At What Point Do You Get Incorporated.....

[ims01]

just go to www.nipr.com. YOu can get any non-res you need through the site for a small servicing fee. It's all electronic except for a couple states.

Check with the carriers you use and ask if they will give you a seperate number for non-PLMA states so you dont have to get both the ind. and the business entity licenses.

 

[LifeIn403b]

just go to www.nipr.com. YOu can get any non-res you need through the site for a small servicing fee. It's all electronic except for a couple states.

Check with the carriers you use and ask if they will give you a seperate number for non-PLMA states so you dont have to get both the ind. and the business entity licenses.

Thanks for the advice .....

Don't want to sound stupid, but what does PLMA stand for?

 

[djs]

Private Label Manufacturers Association
Welcome to PLMA

Of course, I was wondering the same thing....

dan

 

[TwiLight]

Private Label Manufacturers Association
Welcome to PLMA

Of course, I was wondering the same thing....

dan

Please Gentlemen....

NAIC Producer Licensing Model Act

 

[IMO101]

I have lived this, and want to share some personal feedback. Having a corp license is great, there are many benefits to it. Obtaining a corp insurance license in your state should be relatively easy, with a few exceptions. However, if you are working with agents in other states, this is where it gets tricky.

There are some states that require you are licensed to receive overrides, such as FL, VA, CA, etc. There are other states where you do not need a license for overrides. However, to complicate everything, there are also some carriers that require a license for override, even if the state doesn't. Other carriers are more flexible, but they don't always have an updated list of states not requiring a license for override, so sometimes you may have trouble with a few states even in this case.

One last issue, is that if you are talking about MA or Part D, you will need a license in every state where you have agents, regardless of carrier (I hope this changes sometime, but for now, at least with all of the major carriers, this is the way it is).

Back to where I started, I have lived through this, and it is not all that fun. We have agents in about 20 states, and a while back, we realized as we continued to expand, that some states make it very hard to obtain a corp/entity insurance licenses.

FL, VA, TX, are some examples, and there are more. In VA alone, it was going to cost us roughly $3,000 in fees, due to a charter requirement. Texas and FL have their own requirements as well, and across the country, it varies greatly by state. Some are very easy, but many important states are not.

With NIPR you can easily obtain a personal license, but a corp/entity license varies by state, as far as how easy or virtually impossible it can be.

As a result of this, we ended up needing to dual contract with most carriers, meaning that with each carrier, we would have two IMO numbers. One for personal license, one for corp/entity license. Agents in certain states would need to be under the personal license, and other states would need to be under the entity license. Complicated you may think? This is just the beginning.

What if you have an agent in VA, FL, or CA, who is under your personal license (by the way, CA will likely require that you change your agency name, since they have very specific name requirements, that are different than other states)....and you agent later decides they want to sell in WA, where you have an agency license, but not a personal license? Well, then you have to either give that agent a dual code, one for WA, and one for CA or FL or VA, wherever they may be, or instead, you have to get a personal license in WA, if the carrier requires you to have one for override. This leads you to have both entity and personal licenses in many states.

One more twist, is that some states will not allow you to have a corp/entity license, unless an officer of the corp is personally licensed in that state first. This also leads to having both licenses in many states.

Another nice twist is that not all insurance companies will allow you to dual contract, and furthermore, even those that will often will not allow your agents to dual contract as well.

This is all meant to give you a general idea, a sample, since seriously it is a lot more complicated than it sounds.

For example, sometimes the agent may be a high level manager, with agents in many states, some where a license is required for override only, some where it is not, some where it is easy for an agency license, some where it is not, some with carriers that allow dual contracts, some that don't, etc.

Then you may ask, why not just use a personal license, and assign all commissions to the corp/entity?

That is a great question, and whenever possible, we do that, however not all states allow that (FL), and also, not all carriers allow that (including some very important carriers). What I mean is that in some cases, they will only allow you to assign commissions to an entity or individual that is licensed and appointed in the specific state where the business is being written.

So to make a long story short, to avoid an early heart attack, we decided a while back to keep it simple, even if it may mean more taxes in some cases. Running it through the personal license is a heck of a lot simpler, and with a good CPA, you should end up okay, even though having it all in the corp/entity name would be ideal.

We still have licenses with the corp in many states, but not all, and if I could do it all over again, I would have just stuck with personal licenses only, since it would have saved a few thousand headaches over the years. We have so many agent numbers, dual contracts, complicated states, agents under different contracts with different contracts in different states, etc., it just isn't really worth it, at least not to me.

If you want to go corp/entity, and you will only be operating in a few states, it may be easy to manage, depending on which states. I would suggest checking the requirements carefully first, to make sure you don't end up having to hire a full time person to keep track of it all.

Please take this with a grain of salt and a shot of tequila, it may be easier for you than it was for us, this is just based on personal experience, and who knows, you may be lucky and find it much easier than we did.

 

[Todd King]

Great explanation Hurst!

 

[ims01]

For those contracts in your ind. number in some states, many carriers will allow you to assign the commission to your corp and will 1099 that tax ID. this will help with your accounting and eliminate the need to issue 1099's to your corp.

 

[LifeIn403b]

thanks for all the great feedback! that sheds some light on this!

 

[dlvhi]

Hello all

When considering incorporation, I understand that the pure insurance side is much easier than the securities side.

I have been told that getting the corporation approved for securities is more difficult than for insurance and is probably not worth the effort.

I would appreciate any insight you have on this one.