Resident License for an Individual

Securing a Resident License for an Individual

Pennsylvania

Anyone who “sells, solicits or negotiates contracts of insurance” needs a license (see Act 147 of 2002). Note that the terms are defined in the law.
The producer then acts in the marketplace either as a representative of the insurer (agent) or a representative of the consumer (broker).
  • Representative of the insurer – Whenever you are placing a policy with a carrier that has appointed you. In essence, you are an agent of the carrier.
  • Representative of the consumer – Whenever you are placing business with a carrier that has not appointed you, you are acting as the “representative of the consumer” (broker). Examples include placements with SWIF, FAIR Plan, MGA or Surplus Lines market, etc. PA law places specific disclosure requirements (broker agreements) on brokered business, subject to hefty fines.
The “clerical” exemption
To benefit by what is commonly known as the “clerical” exemption, an employee must not receive a commission on policies written in Pennsylvania and the employee’s activities must be “executive, administrative, managerial, clerical or a combination of these and be only indirectly related to the sale, solicitation or negotiation of insurance.” These activities may include:
  • discussing and informing on insurance inquiries and matters, so long as no recommendation is made with respect to specific coverages, products or rates;
  • receiving requests for coverage for transmittal to a licensee or insurance entity;
  • assisting with the completion of applications at the licensee’s or insurance entity’s place of business;
  • passing on to the licensee inquiries of a particular nature;
  • receiving premium payments delivered to the licensee or insurance entity for coverage and issuing receipts on behalf of the licensee or insurance entity [Caution: while not a licensing requirement, E&O recommendations generally suggest having the status of the customer’s account verified prior to accepting payment, in case the payment is late] ; and
  • collecting expiration date information from clients or potential clients;
NOTE: In Nov. 2013, the Insurance Department issued Notice 2013-09 to clarify which activities required a license. The notice was issued in connection with the Affordable Care Act and the role of navigators, but provides insight into the clerical exemption.
The claims exemption
As long as the individual is only processing claims, he or she should not be required to have a producer license. Section 603-A of Act 147 of 2002 (the producer licensing statute) states, among its exceptions:
(b) Exceptions: The following persons shall not be insurance producers for purposes of this act:
(3) An officer, director or employee of an insurer or of an insurance producer if the officer, director or employee does not receive a commission on policies written or sold to insure risks residing, located or to be performed in this Commonwealth and:
(ii) the officer, director or employee’s function relates to underwriting, loss control, inspection or the processing, adjusting, investigating or settling of a claim on a contract of insurance; or
(iii) the officer, director or employee is acting in the capacity of assisting insurance producers where the person’s activities are limited to providing technical advice and assistance to licensed insurance producers and do not include the sale, solicitation or negotiation of insurance.
A few other exemptions apply, particularly for certain types of group policies. For a complete review, check the entire section 603-A (b) of the producer licensing law (Act 147 of 2002).
Individuals desiring to become insurance producers must complete 24 hours of pre-licensing education (PLE) to be eligible to take the licensing examination. Here are some important things to keep in mind:
  • You can take any approved PLE course or courses totaling 24 hours with at least three hours of ethics. IA&B has two approved courses for PLE: one for P&C and one for L&H. Both also serve as an exam preparation course.
  • PLE is a one-time requirement and is necessary for those individuals not currently licensed who are preparing to take their first licensing exam.
  • Current insurance producers – To add additional lines of authority you only need to take and pass the exam for that line. No PLE is required to add a line of authority to an existing license. Simply print a copy of your current license (to provide as proof of your exemption) when you go to the exam center.
All new license candidates must be fingerprinted (for both the FBI and state police database access). This includes new producers or non-resident producers moving to Pennsylvania and switching to a PA resident license. Effective Nov. 28, 2017, the PA Insurance Department has contracted with IdentoGO to supply digital fingerprinting. Applicants requiring fingerprints need to do the following (in this order):
  1. 1. Pass the licensing exam (unless clearing from another state)
  2. 2. Apply for the license. Applying from the PSI test center immediately after passing the exam will shorten the delay to obtain the license. A candidate should bring the following to the test site:
    • 2 forms of ID
    • a credit card
    • A pre-filled license application form (recommended) – An application form is available from this page (click on “Initial Licensing Documents: Application”).
    • The Certificate of Completion for PLE (unless only applying for a new line of authority).
  3. 3. Secure a fingerprint appointment by registering online or by phone at 844-321-2101.
    1. 1. Use the following service code 1KG8Q3 (to assign the background check to the Insurance Department)
    2. 2. Make note of your registration number. It needs to be presented at the nearest IdentoGO site for fingerprinting.
    3. 3. Pay by credit card, debit card, check or money order only (no cash). As of Nov. 28, 2017, the total FBI background check fee will be $22.60.
  4. 4. Go to an IdentoGO site to have your fingerprints taken (Find the nearest location)
  5. 5. The Insurance Department will connect the application submitted online with the fingerprint results, and will issue the license as appropriate.
  6. 6. You can check if your license has been issued
  7. 7. Once the license is issued, remember to print your license from the Insurance Department’s website.
For questions, contact the Insurance Department at ra-in-producer@pa.gov. Feel free to call us as well if you’re not sure about the process.

