FAQs:
Frequently Asked Questions
How is insurance licensing regulated?
Insurance laws are promulgated by state departments of insurance. Much of individual state laws come from model regulations promulgated by the National Association of Insurance Commissioner (NAIC). As such, there is some regulatory consistency between states.
Working with JLH Associates
Perhaps the most compelling argument for engaging professionals with extensive insurance industry experience lies in the fact that most businesses are focused on their primary line of business. There is rarely internal insurance expertise on staff to assure successful and compliant operation of insurance activity.
Most businesses today outsource some level of operational functions- HR, accounting, IT, etc. In the case of a “virtual” insurance agency all aspects of agency operation are outsourced to a partner agency.
JLH does not offer insurance and has no carrier insurance contracts in place. All services provided are “fee” based.
JLH, as designated responsible licensed producer (DRLP) is the primary contact for the marketing and market conduct for the agency with state departments of insurance. As such JLH conducts agency operational surveys requesting various information regarding agency activity
Most industries look at vertically adding insurance offerings as a new source of revenue, there are additional benefits such as improving the overall customer and, creating internal efficiencies. In a properly implemented and managed insurance agency these benefits far outweigh any organizational licensing an ongoing expense.
Getting Licensed
The answer, in every state, is yes. This is especially true if the customer lives in a particular state and the product was marketed using your brand. There are vendors in the market place that opine that there does not have to be insurance licensing in place to receive compensation. They then call the compensation “marketing fee”, or “lead fee”. Some even opine that there are states that do not even require insurance licensing at all. We would suggest caution with any of these “alternative” opinions. While insurance activities can develop material sources of revenue and provide significant benefit improving the customer experience, most would suggest it is not worth compromising the parent company core business.
Step one is to identify an entity to be licensed. Most companies will form a new operating subsidiary to obtain the insurance licensing.
No - you do not need your employees licensed.
In virtually all instances there is not insurance experience or expertise present in the parent company. And it virtually always does not make economic sense to hire insurance staff, especially from an EBITDA analysis. In the high percentage of instances all insurance functions, such as carrier appointments, hiring and managing licensed sales agents, operating a call center, etc., etc., etc., are outsourced to a qualified partner. The outsourcing of various, if not all functions of any company is common practice. This is also true with ongoing admin and agency oversight management.