Guide to Insurance Licensing for the Non-Insurance Business

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By The Boost Team on Jun 1, 2022

8 min read

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If you’re new to the world of insurance, the process of getting an insurance license may seem time-consuming and even a little intimidating, but it’s surprisingly easy if you work with the right partner. In this blog, we’ll go over what an insurance license is, why it matters, how to attain the right licenses for your business, and how to get the help you need along the way.

What Is an Insurance License and Why Is It Important?

Embedded insurance is a great opportunity to increase your revenue, diversify your offerings, and deepen customer relationships. To reap the full benefits, however, it’s recommended that your company get licensed.

An insurance license is a certification given by individual states that allows an individual or entity to sell, solicit, or negotiate insurance in that particular state. Each state requires a unique license. So, if you wanted to sell insurance in more than one state, you would need to obtain a license for every state you intended to sell in.

If you or your company were to attempt to sell or market insurance without a license, it would be considered illegally selling insurance. You could be subject to large fines and legal repercussions from your state’s insurance regulatory agency (and the agency of any other state you illegally sold insurance in). This makes obtaining a license the crucial first step in the insurance selling process. The good news is, when you work with the right digital insurance partner to get the licenses you need, all of those issues can be easily avoided.

There are many different types of insurance licenses available, for different kinds of insurance (for example, selling cyber insurance requires a different kind of license than selling pet health insurance). For this blog, we’ll be discussing two licenses you need to become a distribution partner who sells and markets property & casualty insurance on behalf of a carrier: the Individual License and Entity License.

Individual and Entity Licenses

What is an Individual License in Insurance?

An Individual License– also referred to as a “Producer” or “Agent” License– is given to an individual after they complete a pre-licensing course and pass the required tests in their resident state, which is a state where an individual has a residence or primary place of business. The purpose of this license is to educate the holder on the ins and outs of the insurance process and ensure that before selling, soliciting, or negotiating insurance, they are informed and responsible.

What is an Entity License in Insurance?

Once someone in your company has attained their Individual License, your company can apply for its Entity License, also known as an “Agency” License. This license is given to the company itself and allows it to sell insurance within the resident state.

For your company to sell and market insurance products on behalf of carriers, you need both an Individual License holder and an Entity License.

Who at Your Company Should Be Licensed?

When determining who should become licensed on the entity's behalf, the individual should be someone who holds a position of substance and is likely to stay at the company long-term. That usually means someone at the executive level, such as an owner, partner, director, or officer. Once this person has obtained their license, they will be known as the Designated Responsible Licensed Producer (DRLP), sometimes referred to as a “principal agent.” The DRLP needs to be licensed in all jurisdictions that the entity sells in.

The DRLP is usually responsible for compliance oversight of the agents operating under them. Because the DRLP is typically held accountable for all entity actions, this kind of oversight is a requirement in most states. When selecting a candidate to become the entity’s DRLP, they should be informed and willing to take responsibility.

Some companies have more than one licensed person working for them, but only one is required to sell. If you lose your DRLP and there isn’t another licensed person at the company, then someone else will need to step in or be elevated to a suitable position to hold the title of DRLP. Otherwise, the entity can’t continue selling insurance.

How Do You Get an Individual Insurance License?

The Individual License should be obtained in your resident state. We’ve outlined the general steps to follow below, but every state has unique requirements. Make sure that you know the steps that apply to your state.

Step 1: Complete the pre-licensing education course (varies by state)

The first step is to complete a pre-licensing education course. These courses require a specific amount of study time, which varies based on state. Each state’s requirements can be found here. We recommend taking the Kaplan self-paced online pre-licensing course for your resident state.

Step 2: Pass the practice exam

Once you’ve completed the pre-licensing education course, you must pass your resident state’s practice exam to receive a certificate of completion and qualify for the state insurance licensing exam.

Step 3: Complete the state insurance licensing exam (varies by state)

Step 4: Apply for your Individual Insurance License in your resident state

After passing the licensing exam, submit the licensure application and pay all applicable fees in your resident state. This can be completed on the state's Department of Financial Services or the Department of Insurance website. In many states, you must also provide fingerprints or other background information. Once approved, the individual insurance license will be issued.

How Do You Apply for an Entity License?

