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Who is Considered to be an Insurance
Anyone who, for a fee, advises, offers, or purports to advise in the area of Life and Health insurance or Property and Casualty insurance is required to be licensed as an insurance consultant. The only exemptions are:
- A licensed attorney acting in in his/her professional capacity,
- A trust officer of a bank acting in the normal course of his/her employment,
- An actuary or certified public accountant who consults during the normal course of his/her business, and
- Any person employed as a risk manager and who consults for his/her employer only.
The key to the definition is "for a fee," which is separate and distinct from commissions received by a licensed insurance agent or surplus lines broker resulting from selling, soliciting, or negotiating insurance or health care services as allowed by his/her license. In other words, an insurance agent acting in his/her professional capacity who advises an insured or prospective insured in the area of insurance or health care services and receives a commission only upon sale does not come under the auspices of insurance consultant. However, as soon as a fee for the consulting services is implemented, whether or not the consultant is a licensed insurance agent and whether or not a commission is received, the definition of insurance consultant applies and licensing is required.
How Do I Apply for a Consultant License?
Review Licensing Procedures
Nonresident applicants must be licensed or otherwise authorized as an insurance consultant in their home state or province.
If a nonresident applicant’s home state does not issue insurance consultant licenses, then the nonresident applicant must hold a Life and Health and/or Property and Casualty license in their home state to qualify for a corresponding Consultant license. The Bureau will verify nonresident licensing through the NAIC’s Producer Database.
Requirements for Licensing Partnerships, Corporations, or Limited Liability Companies:
In the event that a Partnership, Corporation, or Limited Liability Company renders insurance advice as a consultant and receives a fee for that advice, then it must obtain an Insurance Consultant's license.
In addition, each active partner and employee in a Partnership must be licensed if he/she is to be an insurance consultant; and each officer, director, or employee of a Corporation or a Limited Liability Company must be licensed if he/she is acting as an insurance consultant.
If the Partnership, Corporation, or Limited Liability Company is also involved in the business of selling, soliciting, or negotiating insurance and receiving commission, then the insurance agency licensing requirements must be met. Virginia does not license Sole Proprietorships.
A Certificate of Authority (COA) or its equivalent must be obtained from the Office of the Clerk of the State Corporation Commission within 90 days of licensure. Failure to obtain a COA within 90 days of licensure will result in license termination. Visit
or contact the Clerk's Office at 804-371-9733 to obtain a COA.
Insurance agencies are required to maintain a Designated Licensed Producer (DLP) responsible for the agency's compliance with insurance laws and regulations. The DLP must be an employee, officer, or director of the agency. Regarding Limited Liability Companies and Partnerships, the Bureau will accept members and partners respectively as the DLP. Business entities are required, within 30 calendar days, to report the removal of the DLP and the name of the new DLP.
Does a Financial Planner Have to be Licensed
as an Insurance Consultant?
If the financial planner provides a client with a financial plan that was prepared by someone else appropriately licensed, then he/she is not advising, and a consultant license is not required.
However, once the presentation of the financial plan becomes an explanation of options, then insurance knowledge is necessary and licensure is required. If the planner's presentation includes a recommendation of one insurance plan or option, either an insurance consultant's or an insurance agent's license is required.
A consultant's license is required if the recommendation of a specific insurance option or plan is part of the overall plan recommended, but no commission for the sale of that insurance is received. If commission is received from the sale of an insurance product, then the financial planner MUST also be licensed as an insurance agent. This includes indirectly sharing commission or any other compensation received by an insurance agent who ultimately sells an insurance product to your client.
NOTE: If a financial planner/insurance consultant is also selling in the area of securities, he/she must also contact the Division of Securities and Retail Franchising of the State Corporation Commission of Virginia with regard to additional registration requirements; the telephone number is (804) 371-9051.
Standards of Conduct:
An insurance consultant must enter into a written contract with his/her client prior to engaging in any consultant activity. The contract must include, without limitation, the amount and basis of any consulting fee and the duration of employment.
If the insurance consultant receives commission for selling, soliciting, or negotiating insurance as a part of his/her services in addition to a consulting fee, such information must also be disclosed in the contract. The consultant is subject to all laws and regulations pertaining to insurance agents and their practices.
Rebating: The term "rebating" includes waiving or reducing the fee or compensation for consulting services for the purpose of inducing a client or potential client to purchase a policy, or waiving or reducing commission on the sale of insurance to a consulting client.
Rebating by an insurance consultant is prohibited and could be grounds for refusal, suspension, or revocation of an insurance consultant's license as well as monetary penalties of up to $5,000 for each violation.
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