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 – Actions reportable to the National Producer Database and should be reported on any license application (or potentially a renewal application), as they may have a direct outcome on whether a license is issued or renewed. These actions could be sanctions levied by a Department of Insurance, or could be past criminal convictions, etc. May also be referred to as Sanctions.
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.
Affiliated Producers – These are the employees who are licensed in the various lines of authority. Some states require the affiliation of these producers to the agency license.
Affiliations/Terminations – The process of showing the relationship of a licensed employee to the licensed agency. This is a process separate and apart from the license application.
Agent/Agency Type License – This license type indicates an agency that contracts with specific carriers and sells only those carriers products. A carrier will require to see a copy of the license that indicates it is an “agent” license type. Agent/Agency type licenses are ‘appointed’ (see Appointment) to the carriers they work with/contract with.
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 (Annual Report) – A report due to the Secretary of State office usually every year (a few states are biennial) that updates the business entity address, officer information and where applicable the shares information.
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 – The process of showing the relationship of a licensed person or agency to the insurance carrier that they sell products for. Example: State Farm, Progressive, United Health Care
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/Organization (AOI/AOO) – Articles of Incorporation are the formation documents (domicile) for Inc.’s (S Corp and C Corp) / called Articles of Organization for LLCs (also known as Certificate of Formation for LLCs)
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.
Broker Type License – This license type indicates an agency that will ‘shop around’ for the best deal for their client. They aren’t locked into specific carriers and can shop multiple carriers until they find the deal that will best suit their client’s needs. No contract between agency and carrier are needed, and therefore no appointments needed.
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 – The company that receives premium and pays claims. Carriers rely on agencies and individual licensees to sell their business. They may also be referred to as Insurance Companies or Insurers. Example: State Farm, Allstate.
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 (CE) – Classes that are required to be taken in your Resident state before your renewal can be submitted to the state. Every state requires different courses and an amount of hours depending on the license you hold.
Conversion – The process of changing from one entity type to another. For example, changing from a Corporation (Inc.) to a Limited Liability Company (LLC).
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 Qualification (CQ) – The process of obtaining the Certificate of Authority (COA) to do Business in a given state. These are always suggested or advised by ILSA for the client to be fully compliant. Research tells us that many insurance companies (carriers) are not subject to obtaining a CQ, but there are no exceptions noted for agencies. Some clients refuse the CQs, ILSA always maintains the documentation (typically stated in the PCA) indicating it was advised. This may also be referred to as a Business Registration.
Corporate Tax Return (Corporate Tax Filing) – A return which is due to the Department of Revenue for any business entity that is registered to do business in a particular state. Clients may have to file Zero business tax returns and owe a minimum tax in states where they have no employees or physical presence. ILSA files these zero tax returns for our clients.
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.
Cybersecurity – The practice of defending computers, servers, mobile devices, electronic systems, networks, and data from cyber-attacks.
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.
Data Form (DF) – Online form completed by each individual and each agency that is enrolled in ILSA services. The client completes the online secure form to submit their personal information to ILSA so that Intake personnel can build the record in the system for use in the licensing process.
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 regulatory authority that sets up tax accounts, receives taxes and provides tax clearance letters for business entities that are approved by that state’s Sec of State office to do business in that state.
Designated Responsible Licensed Producer (DRLP or DP) – This is the main person in charge of and responsible for the agency license. They maintain a license for the same lines of authority that the agency holds.
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.
Exhibit A – ILSA Price List provided to existing and prospective clients which lists each service that ILSA offers along with the corresponding price.
Exhibits – This exhibit always accompanies a new contract. The Exhibit B provides details of each of ILSA’s services offered. Exhibit D contains required legal language such as the Fair Credit Reporting Act.
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.
ILSA Representative – May also be referred to as the Marketer or Compliance Coordinator. The initial person at ILSA that a prospective client talks to. They bring prospective clients into ILSA services.
