How to Get an Insurance Broker License
Almost every state in the U.S. has a specific set of rules and procedures on how to become a licensed insurance broker. This is because the state insurance commissioner or state insurance regulator is typically charged with regulating insurance brokers and the insurance industry. As a result, the first step for any prospective brokers is to first become familiar with what their respective state law actually requires for a license application. Note that some states don’t have a difference between agents and brokers, instead using what is called an insurance producer license. It becomes a catchall for both agents and brokers, regardless of how they want to sell.
It’s important to understand that an insurance broker is not an insurance sales agent. While it may seem to two occupations do the same thing, in reality an agent works for a company while a broker works independently as his own business. Instead, the broker partners with various insurance providers to sell their products. As a result, requirements to get a broker’s license are more stringent.
With the application process determined, the applicant then needs to be sure he meets pre-requisite criteria. Most regulatory agencies require some kind of minimum education be met. This typically includes a number of classes on insurance, general finance, business law, and ethical practice. Many states give the flexibility to either take the courses via an online course or through a traditional classroom setting. In addition, a period of training under a licensed broker can be required as well. This usually means the applicant in practice needs to have worked a certain period as a sales agent reporting to a broker.
When applying, applicants need to then be able to pay the required application fees and background check charges as well as do so within specific deadlines. These expenses pay for processes and agency workload associated with processing the applications. When the fees are charged and where varies from state to state, so no payment procedure will be exactly the same in every jurisdiction.
With pre-requisites and fees squared away, prospective brokers must take a state-approved test to show they have the necessary insurance education to be licensed. Many states only provide or contract for these tests to be taken at specific times of year, so if someone misses their filing date he or she has to wait for the next testing period to become available.
Some insurance brokers may want to move around and not be limited to selling in just one state. Those selling insurance to businesses typically have this need. To do so, a broker will need to meet licensing requirements in each state. There is no national licensing process that allows a broker to automatically work in any state he desires. However, some states do provide a procedural approval if a broker can show he was already licensed in one state, saving the second state and the broker the trouble of a full application. At least brokers generally don’t need to take the classroom pre-requisites again in most cases. If proof of existing licensing is already shown, the proof of education criteria tends to be waived in many cases.
If a prospective broker is not easily within distance to get licensing information from a state agency, most states provide their licensing material over the Internet. In some cases, even the application can be processed via an online submission system, including fee payment tools as well.