Guide to Getting Your Insurance Broker License  - Bonding Solutions

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Guide to Getting Your Insurance Broker License 

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For both new and experienced professionals, starting a career in the insurance industry can be an appealing option as there is the potential to make a significant amount of money due to the commission-based salary structure. It’s a flexible career path with a diverse roster of interesting clients, depending on the area of emphasis. The steps and requirements to become an insurance agent vary by state, but the process is typically much shorter than those for other license-required professions and depending on the individual’s dedication to completing all pre-requisites, the process can take just a few weeks.

For those wondering how long it takes to get a job as an insurance agent, motivation is key to an expedited entry into the field. In just a few weeks, the majority of people can become licensed insurance brokers. Most people will participate in an online course that requires a certain amount of study hours in order to qualify to take the final exam to receive their license. Once you have completed the course, passed the exam, and a background check is completed, your license will be issued within a few short weeks. 

Pre-licensing requirements must be completed before you can become an insurance broker — these include taking the required classes, getting fingerprinted, passing the exam, and obtaining a surety bond. Depending on where you want to get your license, you’ll need to meet different requirements as each state has its own guidelines. Insurance brokers work directly with clients to find the best insurance policies that meet their specific needs. Coverage varies significantly based on the client’s preferences, insurance company, and what exactly is being insured. Insurance brokers work in all areas such as health, home, professional liability, and auto insurance.

Because brokers aren’t tied to any particular insurance company, you’re free to recommend whatever you think is best for your client rather than what the insurance company wants. Contact us and get any advice you need or request a free quote on your insurance broker bond. We’ll walk you through the bond requirement process and insurance broker license requirements in the sections below.

Check your State’s Requirements

The requirements for insurance brokers vary by state. While some states will require a minimal level of education being a bachelor’s degree, others only require the completion of specific courses in order to take the insurance broker exam. In some states, you must obtain a producer license rather than an insurance broker license. Every state has a specific website dedicated to insurance broker requirements, you can easily find your state-specific guide with a simple Google search or contact your local surety agent to help you! 

Pre-licensing Requirements

Every state has its own pre-licensing requirements, but many of them are similar. We’ll go over a few of the most common ones here.

  • Complete the following coursework: You can expect to learn about ethics and insurance codes. 
  • Fingerprints should be sent: You may be required to submit your fingerprints for a background check in some states. 
  • Take the qualifying exam: State laws and insurance products may be covered on licensing exams. Depending on your specialty, you may need to take a few exams.

After you’ve completed these requirements, you’ll have a certain amount of time to obtain your insurance broker’s license. To avoid missing the deadline, complete the requirements and submit your application as soon as possible, otherwise, you run the risk of having to start the entire process over. Fees apply to the majority of requirements. 

Pre-licensing classes are required in almost all states. Many of these courses are available online or as part of a live class. State requirements range from a one-day class to 20-40 hours of online training. 

After you’ve completed any state-specific pre-exam requirements, you’ll need to schedule your official licensing exam. These exams are usually proctored by a third party. To take the online test, you will go to a testing location on the scheduled date and time. Before taking the exam, you may be required to show proof of completion of the training course.

Send in Your Application and Pay Fees

Submit your application after you’ve completed your state’s pre-licensing requirements. Providing proof of completed coursework and the exam are required when applying for the license. Your state might also want to know about your work history. Once you have paid the application fee (s), your last step will be obtaining an insurance broker bond.

Apply for an Insurance Broker Bond

Before you can legally begin working as an insurance broker, most states require you to obtain an insurance broker bond. This surety bond, like all other surety bonds, is a three-party agreement between the broker, the surety agency, and the state requiring the bond. 

The surety agency guarantees that the broker is financially capable of paying any claims made against the bond. The broker agrees to abide by the bond’s terms and repay the surety agency if the bond agreement is breached.

Surety bonds are required by states to protect customers from dishonest brokers and to hold brokers financially accountable.

Obtain an Appointment to Sell Insurance Products with a Company

Before you can sell an insurance company’s products, you must first be appointed by it. Each insurance company you plan to sell products for will require you to fill out an application and be granted an appointment and binding authority, which will be recorded on your state insurance license.

Grow Your Network

You have a permit. So, what’s next? You should start prospecting for clients right away. Many insurance agents start out by writing their own policies and prospecting friends and family. This is a fantastic way to get a feel for how the system works and gain confidence in quoting new coverage. 

It’s a good idea to start marketing your agency at this point. Joining a local chamber of commerce, creating a website and promoting your business online, or looking into local advertising are all options. Depending on your specific target market, different marketing efforts will work effectively for certain groups. Take time to figure out what method works best for growing your business.

How Much Does an Insurance Broker Make?

Insurance agent salaries are typically based on commissions, which can lead to significant pay disparities. Wages also differ significantly depending on an agent’s skill set, specialties, and experience.

In 2019, the median annual salary for insurance sales agents was $50,940, according to U.S. News. The best 25% made $77,460 that year, while the lowest-paid 25% made $36,520.

According to Glassdoor, an insurance broker in the United States earns an average of $66,104 per year. Depending on experience, Brokers can make anywhere from $33k – $132k per year. 

The majority of an insurance broker’s income comes from a commission paid by the insurance company when a sale is made. Commissions and fees are different by company and state which means your income can vary monthly and annually significantly.

Know When to Renew Your License

 Most states require insurance brokers to renew their licenses every few years to keep up with any changes in their state and the products they sell. Renewals may necessitate additional coursework or training. 

Older brokers who have held their license for a long time may not be required to renew it. Make sure you know what your state’s requirements are ahead of time.

Experience Matters

Degree programs, internships, and certifications can all help you gain experience. These routes aren’t required for your license, but they’re a great way to stand out.

  • Internships: When you’re first starting out, internships are a great way to gain experience. Although brokers do not typically work for agencies, interning with one will provide you with valuable experience. It’s an opportunity to learn about insurance sales and the various types of insurance. Internships are available through your school and online.
  • Degree programs – four years of experience will help you to stand out among your peer. Some schools may provide business insurance or other programs that are directly applicable. However, general programs such as marketing and finance are more likely to be found. Psychology and risk management are two other topics that can help you improve your communication and sales skills. Experienced agents can use a college education to advance into risk management, actuarial work, and other positions that require postsecondary education. Having a background in business and finance can also be a huge plus for agents.
  • Professional designations: Insurance brokers can earn professional designations to further their careers. Professional certifications also assist them in keeping up with changing laws and policies. The Certified Professional Insurance Agent (CPIA) Designation is a way for anyone to learn new sales and marketing techniques.

Get a free quote on your insurance broker bonds today if you’re ready to take the next step toward becoming an insurance broker. This way, you’ll know ahead of time how much your bond will cost and whether it’ll be valid in your area. For any other bond-related questions, visit us at Bonding Solutions or contact us here.

published on Saturday, May 15th, 2021

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