Once your DRLP has obtained their Individual License, your company can begin the process of attaining its Entity License.

Step 1: Create Insurance Agency Entity

Your first step is to create a registered insurance agency entity. To do this, you must choose an entity name and submit it for approval to the state government where your agency will be based (this must be a state where you have a business presence). The state will issue the entity a Federal Employer Identification Number (FEIN) and the business entity will be officially registered. Once registered, the entity can start submitting the required licensure paperwork with the state.

Step 2: Apply for the Entity License in Resident State

Next, the entity needs to select its Designated Responsible Licensed Producer (DRLP), and file the DRLP’s approved Individual License along with its entity application to its resident state. Once approved, the entity will receive its resident state license.

How Do You Register for a Country-Wide License?

You and your company might want to sell or market insurance in more than just your resident state. Once the individual and entity are licensed in their resident states, each can begin applying for non-resident licenses in other states.

However, technically a “country-wide license” doesn’t exist. There isn’t one license that covers the whole country. Every state has a unique license and different requirements for its applications, so the process of getting licenses in multiple states can be extensive and complicated. Because the DRLP needs to be licensed in all jurisdictions that the entity sells in, the process involves filling out an application, gathering various supporting documentation, and submitting it individually to each state for both the individual and the entity.

To sell nationwide, you would need to do this process multiple times to be licensed in all 51 U.S. jurisdictions—the 50 states and Washington D.C. Luckily, there is some reciprocity amongst the states, which means that if you get licensed in one state, you do not need to satisfy all the requirements like taking a pre-licensing course or licensing exam in all other states to become licensed there.

Is It Beneficial to Work with a Licensing-as-a-Service Company?

While reciprocity helps reduce the amount of work that is required to apply for individual and entity licenses in all 51 U.S. jurisdictions, that is still a lot of applications. If you choose to do these processes yourself, it can take a very long time, especially if you are unfamiliar with each state’s requirements. There are processing and wait times, and often you can go back and forth with each state because of missing or incorrect information, which can greatly increase your get-to-market time.

In addition to the application process, there are also unique renewal processes for each state —some are annual, some are every four years. Most states also require that individual license holders complete a certain number of hours of continuing education every renewal period, and the exact number of hours varies by state.

To mitigate such a lengthy and complicated process, third parties exist that offer licensing-as-a-service. When you work with a licensing-as-a-service company, you give your information to the company and then they handle the lifecycle of your licenses from applications to ongoing renewals.

Licensing-as-a-Service with Boost

Not all licensing-as-a-service companies are created equal. Some third parties can actually extend the process by not being clear about what information is required upfront. Ultimately, they can make the process more expensive, cumbersome, and time-consuming, delaying your go-to-market time and defeating their purpose altogether.

When you work with Boost Insurance, on the other hand, we have the experience and expertise to streamline these processes. In addition, it is our goal to get you to market as quickly as possible - that’s the Boost difference. Our in-house licensing experts will collect all your necessary information upfront, process it, and then submit the applications for you, country-wide, saving you a lot of stress and back and forth. Our licensing team knows all of the pitfalls and loopholes in each state. They also know what questions to ask ahead of time, so they can submit licenses and gain approvals quickly. We can get you to market, in as many markets as possible, selling Boost insurance products on our platform in as little as a month.

We will also handle the lifecycle of your licenses, keeping track of your renewals and updating you along the way. And, when you work with Boost, your licenses are not exclusive to Boost products. You can use your licenses for other insurance products as you choose.

If you want to learn more about getting your individual or entity insurance licenses through Boost’s licensing-as-a-service, contact us.

Disclaimer: The information set forth herein is intended for informational purposes only and may include links to internet websites maintained by third parties. Boost Insurance Agency, Inc. (“Boost”) assumes no responsibility or liability for any errors or omissions in the content of such third-party websites. Any timelines or requirements included herein are illustrative based on experience and subject to change. Boost cannot guarantee any state review timing.

