Insurance Revenue Sharing with CPAs

[brookfieldpartners]

I had this recently brought to my attention.

Can an unlicensed CPA start an insurance agency with a licensed producer. The licensed producer will be the officer of the LLC and the CPA will be a member of the LLC.

The CPA would then share in the profits of the newly created LLC. NOT IN THE COMMISSIONS, but the PROFITS.

Has anyone seen this before? Is it permissible?

 

[STIBROKER]

no different than giving your wife your commissions.......hahahahaha

 

[VolAgent]

The answer can be state specific. The best answer is to get the CPA licensed and call it a day. How much is a license in your state, couple hundred at most? It'll save you tons of grieve. Even if its legal, that doesn't mean everyone else knows it is, and some regulator can cause you a headache until they figure it out.

 

[FL P&C Broker]

I remember reading somewhere that an unlicensed share holder can only own like 10% of the company. Could be state specific.

 

[brookfieldpartners]

I own a BGA and have a broker doing this - I am wondering the legalities -no one seems to know definitively

 

[Newby]

That's exactly what I did but there was a twist. The CPA is my wife. She got her life & health license a few years later but originally she didn't have it.

I don't really know the answer if you could do that without being married to her.

 

[jraastad]

im interested in the legal aspect of this as well, please post back for viewing when you find out if you dont mind

 

[brookfieldpartners]

Here is what I found per Massachusetts DOI - might be different in other states, but I suspect that it's not different. This legislation was brought to us courtesy of the Bankers Association.

In MA - an unlicensed person or entity may own up to 100% of an insurance agency - so long as there is at least one person that is a principal brokered individual that can license the agency.

Banks got this legislation through so that they can own insurance agencies and take a piece of the revenue (notice I don't say commissions).

Let me know if you have any further questions!

Brad