To obtain an insurance broker license, follow the state-specific steps, understand the difference between an agent and broker, determine the license types, meet educational requirements, consider fees and terms, and review requirements for selling in multiple states.
Obtaining an insurance broker license is as simple as following the steps outlined by the specific state you are trying to do business in. Often, the first step is to become familiar with the terminology used by the Department of Insurance or another agency that oversees the insurance industry in the state. Some have stopped calling the product an insurance broker license. Most likely, education and testing requirements will also be in place.
First, it’s important to understand the difference between an insurance agent and an insurance broker. While the two may seem like very similar terms, they are not interchangeable. An agent is usually an individual who works for a particular company and tries to sell insurance products specifically offered by that company. A broker is not limited to one insurance company and can offer offers from many different companies. There are advantages and disadvantages to each system.
Second, determine what different types of insurance licenses exist in your state. Some states no longer have an insurance broker or agent license. Whereas the requirements for the two are virtually identical, they’ve switched to something called an insurance producer license. This will allow anyone who has the license to sell insurance products to be interested in becoming an insurance broker or agent.
Third, observe the educational requirements for an insurance broker license, or whatever the name is in your jurisdiction. Some states may simply require the individual to pass a written test. Others may require a certain number of hours of training. The individual may have the option to complete this training online. Otherwise, enrolling in a classroom course will be the only other option.
Fees and terms are another issue to consider. Some states may have an open testing policy where all an individual needs to do is show up to a testing center and take the test. Others may only offer the test a few times a year. Often, fees must be paid before the individual can take the test. So those who are in a hurry to get an insurance broker license need to make sure they plan ahead.
Finally, for those who wish to sell insurance in more than one state, it is necessary to review the insurance broker license requirements in each state in which they intend to work. Some states will allow a broker to sell with a valid license from another state. Some will require the individual to at least take the test for that specific state. In most cases, additional classroom training will not be necessary if the broker has a valid out-of-state license.
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