While insurance is characterized by disparate state regulations, licensure procedures are comparatively similar – although they’re one area of insurance regulation that has the most agreement across states, there is still a lot of variation state to state.
The topic at hand in today’s mosaic of insurance rules is licensing fees, specifically: What kinds are there, how do states handle them, and how do states compare across the U.S.?
Before we get into the meat of it, a quick disclaimer: We believe this information is accurate and up-to-date, yet we also know this is an ever-changing industry, so anything you haven’t received straight from a state regulatory department is use-at-your-own-risk. Also, comparing state by state regulations can be an area that feels a little bit like comparing apples and orangutans.
New insurance producer licensing fees
Each state has its own distinctions as they pertain to license classes, and the same applies to what’s considered a state line of authority, or LOA.
So, the first complication in assessing or comparing insurance producer licensing fees lies in figuring out what a state considers a line of business, line of authority, or license class. Because many states assess fees based on all of those things. Other states charge a flat fee. Depending on what state you’re paying fees for, you may be able to pay via the National Insurance Producer Registry (NIPR).
In the state-by-state nuance, it pays to not forget any prelicensing requirements: Some states will require producers to take classes before sitting for a licensing exam. Licensing exam fees may not be part of the strict cost of licensing, but they’re likely a factor for producers or for the agencies sponsoring producer licensing.
Even a relatively straightforward resident new insurance producer license could be $0 in Montana, or $225 in Massachusetts.
Fees by line of authority (LOA)
Some states maintain a static fee. However, states that charge per line of authority can add up for those who sell a variety of products. A few examples of licensing fees per line of authority:
- Louisiana charges $75 per LOA
- Kentucky charges a base fee of $40, plus $40 per LOA, plus $50 for an initial licensing exam
- North Carolina charges a base fee of $82, plus a $50 fee per LOA
- Georgia charges $120 for any single LOA or for property and casualty (P&C) or for life, accident and sickness. However, the state charges $220 if you hold a single license for property, casualty, life, accident, and sickness.
- Though Massachusetts already has the costliest straightforward fee at $225 for a license, the state charges an additional $75 lead paint fee to property, casualty, or personal lines licensees.
The fees in this list are specific to residents, but many states mirror these fees for nonresidents, as well. As you can see, these fees add up. So, if you’re an agency that offers contracts for products with different LOAs and you’re licensing your producer force across the U.S., you might take a look at the most effective way to approach different regions.
In other words, is it more effective to get several producers licensed in every LOA across the whole U.S.? Or is it better to license a pod of producers for one regional area of states and use more of a hub-and-spoke model of sales management?
Keep in mind that non-resident insurance producer licensing fees are usually similar to resident levels, but that’s not universally true of all states.
Certainly licensing fees aren’t the only relevant information for a discussion of your operational business model. However, it’s shortsighted to discount the impact of these fees when you look at thousands of producers who may or may not sell under every authority in every state.
Fees by license class
In addition to LOAs, insurance producers may also be more than one thing – for instance, it’s common for states to require surplus brokers to have a property and casualty license before they take a surplus lines broker exam.
However, many of these states still consider surplus broker licenses (also known as excess lines) to be a separate license class. So, for insurance producers who’re also licensed to sell surplus insurance, you may have to pay fees for your standard P&C license and then something additional for a surplus lines broker license class. While in most states that surplus lines broker license will run $50 to $100, in other states it could be much more: Arizona charges $1,000 for a surplus lines broker who has two years or more left in their license cycle.
For non-resident insurance producers licensed for surplus lines, this is another area where state regulatory disparities can throw a wrench in an agency or producer’s licensing maintenance processes.
Insurance license renewal fees
Just as in every other daggum case of licensing (or insurance, broadly), states take different approaches to licensing renewal, from renewing for $0 to charging less than an initial license to charging more for a license renewal than for the original license.
Renewals are just a fact of life. Remember, even if your license doesn’t require a fee for renewal, every renewal period – even for perpetual licenses – will require you to complete some required amount of continuing education for any standard general lines.
And your renewal fees will go up if you miss your renewal period: While most states have a grace period or reinstatement period, it typically comes at a cost. So, it’s a priority to remember your non-resident insurance license renewal periods may be different from your resident license renewal period.
Staying up-to-date with producer licensing fees
Depending on the state and on a producer’s contract with their agency, agencies may be on the hook for paying licensing fees for producers, from line of authority to license class to those delightful recurring renewal fees.
Those fees can add up with all those licenses. Which is why it’s important for your agency to have daily visibility into who is licensed, where, and for what. Want to know how?
It’s AgentSync. It was always going to be AgentSync. Check out our solutions here.
But for more specifics on fees, or to compare producer licensing fees across states so you, too, can impress people with your massive fee knowledge base – including non-resident insurance producer licensing fees by state – download our 50 State Summary table for free.