Intake Personnel – ILSA personnel who are specifically assigned to ‘intake’ to ‘onboard’ new clients. Intake processes each agency and individual data form, runs PDBs, checks for affiliations and CQs.
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 Copy On Demand (LCOD) – A service ILSA provides to renewal clients where ILSA locates and sends a new license copy to the client once a renewal has been processed and the license copy would have a new expiration date.
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 periodic and scheduled renewal of a license to keep it from lapsing/expiring.
Licensing – New licenses requested by clients. ILSA advises clients of the general rules, such as: if selling, soliciting, negotiating or receiving the commissions in the name of the agency, the agency needs to be licensed as well as the individual. *In any new state an individual must be licensed first, because someone has to act as the designated responsible person on behalf of the agency when the agency is licensed.
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 (LOA) – The specific types (or lines) of insurance that the individual/agency is licensed to write. Examples: P/C, L/A/H, SL, Adjuster, TPA (Third Party Administrator)…
Managers – The individuals responsible for the maintenance, administration and management of the affairs of a limited liability company (LLC). Managers usually do not hold a percentage of ownership in the company.
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 (MSA) – The contract signed between ILSA and the client. ALL ILSA clients must sign an MSA to join ILSA services. Once executed, the contract remains in force until cancelled either by client or ILSA for cause.
Members – The owner(s) of a limited liability company (LLC) may be known as members. Members usually hold a percentage of ownership in the company.
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 – This describes a license that does not require a renewal. The license will always continually be active until a withdrawal is submitted to inactivate the license (or the resident license lapses/expires, then all others begin to fall off as a result). You may see the expiration date listed as 2/2/2222.
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 from the National Producer Database that gives the last known addresses and aliases (DBAs) of an individual or agency. It also provides license detail for all license types that are reported to this national database, as well as any administrative actions and appointment currently on file. A PDB is only good at the moment it is run, because details are ever changing. A PDB could be run for the same person/agency the following day and contain different information.
Project Cost Analysis (PCA) – Quote for ILSA services and estimated state fees for new projects that client or potential clients request. All ILSA clients as well as prospects receive quotes for their new license requests. This is the equivalent to an invoice and is the vehicle used to collect service fees and state fees for new projects.
Region Code (RC) – A specific number assigned to each new client as they onboard.
Registered Agent (RA) – Required by each state that you are registered in at the Secretary of State level (a couple of exceptions). The RA is an office or person in that state. We use Corporate Creations or CT Corp and if our clients use them through us, the fee is $95 per state per year.
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.
Renewal – The periodic and scheduled renewal of a license to keep it from lapsing/expiring. (Annual Returns Department renews the CQ)
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
Retainer – An account set up for all ILSA clients in which money for ‘pre-paid’ items will be deposited. Once the items or “tasks” have been completed and put into the billing cycle, the funds for those particular items will be removed from the Retainer account and used to pay ILSA service fees.
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 (SOS) – The regulatory authority that grants business entities the authority to conduct business in their state. Some states refer to as State Corporation Commission or other similar name
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.
State Fees – The amount of funds needed to process an item and pay the state. This amount usually includes an additional amount to cover any related ‘processing fees’.
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.
Tasking – The process of manually entering a client’s signed/funded PCA request into the database so the license reps can complete the work. The lines are entered manually one at a time into various tables for the below mentioned services. The licensing reps get their work assignments from queries that pull from these various tables: New License, New Affiliation, New Appointment, New CQ, New Initial Annual Return, New Corporate Tax Filing, Address Changes, Director & Officer Updates, Bonds, Etc… There are many more services that are ‘tasked’ into the system.
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)
Trigger & Cap (T&C) – A specific accounting option available for clients that don’t like to fund invoices each month. When their escrow account reaches a certain low ‘trigger’ balance it prompts accounting to send an invoice for an amount that brings them back up to their ‘cap’ balance.The trigger amounts and cap amounts differ by client.
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.