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Difficulty: MediumLicense Maintenance and Continuing Education

A corporate insurance agency holds a business entity producer license. The agency's sole Designated Responsible Licensed Producer (DRLP)—the individual legally accountable for the firm's compliance with state insurance laws—suddenly retires. To properly maintain the agency's active license status, which of the following actions is required under standard state insurance regulations?

  1. The agency must notify the Department of Insurance and designate a new licensed individual producer as the DRLP within the required statutory timeframe.Answer
  2. B
    An unlicensed corporate executive may act as the temporary DRLP for a maximum of 180 days while a licensed replacement is recruited.
  3. C
    The agency is exempt from designating a new DRLP as long as all subordinate staff members interacting with the public hold active individual producer licenses.
  4. D
    The agency must submit a written petition to the Insurance Commissioner to permanently waive the DRLP requirement for the business entity.

Answer

The agency must officially notify the state regulator and appoint a new licensed individual to serve as the designated responsible producer within the state's mandated timeframe.
Under standard state insurance regulations, a business entity producer license is contingent upon the agency having a Designated Responsible Licensed Producer (DRLP). When the DRLP retires or leaves, the agency is legally required to notify the Department of Insurance and appoint a qualified, licensed replacement within a specified statutory window to avoid suspension of the entity's license.

Step-by-Step Solution

1
Identify the foundational requirement for business entity licenses.
Standard state regulations mandate that a business entity must designate a licensed individual producer (the DRLP) to be responsible for the business entity's compliance with insurance laws.
Regulators need a specific, licensed individual to hold legally accountable for the operations and ethical conduct of the agency.
2
Determine the necessary procedure when the designated individual leaves the firm.
The entity must formally notify the Department of Insurance of the change and promptly designate a qualified, licensed replacement.
Failure to replace the DRLP and notify the state within the statutory window (often 10 to 30 days) causes the business entity to fall out of compliance, potentially resulting in license suspension or revocation.

Key Concept

Business Entity License Maintenance and DRLP Requirements
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Topics

License Maintenance and Continuing Education

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