Maryland

Maryland insurance law defines an insurance producer as anyone who, for compensation, sells, solicits or negotiates insurance.
The following individuals may be exempt from licensing:
  • Insurance producers’ employees who exclusively perform managerial, clerical, administrative or similar office duties.
  • Individuals, if not paid a commission, who obtain and forward information, enroll individuals, issue certificates under group insurance coverage or otherwise assist in administering group plan.
Clerical support includes activities such as taking insurance information or receiving premiums in the insurance producer’s office, if the clerical employee’s compensation does not vary with the number of applications or amount of premiums.
Note:
  • It is important to note that this clerical support exemption lists specific duties. If the person performs any other functions which would fall into the broad description of insurance producer, the person must secure a license.
  • Caution: while receiving premium payment may not require a license, E&O best practices include having the status of the customer’s account verified prior to accepting payment, in case the payment is late and the policy in cancelled status.
Candidates must have completed a 20-hour approved course for each major line of authority. For combination exams (e.g. Property/Casualty), 40 hours would be required. A certificate of completion will have to be submitted in order to take the examination.
The lines of authority are:
  • Property
  • Casualty
  • Personal lines
  • Life
  • Accident and health
  • Variable life and variable annuity products
  • Title
  • Automobile
The following individuals may qualify for an exemption from the pre-licensing requirements:
  • Individuals who have regularly been employed by an insurer or producer in responsible duties may be exempt from the pre-licensing education if they are able to provide an employer affidavit.
  • Applicants previously licensed in another state may bring a letter of clearance from their former home state.
  • Holders of the CPCU*, CIC, FCAS, AAI or ARM designations are exempt from P&C pre-licensing education.
  • Holders of the CLU*, Fellow of the Society of Actuaries, CIC, CEBS, ChFC, CFP, FLMI or LUTCF are exempt from the Life pre-licensing education.
  • Holders of the RHU, CEBS, REBC or HIA are exempt from the Health pre-licensing education.
* must also be in good standing with the American Society of CPCU or CLU (as applicable)
Once you have satisfied the pre-licensing requirements, you must pass a licensing examination. Please go to our IA&B Education licensing section or contact or Education Team for assistance at 800-886-9644, option 2 or education@IABforME.com.
The examination will correspond to the line of authority you are applying for.
You must then file an application with the Maryland Insurance Administration (MIA). You can apply online (recommended) with a credit card, or use the NAIC Uniform application plus Maryland supplement.

Delaware

Anyone who sells, solicits or negotiates insurance in the state of Delaware must be licensed to be considered a producer. The term “Producer” replaces any previous reference to Agents or Brokers.
The terms sell, solicit and negotiate are used throughout the licensing law and are used to determine when a license is required. The terms are defined as follows:
  • Sell – To exchange a contract of insurance by any means, for money or its equivalent, on behalf of an insurance company.
  • Solicit – Attempting to sell insurance or asking or urging a person to apply for a particular kind of insurance from a particular company.
  • Negotiate – The act of conferring directly with or offering advice directly to a purchaser or prospective purchaser of a particular contract of insurance concerning any of the substantive benefits, terms, or conditions of the contract if the person engaged in that act either sells insurance or obtains insurance from insurers for purchasers.

