DE Non-resident licensing - What is a registered agent?

QUESTION:

We are in the process of getting our agency licensed in another state and have received a letter asking us for the address of our registered agent in that state: What does this mean?

ANSWER:

This letter most likely does not come from the state’s Insurance Department but rather from its Department of State. When licensing a non-resident agency, many insurance departments first want to verify that the agency, as a business, has been registered with their state’s Department of State.

In order to be able to register, foreign businesses (those domiciled in another state) are often required to indicate an address in the state where they want to register, which seems counterintuitive to non-resident agents who are located and operating out-of-state. The same request can also be made by asking to identify the business’s registered agent in the state, as in your case. The reason for this request is generally to identify someone locally upon which service of process may be made on behalf of the agency.

For many agencies, the only recourse is to use a company that acts as a registered agent. Needless to say, these companies will provide this service for a fee. IA&B recommends shopping around, as it is not unusual to see annual fees over $200 for the registered agent alone. Some states will provide a listing of available companies; others will not. If you need assistance, IA&B can help you find a company providing this service.

For some perspective on the subject …

Non-resident licensing is at the heart of the federal debate between the Optional Federal Charter, state licensing and NARAB II. The business registration component of licensing an agency has been addressed in the NARAB II proposal by removing the requirement altogether. If the NARAB II proposal passes, this would probably be one of the most welcome changes to the non-resident licensing process.