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Difficulty: MediumLicensing Requirements and Types

Apex National Insurance employs several individuals in its regional headquarters. According to state insurance licensing statutes, which of the following employees is legally REQUIRED to hold an active insurance producer license?

  1. A
    A corporate executive who develops generalized marketing strategies and sets overall agency production goals.
  2. B
    A receptionist who answers incoming phone calls, gathers basic contact information, and routes inquiries to designated agents.
  3. A customer service representative who advises callers on coverage enhancements and receives a percentage of the additional premium generated.Answer
  4. D
    A salaried benefits administrator who solely assists the company's own staff with enrolling in the employee group life plan.

Answer

The customer service representative who advises callers on coverage enhancements and receives a percentage of the additional premium generated.
State insurance regulations mandate that an active producer license is required for any individual who sells, solicits, or negotiates insurance. Because the customer service representative is advising on coverage (negotiating) and receiving a percentage of the premium (commission), they cross the legal threshold requiring licensure. The other roles fall under specific statutory exemptions for administrative, executive, or internal HR duties.

Step-by-Step Solution

1
Analyze the legal threshold for requiring a producer license.
A license is required for anyone who sells, solicits, or negotiates insurance contracts in the state.
This establishes the core regulatory framework for the scenario.
2
Evaluate the compensation structure tied to the activities.
Receiving a commission or performance-based compensation directly tied to the sale or enhancement of a policy confirms the requirement for a license.
Compensation structure often distinguishes exempt administrative employees from those who must be licensed.
3
Review the specific statutory exemptions provided in state law.
Executives not directly selling, clerical staff performing admin duties, and HR employees administering internal group plans are all explicitly exempt.
Identifying the exceptions eliminates the incorrect distractors.

Key Concept

Exemptions from Insurance Producer Licensing
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Topics

Licensing Requirements and Types

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