partnership is a form of partnership consisting of one or more general partners who manage the business and are responsible for its debts, and one or more limited partners who invest in the business and have limited personal liability.
Lines of Authority – The general types of insurance products that may be sold and/or written under an insurance license are known as lines of authority.
Managers – The individuals responsible for the maintenance, administration and management of the affairs of a limited liability company (LLC) are known as managers.
Managing General Agent (MGA) – A Managing General Agent is a specialized type of insurance agent/broker that, unlike traditional agents/brokers, is vested with underwriting authority from an insurer. Accordingly, MGAs perform certain functions ordinarily handled only by insurers, such as binding coverage, underwriting and pricing, appointing retail agents within a particular area, and settling claims.
Master Service Agreement – A Master Service Agreement is a perpetual contract between ILSA and its client that describes the terms and conditions governing both parties.
Members – The owner(s) of a limited liability company (LLC) are known as members.
Name Change – The process by which the name of an individual or corporation is updated with all state departments that record this information
National Association of Insurance Commissioners (NAIC) – An association representing the various state commissioners of insurance that promotes uniformity of insurance licensing procedures and governing law and regulations
Nexus Questionnaire – The Nexus Questionnaire is a state provided application that helps an agency determine whether or not it needs to file taxes in that state.
Newspaper Publication – Newspaper publications are a public notice in local newspaper(s) required prior to the issuance of certain types of corporate qualifications and/or licensure.
National Insurance Producers’ Registry (NIPR) – The National Insurance Producers’ Registry is a business entity created by the NAIC to oversee the electronic licensing process and maintain a database of agents’ and agencies’ licensing and appointment statuses in the various states.
No Par Value Shares – A no par value share is issued without the specification of a par value indicated in the company’s articles of incorporation. They may be issued for any consideration determined by the board of directors.
Non-Admitted Carrier – A non-admitted carrier is an insurance carrier that, although it has not been approved by the state department of insurance to underwrite standard insurance products, may underwrite certain excessive risks, i.e. surplus lines policies with the special permission of the DOI.
Not-For-Profit Corporation – Also known as a non-profit corporation, a not-for-profit corporation is generally organized for some socially beneficial purpose, rather than for the direct monetary benefit of the directors or members. Not all not-for-profit corporations are tax exempt and some make a profit. However, the profit is not distributed to the members or directors.
Officers – Officers are individuals appointed by the board of directors who are responsible for carrying out the board’s policies and for making day-to-day decisions.
Ordering of Legal Documents Fee – A fee assessed by ILSA to order certified copies of legal documents from the appropriate state office and/or criminal jurisdiction.
Par Value – Par value is the minimum price of a share below which the share cannot be issued, as designated in the articles of incorporation.
Parent Corporation – A corporation that owns a controlling interest in another corporation is a parent corporation.
Pass-Through Taxation – Rather than tax the income of the entity, taxation is “passed through” to the individual shareholders in S corporations (and LLCs). Income or losses are declared on their individual tax returns.
Partnership – A partnership is a business organization in which two or more people agree to do business together.
Perpetual Existence – Unlimited term of existence; characteristic of most business corporations.
Power of Attorney – Power of attorney is the authority given to one person or organization to act on behalf of and obligate another.
Pre-licensing Requirements – Before a license application can be submitted, a new agent must complete certain courses on state insurance laws and procedures, either online or in a classroom setting.
Preferred Shares – A class of shares that entitles the holders to preferences over the holders of common shares, usually with regard to dividends and distributions of assets upon dissolution or liquidation.
Producer Database Report (PDB) – A report extracted from the NIPR database showing the address, licensing and appointment information for an agent or agency, as reported to the NIPR by the various state departments of insurance
Project Cost Analysis (PCA) – A Project Cost Analysis is a written description outlining the estimated ILSA service fees and state fees for the project as discussed by the client’s representative and an ILSA specialist.
Registered Agent – A registered agent is a person or entity designated to receive important tax and legal documents on behalf of a corporation, which are then forwarded to the corporation for action. The registered agent must be located and available at a legal address within the specified jurisdiction at all times.
Reinstatement – Reinstatement involves returning a corporation that has been administratively dissolved, or had its certificate of authority revoked, to good standing at the Secretary of State.
Reordering of Supporting Documents/Letters of Certification Surcharge – A fee assessed by ILSA when a delay in response by a client results in the expiration of time-sensitive documents prior to their submission to the state
Reports in Lieu of Online Database Fee – A fee assessed by ILSA to provide custom reports to a client and/or to provide reports of information available via the Compliance Gateway
Research/Resolution Fee – ILSA will charge an hourly fee to research topics falling outside the normal scope of ILSA services and/or resolve issues arising from actions or oversights by a client.
Restricted State – A state that requires the approval of an agent’s or agency’s request for appointment before any insurance policy is solicited or written
Returned Check Charge – When a client’s check is not honored due to insufficient funds, ILSA will assess a returned check charge.
S Corporation – S corporations are corporations that elect to pass corporate income, losses, deductions, and credits through to their shareholders for federal tax purposes.
Secretary of State’s Office – The state office responsible for authorizing foreign and domicile business entities to do business in the state
Selling Agreement – The contract between an insurance carrier and an agency defining the terms and conditions under which the agency and its agents may represent the carrier’s insurance products; typically defines marketing procedures, terms and schedules for compensation, and binding legal responsibilities of both parties
Sole Proprietorship – A sole proprietorship is an unincorporated business with a sole owner in which the owner is personally liable for business debts and claims against the business.
Stockholders – Stockholders, also known as shareholders, are the owners of a corporation based on their holdings. They own an interest in the corporation rather than specific corporate property.
Surplus Lines (a.k.a. Excess Lines) – Surplus lines is the license class that enables an insurance agent and/or agency to place large and/or hard-to-place insurance risks with non-admitted insurance carriers.
Surplus Lines Tax Filing – A tax filing required from a business entity to report income earned, if any, within the state from surplus lines policies is a surplus lines tax filing.
Tax Clearance – A confirmation from the state that no further tax filings are due and that the agency is in good standing with the Department of Revenue is a tax clearance.
Termination of Corporate Affiliation – The process of disassociating an individual agent’s state license from the license of an agency in the same state is a termination of corporate affiliation.
Third Party Administrator (TPA) – A third party administrator is an individual or entity licensed by the state to perform certain administrative functions, including claims administration and payment, marketing administrative functions, premium accounting, premium billing, coverage verification, underwriting authority or certificate issuance on behalf of insurance companies.
Trade Name – See Doing Business As Name (DBA)
Voluntary Dissolution – Voluntary dissolution is when shareholders, incorporators or initial directors decide to dissolve a corporation in their domicile state.
Withdrawal of Corporate Qualification – The process of terminating a business entity’s corporate qualification (certificate of authority to conduct business) in a non-resident state without prejudice to the entity
X, Y, Z
Zero Report – A report to the state that confirms there was no business written for the month, quarter, year, etc.