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Question

Difficulty: HardLicensing Requirements and Types

Apex Insure Group is a licensed resident business entity producer domiciled in State X. To capture new market share, the agency is opening a physical branch office in neighboring State Y. The agency executives appoint Marcus, a top-performing producer who currently holds only a State X resident individual license, to manage this new branch and act as the designated responsible licensed producer (DRLP) for State Y compliance. Marcus will maintain his primary residence in State X but will commute to State Y daily. Under standard state insurance regulations, which of the following accurately describes the licensing actions required before the State Y branch can legally solicit policies?

  1. Marcus must obtain a non-resident individual producer license in State Y, and Apex Insure Group must obtain a non-resident business entity license in State Y that explicitly designates Marcus as the responsible producer.Answer
  2. B
    Apex Insure Group can operate in State Y under its State X entity license via reciprocity, provided Marcus submits a change of business address notification to the State Y Insurance Department within 3030 days of the branch opening.
  3. C
    Marcus must surrender his State X resident license and obtain a State Y resident license because he will be physically managing a branch located within State Y's borders.
  4. D
    The Commissioner of State Y will grant Marcus apparent authority through a 180180-day temporary license to establish the branch while the agency's formal non-resident entity application is pending.

Answer

The correct action is that Marcus must secure a non-resident individual license in State Y, and the agency must secure a non-resident business entity license in State Y that formally designates him as the responsible producer.
State insurance laws require both individuals and business entities to hold proper licensing in every jurisdiction where they transact business. Because Marcus and the agency are residents/domiciled in State X, they must both obtain non-resident licenses in State Y. Furthermore, a non-resident business entity must designate a properly licensed individual (Marcus) to be strictly responsible for the entity's regulatory compliance in that state.

Step-by-Step Solution

1
Determine the individual licensing requirement for Marcus.
Marcus resides in State X but will solicit insurance in State Y. Therefore, he must obtain a non-resident individual producer license in State Y.
An individual must hold a license in every state where they solicit, negotiate, or sell insurance. Commuting across state lines does not sever his State X residency.
2
Determine the entity licensing requirement for Apex Insure Group.
The agency is domiciled in State X and wants to operate a branch in State Y. It must obtain a non-resident business entity license in State Y.
Business entities, like individuals, must be authorized in foreign states (states other than their domicile) before conducting insurance business there.
3
Identify the relationship required between the entity and the individual.
State Y requires the business entity to designate a licensed individual producer (Marcus) to be responsible for the agency's compliance with state insurance laws.
State regulations mandate a Designated Responsible Licensed Producer (DRLP) to ensure accountability for a business entity's actions.

Key Concept

Non-Resident Licensing and Business Entity Designation Requirements
Estimated Time:1m 30s
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Topics

Licensing Requirements and Types

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