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Affiliations and appointments make it clear to regulators and consumers who are responsible for the products and services your insurance agency provides. In some jurisdictions, affiliations and initial appointments are part of the licensing process. In other states, these compliance tasks must be completed shortly after the license issues and before the licensee begins to solicit or transact business.
Affiliations (sometimes called corporate affiliations) establish the relationship between an agency and the individuals who represent it. Departments of Insurance in roughly half the states require agencies to maintain affiliations. An affiliation typically remains in effect until terminated, as long as the agency’s license and/or the license of the individual (if applicable) remain active. They do not “renew” the way licenses or appointments do.
Of course, each state has its own procedure for handling affiliation requests. Increasingly, states allow agencies to make these requests online. But there are states that continue to use paper forms. In a few cases, nothing more than a simple email is necessary. Our experts know what each state requires. Failure to file an initial affiliation or to keep affiliate information up to date can result in fines and even administrative actions.
Several different “types” of individuals need to be affiliated.
Designated Responsible Licensed Producer
Almost all states require an agency to affiliate a Designated Responsible Licensed Producer (DRLP). This individual ensures the agency’s compliance with the laws, rules and regulations of the state. Departments of Insurance want the DRLP to have the authority to meet this responsibility. For this reason, many states require the DRLP to be an officer of the corporation or a manager of the LLC.
Every Line of Authority on the agency license must be matched by an LOA on a Designated Responsible Licensed Producer’s individual license. Fortunately, some states allow agencies to have more than one DRLP. In this case, individuals can divvy up the Lines of Authority. The Department of Insurance can cancel any lines not matched.
In addition to the DRLP, you need to affiliate the other licensed individuals who represent your agency to clients. If they don’t yet hold a license in the state, you can include the affiliation on the license application form. Otherwise, you will need to submit a separate affiliation request. Again, you cannot affiliate the individual for any Line of Authority not held by the agency as well.
Agency Owners and Leadership
Some states also require affiliations for individuals with significant ownership of an agency, partners, officers, directors, LLC members, managers, and even licensing coordinators. These individuals do not have to hold insurance licenses. Some states treat these affiliations more like a change of Director & Officer notification than true affiliations.
It is essential to complete affiliations in a timely manner and to keep them up to date. Typically, regulators allow only 30 days to submit affiliation requests. Failing to do so can result in additional fees, fines, and even administrative actions.
While affiliations establish the relationship between an individual licensee and their insurance agency, appointments recognize the business relationship between licensed individuals and business entities and the insurance companies whose products they represent. A contract (also known as a selling agreement) must be in place between the agency or brokerage and the insurer for an appointment to be approved.
Most states require licensees to have an appointment in place before selling insurance policies. These days, however, many regulators allow licensees to wait to request an initial appointment until they have an insurance contract ready to sign. It’s known as a just-in-time appointment.
Most jurisdictions require licensees to have at least one active appointment for each line of authority they hold. In a few states, failure to maintain an active appointment can result in cancellation of a line of authority of license.
ReSource Pro Compliance offers two approaches to our clients’ appointment needs:
Where a carrier contract or selling agreement is in place, our licensing experts can submit a request for appointment to the carrier on the licensee’s behalf. This service is typically offered in those states where an appointment is required to maintain an active license.
Where authorized by both the client and their insurance company, ReSource Pro compliance professionals submit applications to state regulators to secure appointments.