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Ready for Liftoff: BHMS Backs Boost

Jul 31, 2024

Friends of Boost, Today Boost is thrilled to announce that we have secured a significant equity investment from BHMS Investments, setting the stage for an incredibly exciting next phase for this company and the amazing team that has built it brick-by-brick over the past seven years. With a rock-solid foundation firmly in place, this partnership is going to supercharge our growth, fuel more innovation, and cement Boost’s position as the go-to infrastructure platform in insurance. We are on a mission to empower MGAs, insurtechs, independent brokers and agents, wholesalers, embedded insurance providers, and really any company that just wants to build, transact, and operate more efficiently in this technology-enabled world of ours. While capital is great, today is about hard-earned validation for our team doing that the right way since Day 1. BHMS is the perfect capital partner for Boost in terms of their insurance expertise and unquestionable track record in the space, but more importantly, they are fantastic people that share both our views on the industry and our principles of company building. The market is dangerously fixed for early and growth stage companies right now (and I say “fixed” intentionally). It’s incredibly easy to get picked off in an environment like that, so it takes a rare mix of both intellect and character to do the right thing when you’re on the capital side of that equation - and even more to be truly value-add to your portfolio companies. BHMS has that mix in spades and appreciated Boost for what it is, what it has accomplished, and what remains an incredibly high ceiling for this company vs. playing short-term charades with the herd. That’s our kind of investor. This investment isn’t just about the money—it's a resounding endorsement of Boost’s strength, credibility, and potential to make a truly meaningful impact on the insurance industry at scale. With BHMS now on board, alongside an incredible group of long-time strategic backers like Markel, RenaissanceRe, and Canopius, we’re ready to take our game to the next level. Our mission has always been to disrupt the insurance space with cutting-edge tech and unparalleled service, and this backing proves that disrupting responsibly is the only approach that works in our industry. Anyone can grow fast if they don’t care about quality or long-term credibility. At Boost, we underwrite profitably, we respect compliance, and we always - always - take a collaborative approach with our stakeholders across the entire value chain. As someone with literally zero patience, I can personally attest to that being incredibly difficult to do at times - but it scales. Even with the market’s ups and downs, Boost has been a powerhouse of innovation in the insurtech landscape with equal commitment to disruption and reliability. Doing things the right way does not mean you cannot innovate - or even disrupt - and leveraging best-in-class technology is not a right reserved for #insurtechs. Our platform has always been a one-stop shop for insurtechs and embedded insurance providers and MGAs, independent agents and brokers, and wholesalers alike - offering everything from product development to underwriting and program management to claims administration and reinsurance capacity. With our proprietary tech and a dream team of industry pros, we’re delivering smarter, more efficient solutions than ever before. Since our first program launched in 2019, we’ve underwritten over $200 billion in coverage, which is a somewhat staggering figure in hindsight. Today we’re proud to support programs for giants like Amwins along with trailblazers like Cowbell, Newfront, and Wagmo, and we’re grateful for all of the companies that chose to build with Boost even when Boost itself was just getting started. Our steady, disciplined approach has kept our portfolio profitable and we like to think that has kept our partners in front of us very happy as well. All of Boost’s success is thanks to what is hands down the best team in the industry. Hard stop. Their grit, dedication, and willingness to tackle tough challenges head-on has been crucial. Boost’s commitment to quality starts with our team and is reflected in them every single day. We keep things lean at Boost because that quality always outperforms quantity. Even if that approach always requires more from each individual and makes the stakes a bit higher, working with the right people makes the returns on each long hour invested that much more gratifying. Few people exemplify those principles or have demonstrated such an unwavering commitment to Boost more than Jeremy Deitch, so I am also thrilled to announce that Jeremy has been promoted to President at Boost and will join me on our Board of Directors. Jeremy’s leadership has been critical since the day he started at Boost almost 6 years ago, following probably the most grueling interview process in our company’s history - one he is always happy to dramatize even more if you ever ask him. ;) I couldn’t be more grateful to have a partner like him as Boost soars to new heights. With this new investment, we’re geared up to boost (pun intended) our growth and expand our tech offerings. We’re planning to scale our MGA programs, roll out new products, and snap up some strategic acquisitions. Our goal? To make building a business in insurance easier, faster, and more efficient for everyone so they can better serve their customers. We’re more fired up than ever about our mission to empower insurance providers with the tech and infrastructure they need to thrive. This partnership with BHMS is just the beginning. The future is bright, and we’re ready to lead the charge. Thank you to everyone who has been part of our journey thus far. Let's all keep pushing boundaries together - because the best is yet to come. Special thanks to the team at Howden Capital Markets & Advisory for helping Boost always say what it’ll do and do what it says. You can find our full press release here and, more importantly, can start joining our platform here. All my best, Alex Maffeo CEO & Founder Boost Insurance

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What is a Cell Captive?

