PA ABC's for new agencies

2. Obtaining your insurance license

The first step in starting your agency is to obtain your insurance license. In Pennsylvania, the process of obtaining a license is regulated by the PA Insurance Department through law.

Act 147 of 2002 (PA's producer licensing law) defines an insurance producer as:

A person that sells, solicits or negotiates contracts of insurance.

The insurance producer -- who must have a valid producer license -- has the ability to act in the marketplace as either a representative of the insurer (agent) and/or a representative of the consumer (broker).

Let's explore this further...

Representative of the insurer - The insurance producer is appointed by a carrier. In essence, you are an agent of the carrier. To verify your appointments with your carriers, click here.
Representative of the consumer - Whenever you are placing business with a carrier that has not appointed you, you are acting as the "representative of the consumer" (broker). Examples include placements with SWIF, Fair Plan, MGA or Surplus Lines market, etc. PA law places specific disclosure requirements (broker agreements) on brokered business, subject to hefty fines. To learn more about the requirements regarding business, click here.

Who does not need a producer license?

The "clerical" exemption

In Pennsylvania, to benefit by what is commonly known as the "clerical" exemption, an employee must not receive a commission on policies written in Pennsylvania and the employee’s activities must be “executive, administrative, managerial, clerical or a combination of these and be only indirectly related to the sale, solicitation or negotiation of insurance.” These activities may include:

discussing and informing on insurance inquiries and matters, so long as no recommendation is made with respect to specific coverages, products or rates;
receiving requests for coverage for transmittal to a licensee or insurance entity;
assisting with the completion of applications at the licensee’s or insurance entity’s place of business;
passing on to the licensee inquiries of a particular nature;
receiving premium payments delivered to the licensee or insurance entity for coverage and issuing receipts on behalf of the licensee or insurance entity [Caution: while not a licensing requirement, E&O recommendations generally suggest having the status of the customer's account verified prior to accepting payment, in case the payment is late] ; and
collecting expiration date information from clients or potential clients;

The claims exemption

As long as the individual is only processing claims, he or she should not be required to have a producer license. Section 603-A of Act 147 of 2002 (the producer licensing statute) states, among its exceptions:

(b) Exceptions.—The following persons shall not be insurance producers for purposes of this act:

(3) An officer, director or employee of an insurer or of an insurance producer if the officer, director or employee does not receive a commission on policies written or sold to insure risks residing, located or to be performed in this Commonwealth and:

(ii) the officer, director or employee's function relates to underwriting, loss control, inspection or the processing, adjusting, investigating or settling of a claim on a contract of insurance; or

(iii) the officer, director or employee is acting in the capacity of assisting insurance producers where the person's activities are limited to providing technical advice and assistance to licensed insurance producers and do not include the sale, solicitation or negotiation of insurance.

Other exemptions

A few other exemptions apply, particularly for certain types of group policies. For a complete review, check the entire section 603-A (b) of the producer licensing law (Act 147 of 2002).

Additional resources:

Pre-Licensing requirements

Individuals desiring to become insurance producers must complete 24 hours of pre-licensing education (PLE) to be eligible to take the licensing examination. Here are some important things to keep in mind:

You can take any approved PLE course or courses totaling 24 hours with at least three hours of ethics. IA&B has two approved courses for PLE: one for P&C and one for L&H. Both also serve as an exam preparation course.
PLE is a one time requirement and is necessary for those individuals not currently licensed who are preparing to take their first licensing exam.
To add additional lines of authority you need only to take and pass the exam for that line.
Current insurance producers -- desiring to take an exam to add a line of authority to their license -- are exempt from PLE. Print a copy of your current license to provide as proof of your exemption from the PLE requirement when you go to the exam center.

Fingerprinting requirements

Anyone not currently licensed will be required to get fingerprinted in order to obtain their producer license. Once you have scheduled to take the licensing exam, the following tips will make this a smooth process for you.

All new license candidates must be fingerprinted at a Thomson-Prometric Exam Center utilizing "live scan" technology. The Insurance Department no longer accepts fingerprint ink print cards.
Successful candidates are able and encouraged to apply for the license immediately from the test site. This procedure considerably shortens the delay to obtain the license.
A candidate applying for a license should bring the following to the test site:
- 2 forms of ID
- a credit card
- A pre-filled license application form (recommended) - To apply immediately at the test site, some questions such as the 5-year history may require some prep time. An application form is available from this page (click on "Initial Licensing Documents: Application").
- The Certificate of Completion for PLE (unless only applying for a new line of authority).

For more information from the Insurance Department, click here. For more information about Thompson-Prometric Exam Centers, click here (select "Professional Licensure" and "Pennsylvania Insurance"). For questions or concerns, contact IA&B's Member Service Center toll free at (800) 998-9644 or local at (717) 795-9100, option 0 or e-mail.

