Reinsurance Intermediary Agency License
Learn how to obtain and maintain a reinsurance intermediary license.
Reinsurance is the practice whereby insurers transfer portions of their risk portfolios to other parties by some form of agreement to reduce the likelihood of paying a large obligation resulting from an insurance claim. The party that transfers and thus diversifies its insurance portfolio is known as the ceding party.
The reinsurance industry is composed of two major markets, including the direct reinsurance market and the broker reinsurance market. Reinsurance intermediaries act as a go-between to bring together the reinsured and reinsurer to secure a reinsurance contract on terms agreeable to both parties. The duties of reinsurance intermediaries include:
- Assisting the reinsured in planning and developing its reinsurance program
- Putting together the reinsurance proposal and relevant premium and loss statistics to present to the reinsurance market when soliciting for reinsurers
- Proposing to the reinsured which reinsurers they should solicit
- Soliciting those reinsurers on the reinsured's behalf
- Preparing the reinsurance slip and the contract wording
Starting or expanding a reinsurance intermediary agency is contingent on state laws. If you're uncertain about your business' needs and how to obtain or renew a reinsurance license, the finance license specialists from Harbor Compliance can help.
Reinsurance Intermediary Regulations
Across the country, reinsurance is heavily regulated to protect consumers. Most states have adopted a version of the Reinsurance Intermediary Model Act enacted by the National Association of Insurance Commissioners. Under the Act, there are two categories of intermediaries: intermediary brokers and intermediary managers.
- Intermediary brokers are defined as any firm, association, or corporation who "solicits, negotiates, or places reinsurance cessions or retrocessions on behalf of a ceding insurer without having the authority or power to bind reinsurance on behalf of such insurer."
- Intermediary managers are those that have binding authority from the reinsurers and are really managing general agents or underwriters.
Maintenance and Renewal
There are a number of steps businesses need to take to ensure they continue to comply with state laws after receiving a reinsurance intermediary agency license. License renewal often happens on an annual or biennial basis. Recordkeeping requirements also exist, mandating that the reinsurance intermediary keep a complete record of the reinsurance transaction for at least ten years after the expiration of the reinsurance contract.
Keeping on track with your business' license renewals can be complicated, especially as a growing company. At Harbor Compliance, we offer a range of software and managed services that assist firms with annual licensing, as well as other business lifecycle compliance need such as annual reporting and registered agent services. We help clients accurately track due dates and filing requirements so that your business will continue to be compliant with state and local requirements. Plus, you will have the time you need to continue working and expanding your clientele.
If you are looking to outsource your license maintenance and business compliance duties, Harbor Compliance can help. We are available to review your business status, ensure you are in good standing in the states where you operate, and explain the steps to ensure you remain compliant with state and federal regulations. Contact our licensing specialists today to learn more.
State Licensing Requirements
To properly apply for and maintain a license, it is imperative to stay on top of your requirements. Click on the link below to view licensing information in your state.
Independent Insurance Agents and Brokers of America (Big “I”)
Advocacy group of independent insurance brokers and agents.
National Association of Insurance and Financial Advisors (NAIFA)
Professional association that advocates for favorable regulatory conditions for insurance agents and financial advisors.
National Association of Insurance Companies (NAIC)
A standard setting and regulatory support organization that is governed by state insurance regulators.
National Association of Professional Insurance Agents (PIA)
Professional association that provides education and advocacy for insurance agents throughout the United States.
National Insurance Producer Registry (NIPR)
An affiliate of the NAIC that provides streamlined and uniform producer licensing processes.