May 23, 2024

A captive is an insurance entity that a business creates, rents, or owns in order to self-insure risks. A cell captive, sometimes also called a protected cell captive or segregated cell captive, is a specific insurance captive structure that allows an entity to segment or separate business in one cell from that in another cell, so that a particular cell’s assets and liabilities are insulated from anything that happens in another cell (even if both cells are part of the same overall captive facility). Using captives to self-insure risk offers businesses a number of benefits: they can participate in some or all of their program’s underwriting profitability, maintain end-to-end control over risk (including pricing and claims handling), and avoid paying significant overhead fees to a “middleman” insurer. Companies have several options for structuring and utilizing an insurance captive. They might build a single-parent captive, pool risk in a group captive, or make use of a cell captive. In this blog, we’ll take a look at each. In a single-parent captive, a company will often partner with a fronting carrier to reinsure at least part of their own risk. These are most commonly used by very large companies with exposure to multiple lines of business, which they can insure through the same captive entity. Example: A national food-delivery business wants to provide insurance to its restaurant partners, to protect against the risk of lawsuits related to food safety for meals delivered through the service. It discusses partnerships with several major insurance carriers, but none are willing to provide the level of coverage that the business is looking for at a reasonable price. To get what it needs, the food-delivery business sets up a captive to reinsure a fronting carrier partner, enabling the business to insure its own risk and provide the coverage it needs to its restaurant partners. Setting up a single-parent captive is a considerable undertaking with high capital requirements and a complex setup, with significant ongoing operational requirements going forward. In order to make sense financially, it usually requires a high volume of premium. For that reason, this option is usually only viable for very large businesses. For businesses that can’t afford (either in time or in money) to set up their own captive, a second option is to partner with other businesses in a related industry to set up a group captive. In this scenario, a single captive maintains portfolio capacity that can be shared by a group of entities. The entities can then pool risk together in the single captive. Example: Several real estate companies form a partnership to share a group captive to pool their similar risks. Each company contributes a certain amount of capital to fund the captive, and the capacity is shared among the partners. The participating real estate firms are then able to leverage the captive’s capacity to exercise greater control over their risk, and avoid paying high fees to middlemen. This can allow the partner businesses to share risk (and benefits) between them, and works well for trade associations and other groups of companies in related industries, that share similar risks. However, since the fund is shared between partners as well, one partner’s negative returns can impact the other partners involved. In a cell captive, the business first sets up an entity called a core, which is a similar process to setting up a single-parent captive. Once the core entity is complete, however, the business can much more easily spin up additional cells within the captive structure. The financials for those individual cells are separate from each other, rather than the combined funding of a single-parent or group captive. For many companies, however, using a cell captive doesn’t mean building one themselves. While there are use cases for single-parent cell captives, most businesses that create them then rent out cells to other businesses. Using a cell in another company’s captive entity (also called captive-as-a-service) allows a business to reap the benefits of an insurance captive at a much lower cost. We’ll look at some examples in the next section. The first step in creating a cell captive is to create the “Core” entity. This process is similar to building a single-parent captive: Once the core captive entity has been created and adequately funded, the owner can spin up individual cells within the captive’s structure to support different lines of business, segments, or partners. The Department of Insurance will still need to approve all new cells, but the process is much more streamlined than in prior cases. New cells can often be set up in weeks instead of the months or years typically needed for entirely new captive entities. Captive cells’ assets and liabilities are then statutorily protected from each other (which is where the ‘protected cell captive’ name comes from). This means that if one cell has a difficult year and experiences significant underwriting loss, the assets of the neighboring cells can’t be used to fund that loss. There are multiple ways that cell captives are used, including offering captive-as-a-service (also called rent-a-captive) to other partners or businesses, and separating different parts of the parent company’s business for performance tracking. In a captive-as-a-service or rent-a-captive scenario, the company that owns the captive core would allow other businesses to use cells in its captive. For a fee, the owner can set up a new cell specifically for the partner business, and manage it on their behalf. This lets the partner business leverage the owner’s infrastructure to achieve many of the same benefits of a single-parent captive, without the cost and complexity of creating one. Example: An insurtech specializing in commercial insurance has built a very strong customer base, and wants to further grow its business by participating in some of its own risk. However, building a full captive is too resource-intensive for the insurtech to take on. Instead, the insurtech partners with a CaaS provider and rents a captive cell. The insurtech then uses the cell to self-insure some of its risks, enabling it to participate in the underwriting returns and further scale towards a full-stack insurance business. While the most common reason for building a cell captive is to rent out cells to other businesses, there are a few reasons a company might build one for its own use. Because the cells’ financials are statutorily separated from each other, a cell captive allows a large enterprise to delineate between different lines of business or geographic regions, and monitor their performance separately. Example: A nationwide property management company offers several insurance products to its customers to help protect their personal property and finances. For planning and budgeting purposes, each line is supported by an individual cell in the management company’s cell captive. Over the course of the fiscal year, several lines perform over their targets, while one line significantly underperforms. The other LOBs’ budgets are unaffected by the low-performing LOB’s losses, and the company has clear visibility into which of its products are doing well and which may need a course correction. Cell captives provide a number of benefits to both their owners and the end users: Cell captives are popular for a reason: they offer significant value to both the companies with the resources to build them, and the companies that would rather rent a cell than build a single-parent entity from scratch. To learn more about Captive-as-a-Service with Boost, contact us.