Continuing Education Requirements

You are required by the state's licensing law to continue your education once getting licensed. It is extremely important for insurance agents to keep up to date on issues concerning clients. Changes in laws and state/federal regulations can affect the insurance needs of clients and the way in which agents conduct business. Agents can enhance their selling skills and broaden their knowledge of insurance and other financial services by taking courses and attending institutes, conferences, and seminars sponsored by IA&B. To understand the requirement of this state, IA&B has compiled the following reminders.

Access IA&B's Continuing Education opportunities

Here's the information you need to know to maintain and renew your producer license:

GENERAL REQUIREMENT: During each 24-month licensing period, a Pennsylvania resident producer must earn 24 continuing education (CE) credits of approved education subjects.
GRANDFATHERING EXCEPTION: A producer is exempt from CE if he or she was licensed prior to 01/01/71 and has been continuously licensed for all lines of authority carried since.

► If the producer adds a line of authority or lets the license lapse, the grandfathering feature is lost.

FLOOD:

► If you sell Flood insurance, you must secure three hours of approved Flood “training.”

► Training is set and monitored by the specific Write-Your-Own (WYO) companies (or NFIP/FEMA).

LONG-TERM CARE (LTC): If you sell, solicit, or negotiate Qualified Partnership Policies (referred to as LTCP), you must complete:

► A one-hour training course on Medical Assistance Program (Medicaid) prior to any sale, solicitation or negotiation of a Qualified Partnership Policy,

In addition, you must complete:

► A one-time, eight-hour training course. The eight-hour training may include the one-hour LTCP course referenced above; Producers licensed in A&H before 04/01/11 must complete the course by 04/01/12. Producers licensed in A&H after 04/01/11 must complete the course prior to selling.

► An ongoing, four-hour training course, to be completed once in every licensing period.

ETHICS: N/A.

OTHER ITEMS:

► Up to 24 hours of carryover credits are allowed in Pennsylvania.

► You may not earn credit for repeating a course in the same licensing period. Be particularly mindful of this if you hold a designation (e.g. CIC, CISR) that requires annual updates: Taking the same institute two years in a row will update your designation, but not count towards CE if it is taken in the same licensing period.

► The license renewal date is the last day of the producer's birth month.

► The CE requirement is per license, not per line of authority.

► You have up to the date of expiration to fulfill the CE requirement. The Department sends a notice of compliance 90 days prior to the expiration date of your license.

► If you let your license lapse by failing to timely renew, pay the fee, or complete the CE, you may, within one year, request reinstatement from the Department. You must submit the completed renewal form, the fee required, and verification that all CE has been completed for the previously licensed and lapsed period.

- If the request for reinstatement and required documentation is received within 60 days of the lapse, the Department will reinstate retroactively.

- If the request and documentation is received more than 60 days after the license lapse, the license will be effective the date of the reinstatement by the Department.

- If the lapse period exceeds one year, the person must reapply (and take the licensing exam).

► If you are unable to timely comply with the continuing education requirement or payment of a lapsed license as a result of military service or other extenuating circumstances, you may request a waiver from both the CE requirements and payment of the lapsed license fee. The request should include sufficient detail and supporting documentation to determine the necessity of the waiver. The Department will determine if there is good cause for waiver.

Continuing Education Opportunities

In order to assist you in staying professional and in good standing with the Insurance Department, IA&B has become a premier provider of continuing education courses for independent agents. IA&B offers many opportunities from one-day seminars on a variety of subject matters to more advanced and nationally-recognized designation programs. In addition to our core offerings, a number of organizations offer professional designation programs that certify an agent’s expertise. Although voluntary, such programs assure clients and employers that an agent has a thorough understanding of the relevant specialty.

IA&B offers these professional designation programs in addition to stand alone, one-day seminars on specialty topics:

Certified Insurance Counselor (CIC)
Certified Insurance Service Representative (CISR)
Certified Professional Insurance Agent (CPIA)
Errors and Omissions (E&O) seminars
Special Topic Seminars
Online, Self-Study and Webinars
Licensing Exam preparation

Additional information on all of these programs

ABC's for new agencies table of contents

This document is not a legal opinion and should not be relied upon as such. The intent of this document is to provide a general background regarding the topic or topics discussed, not to provide legal advice. Producers and agencies should consult an attorney regarding specific situations and specific questions with respect to the topic or topics covered in this document. Neither the Insurance Agents & Brokers nor any of its employees shall be responsible for any errors or omissions regarding any statements made in this document, nor any errors or omissions regarding any statutes, regulations, court rules, and/or any other government documents cited in this document.