Updated: Jan 9, 2019
When was the last time you checked to see if your health insurance agent was properly licensed and certified?
There are plenty of cases and news reports about unlicensed insurance agents (brokers) under investigation. Take Zenefits for example. In April of 2017, New York's financial services regulator fined them $1.2 million for letting unlicensed employees solicit, negotiate and sell insurance policies. This comes after repeat violations in 2014 and 2015.
Some agency principals will say there is a fine line between selling and "servicing" clients and prospects. So what's the difference and where do the duties of clerical and administrative staff cross that line?
In Michigan these rules are defined by the Department of Insurance and Financial Services (DIFS) and posted publicly on their website.
According to the DIFS:
If you are soliciting, negotiating or selling insurance you are required to be licensed as an insurance producer (agent) including receiving commission or other compensation.
MCL 500.1201(m) “Solicit” means attempting to sell insurance or asking or urging a person to apply for a particular kind of insurance from a particular company.
MCL 500.1201(k) “Negotiate” means the act of conferring directly with or offering advice directly to a purchaser or prospective purchaser of a particular contract of insurance concerning any of the substantive benefits, terms, or conditions of the contract, provided that the person engaged in that act either sells insurance or obtains insurance from insurers for purchasers.
MCL 500.1201(l) “Sell” means to exchange a contract of insurance by any means, for money or its equivalent, on behalf of an insurance company.
Clerical staff on the other hand can engage in some activities without becoming licensed. Some of those responsibility may include:
Dispensing insurance brochures and other general information (so long as there is not conversation relating to the terms of insurance or a contract).
Informing the insured as to his or her coverages as indicated in the policy records.
When initiated by a current or prospective policyholder, communicating to obtain factual information necessary for a licensed insurance producer to complete a review (so long as there is not conversation relating to the terms of insurance or a contract).
Receiving and recording a customer’s request for additions or deletions to existing insurance policies and preparing endorsement forms for review and signature of the licensee.
How Do I Check To See If My Agent Is Licensed?
Every licensed agent is provided with a National Producer Number (NPN) which is a unique identifier assigned through the licensing application process or the NAIC reporting systems to individuals and business entities (including, but not limited to producers, adjusters, and navigators) engaged in insurance related activities regulated by a state insurance department. The NPN is used to track those individuals and business entities on a national basis.
To find out if you agent is licensed in Michigan, ask your agent for their NPN number. If they are hesitant to provide you that information, that's a red flag. You can visit the DIFS Insurance Search website and enter their information to find out what carriers they are licensed with.
You can visit the National Producer Registry look up by clicking here
The Centers for Medicare & Medicaid released a new tool to check if your agent is licensed and certified to sell Individual Insurance. The tool shows you a summary of your Marketplace registration status and details. Click here to go to that tool.
Either route you choose, it's recommended to check annually to make sure you are working with a licensed agent to ensure they are up to date to be able to help you and/or your employees with their healthcare needs, concerns and questions.
The information herein is intended to be educational only and is based on information that is generally available. The information is not intended to be legal or tax advice. Consult your attorney and/or professional advisor as to your organization’s specific circumstances and legal, tax or other requirements.