Obtaining a Texas insurance agency license is no simple feat. In this guide, discover the various licenses you need and how to acquire them.
All businesses entering the insurance sales arena in Texas must obtain the appropriate licenses before legally operating. This marks the initial and crucial step for insurance entrepreneurs looking to establish their agency. However, the process of obtaining a Texas insurance agency license is more intricate than it may appear.
The insurance industry extensively researched the Texas Department of Insurance (TDI) website to compile all available information, aiding you in navigating through the complexities. We provide an overview of the different licenses required to kickstart your insurance agency in Texas, along with detailed licensing requirements.
If you are considering launching your insurance sales business in the Lone Star State, this guide can be invaluable. Keep reading to learn how to secure your Texas insurance agency license.
What are the various types of Texas insurance agency licenses?
Similar to other states, acquiring the appropriate licenses is mandatory for selling insurance products and services in Texas. Licensing prerequisites differ based on the agency and the type of insurance line, but generally, TDI offers two main types of insurance agency licenses:
1 Licensing of residential insurance agencies
This license enables the operation of an insurance agency across state borders. It functions similarly to the requirements for licensed insurance agents and brokers in Texas but on a business level.
2 License for non-resident insurance agency
This license is necessary if your business operates outside the state, catering to customers in Texas. It involves associated fees and specific requirements.
Certain states have reciprocal agreements with Texas, allowing their agents to apply for a license without undergoing the state licensing exam.
Tailoring Expertise: Empowering Insurance Entrepreneurs to Customize Their Focus Through Varied Lines of Authority. Each insurance line requires the appropriate license for selling policies.
TDI categorizes insurance agencies into different segments, each demanding specific licenses for operation. These include:
County mutual
Defined by the Texas Insurance Code as an insurance company qualified to write casualty lines for statewide operations. County mutuals are permitted to assume risks worth less than 5% of their total assets, except when reinsuring higher risks. While subject to rate and form regulations, county mutuals are exempt from most insurance laws, including Texas Auto Insurance Plan Association (TAIPA) regulations. Texas currently has 23 county mutuals and new ones cannot be created.
Funeral pre-arrangement life insurance agency
This type of life insurance agency writes policies and fixed annuity contracts designed for funeral services and merchandise. It is regulated by the Texas Department of Banking (TDB) under Chapter Operating under Section 154 of the Finance Code: General Lines Insurance Agencies Covering Life, Accident, Health, and HMO Services Specializing in the sale of life, accident, and health (LA&H) insurance policies, along with providing health maintenance organization (HMO) services. Additionally, these agencies may offer annuities and Medicare products, subject to meeting additional requirements.
General lines insurance agencies – property and casualty
They were selling policies falling under the property and casualty (P&C) line, covering auto, home, commercial, liability, pet, and cyber insurance. For those contemplating a career in property and casualty insurance, this guide provides valuable insights.
Life insurance agencies
We are specializing in the sale of life insurance policies. For those aspiring to enter this field, our guide on obtaining a life insurance license is essential reading.
Life insurance agencies for policies not exceeding ₹1,80,000
They are authorized to sell life insurance policies valued at ₹1,80,000 or less. Agents focusing on this limited line are not required to possess a life insurance license if exclusively selling this type of coverage.
Limited lines insurance agencies
The lines of insurance mentioned, such as credit insurance, crop insurance, farm insurance, and travel insurance, fall under the category of limited lines. Another example of a limited line could be pet insurance, which provides coverage for veterinary expenses related to the health and well-being of pets. Limited lines refer to specialized types of insurance coverage that go beyond the six general lines defined by the National Association of Insurance Commissioners (NAIC). Due to the “limited” nature of these policies, agencies and agents can often sell them without needing additional licensing.
Managing general agents (MGA)
Agencies contracted by insurance and reinsurance companies to perform tasks such as claims handling, underwriting, binding, policy administration, and distribution. These companies allow insurers to concentrate on the development and delivery of their core products and services. Personal lines insurance agencies
They are offering policies that combine LA&H and P&C elements. Agents selling such products may need licenses in both general lines.
Surplus lines insurance agencies
Offering policies for highly complex risks that traditional insurers are unwilling to cover. Agencies often source such products from surplus line specialists, also known as non-admitted insurers.
Title insurance agencies
Specializing in title insurance, a policy that protects homebuyers and lenders from financial losses due to issues with the ownership title of the property.
This comprehensive guide aims to assist you in understanding the diverse landscape of Texas insurance agency licenses, ensuring you navigate the licensing process successfully.