May be exempt from licensing:

  • Insurance producers’ employees who exclusively perform managerial, clerical*, administrative or similar office duties
  • Individuals, if not paid a commission, who obtain and forward information, enroll individuals, issue certificates under group insurance coverage or otherwise assist in administering group plan.
* Clerical support includes activities such as taking insurance information or receiving premiums in the insurance producer’s office, if the clerical employee’s compensation does not vary with the number of applications or amount of premiums (more information below).
This clerical support exemption lists specific duties. If the person performs any other functions which would fall into the broad description of insurance producer, the person must secure a certificate of qualification.
While receiving premium payment may not require a license, E&O best practices generally include having the status of the customer’s account verified prior to accepting payment, in case the payment is late and the policy in cancelled status. Unlicensed personnel may do the following:
  1. Announce and introduce the availability of products and services in any of the following manners:
    • Hand out brochures and comment that it may be something of interest to the customer.
    • Inform the customer of the availability of products and services generally.
    • Inform the customer of the presence of a licensed agent on the premises. No mention of specific characteristics of products or coverages may be made.
  2. Show customers other approved marketing literature, including the summary sheets, highlights and corporate reports to help answer general questions.
  3. Assist with the completion of the application by:
    • Asking the customer for the information to enter in each application blank.
    • Referring the customer to a licensed agent if the customer is unable to complete the application without further assistance.
  4. Refer interested customers to a licensed agent by:
    • Introducing the customer and licensed agent directly, if feasible.
    • Setting up an appointment with a licensed agent.
    • Informing the customer of the location of the insurer and a toll-free telephone number.
    • Providing the customer with the name and telephone number of a licensed agent.
    • Forwarding the name and telephone number of the interested customer to a licensed agent.
  5. Receive completed applications and checks made payable to insurers:
    • Deposit the check into the insurers premium account.
    • Attach the transaction receipt to the application.
    • Forward the signed application and attached transaction receipt to the licensed agent.

Unlicensed personnel may not do any of the following:

  • Solicit customers to purchase insurance or annuities.
  • Attempt to discuss, interpret or elaborate upon the information contained in the brochure, application or other sales literature; give advice or describe the specific characteristics of the annuity or insurance products; discuss rates, sales charges or tax treatments of any product; or attempt to answer any insurance or annuity questions. Upon the customer’s request for additional information, refer them to a licensed agent.
  • Once you have satisfied the pre-licensing requirements, you must pass a licensing examination. Please go to our IA&B Education section or contact or Education Team for assistance at 800-886-9644, option 2 or education@IABforME.com.
  • The examination will correspond to the line of authority you are applying for.
  • You must file a Uniform Application with the Insurance Commissioner (Delaware also accepts the NAIC uniform applications).
  • The application materials as well as examination information can be downloaded from the Department of Insurance’s website.
  • For information about examinations, contact Pearson VUE (formerly Promissor) at 1-800-274-0455 or visit their website.
  • The resident as well as nonresident license application fee is $75. It should be sent along with the application.
  • The examination will not be required for:
    • A producer who is already licensed in another state for the same line(s),
    • An individual who was previously licensed for the same lines of authority in another state if his/her application is received within 90 days of the cancellation of the previous license,
    • An applicant for a title insurance license who is an attorney licensed to practice law in Delaware,
    • An applicant for a Travel Accident & Baggage license.

Do you have questions about Legal Compliance?

Contact Claire or Don for answers

Claire Pantaloni portrait
Claire Pantaloni
VP – Advocacy
ClaireP@IABforME.com
800-998-9644, ext. 604
Portrait of Don Bankus
Don Bankus
Legal & Corporate Affairs
DonB@IABforME.com
800-998-9644, ext. 603
5050 Ritter Road
Mechanicsburg, PA 17055
191 Main Street
Annapolis, MD 21401
Toll Free: 800-998-9644
Fax: 717-795-8347
Email: IAB@IABforME.com
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