Want to start an insurance agency

investorinagents

New Member
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I am business person that is not interested in getting a life insurance license myself but would like to start an insurance agency which will have corporate agency license and invest in future agents. I will be be paying and retaining a new agent who will get his own license and be the main agent in this company. Is this setup legal since I myself will not have a license but will own this LLC? Thanks
 
By the fact that an LLC entity is often how CPAs, attorneys, investment advisors, and insurance agents can legally share commissions paid to the LLC... yes, it is legal.

As long as you have at least one licensed agent for the business entity license, otherwise that won't happen.

Obviously, this isn't legal advice.
 
By the fact that an LLC entity is often how CPAs, attorneys, investment advisors, and insurance agents can legally share commissions paid to the LLC... yes, it is legal.

As long as you have at least one licensed agent for the business entity license, otherwise that won't happen.

Obviously, this isn't legal advice.
Thanks, are there any agencies which lend agents for a new agency like mine for a fee? or am I stepping into illegal territory?
 
Business Entity Frequently Asked Questions

1. What are the steps to complete a business entity application?

Please follow the steps below to file for a business entity license:

Step 1 – After the business entity name is approved, the applicant must submit an application using the CDI's Business Entity Online Application Service. However, if the applicant submits a paper Business Entity License Application Form LIC 441-11 the name must first be approved before the Business Entity Analyst can complete the review of the application.

Step 2 – Endorse an individual agent. During the application process, the business entity must name at least one natural person who is applying for an individual insurance license or holds an individual insurance license with CDI.

Endorsees should be named on the Business Entity Application during the initial business entity application filing. After the business entity receives the license, additional agents must be endorsed to the license. Specifically, Section 1656 of the CIC states that ALL licensed persons who will be exercising the power and performing the duties under the business entity license must be endorsed on the license.

The business entity endorsement must be submitted online at Business Entity Endorsement and Termination Online Service (i.e., adding individual licensees who are to transact insurance under authority of its license) (Section 1661 of the CIC). The business entity may also terminate an agent who is no longer authorized to transact under the business entity license (Section 1661 of the CIC).

This is obviously for California, but just because they require an endorsed agent, that agent doesn't necessarily have to be an owner in the LLC (from the way I'm reading this).

I don't see any reason why you can't start with one agent, hire another, and then terminate the first one.
 
Keeping insurance agents around and even trying to find insurance agent in the first place is no walk in the park. It is an uphill battle unless you are planning to pay them a nice hefty salary to keep them.

If you are just going to pay them commission only. It's no cake walk. Because those that can earn a living on commissions, they don't need you. Others, once they gain enough experience, they go start their own agency.

I know an insurance recruiter who spent 20+ years recruiting for a large well known P&C insurance company. His stats: every 50 people he recruits, only 2 makes it. Rinse and repeat.
 
I recently setup an LLC with a bit of a complicated situation. I was consulting a tax expert, an attorney with a heavy background in insurance, and the DOI.

At a minimum you should be emailing the DOI these questions.
 

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