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Partnerships and Focus: Big Trends at Money20/20

Nov 3, 2021

It was a busy October for the team at Boost Insurance, wrapping up with one of our favorite industry events: Money20/20. The conference was a super interesting contrast to ITC which was laser-focused on insurance, while Money 20/20 was more about fintech in general and much, much bigger! With fintech about ten years ahead of insurtech in terms of maturity, it’s interesting to see the level of innovation and diversity of companies in our big brother industry. Here are some of the big trends we noticed. One of the really interesting trends that kept being repeated at Money20/20 was a shift in mindset among both fintechs and banks. In the past, they have tended to see each other as competition for consumers’ business and attention but now everyone is moving towards viewing each other as complementary vs. competitive. We saw multiple collaborative efforts between the upstarts and the established, working together to create a better customer experience. This works because they each have a specialization (fintechs excel at meeting modern consumer expectations and banks are experts in profitably navigating a very regulated, very complex business), and partnership lets them bring both those strengths to the table. This was extra interesting to us at Boost because it reflects what we see in insurance, with insurtechs and carriers working together and bringing their own strengths together to meet modern consumer needs and expectations. For example - Boost has built a modern tech platform making various insurance products available via API but partners with established reinsurance companies to facilitate risk transfer. There will still be winners and losers between the incumbents and the upstarts, but as collaboration and competition continue consumers will be the clear winners. A trend I’ve written about before, and one that we continue to see play out, is tech companies’ focus on affinity groups. Fintechs are springing up all over with explicit goals of serving a relatively narrow group of people and serving them well. Companies like Paceline for people focused on health and wellness, Daylight for the LGBTQ+ community, and First Boulevard for African-Americans are just some of the fintechs concentrating on being the best option for a specific set of consumers. This is pretty much the opposite of traditional one-size-fits-all programs - instead of creating something broad that can be good enough for the biggest slice of people, creating something very targeted that can be great for a specific niche. This trend is great news for consumers who traditionally have not been served well by financial services in general. At Boost we’re starting to work with more affinity-focused companies because our modular, customizable product structure allows partners to tailor insurance for their customer needs. It’s exciting to be part of making insurance more accessible to all groups of people! Finally, it was really exciting and validating to see so much interest in new approaches to traditional industries. Finance and insurance have historically had a reputation for being very slow to change, sometimes for good reason (highly regulated, handling people’s money is a big responsibility, etc). This year though there’s a ton of interest in potential innovations, look no further than the enormous presence of blockchain and crypto-focused companies at Money20/20! Boost met with a TON of different companies during the show, and we cannot talk about anything yet but be on the lookout for some very interesting things coming in the near future! Money2020 was a heck of a conference and while my conference year is wrapped, the Boost team will be out and about at shows the rest of the year. We are looking forward to more opportunities to meet people in 2022, so if you did not get a chance to connect with us at Money2020, just drop us a line.