The process of starting an insurance sales business in a state that has special risks requires meticulous planning. This article will benefit you understand how to set up an insurance company in Florida
The process of starting an insurance sales company isn't an easy venture especially in Florida in which the industry is faced with particular difficulties.
This article Insurance Business will give you step-by-step instructions on how to establish an insurance company in Florida. We will focus on providing an outline of the various conditions. We will also provide some information about the aspects that make the state's insurance market distinctive.
If you're a potential insurance entrepreneur and are wondering if opening an insurance business within Florida Sunshine State is a good idea, this guide will benefit you make a well-informed decision. Learn more and discover whether opening an insurance company in Florida is the right choice for you.
A step-by-step instruction for starting an insurance company within Florida
The high growth potential of owning an insurance sales company is what makes it a lucrative business idea. However, establishing an insurance agency located in the one of most difficult areas in the country takes many hard work and planning. It also requires dedication.
If you're confident that you're ready for the job then follow this step-by-step procedure by the Florida Department of Financial Services' ( FLDFS) website.
Step 1. Incorporate the name of the insurance company.
If you're planning to open any kind of company in Florida the first step you must complete is to register the company's name at the Florida Department of State's ( DOS) Division of Corporations. When you file you'll be required to reveal the structure of your business.
Florida law prohibits businesses from together specific words to keep from informing the public about their business. For insurance companies, you're forbidden from together any phrase that suggests that your business is:
- an insurance company.
- A motor club
- a hospital service plan
- A state or federal agency
- a charitable institution
- An entity that offers advice or guidance rather than selling insurance
- An entity that is engaged in activities that are not covered by the licenses issued
Also, you cannot make an application for names that are identical to the names of registered insurance companies or agencies. Also, you aren't allowed to make use of the terms Medicare or Medicaid.
If you're confused by the distinction between an insurance firm and an insurance agency this article about how to create an insurance firm will benefit to clarify the distinction.
After you have registered your business's name, you must obtain an Employer ID number ( EIN) from the Internal Revenue Service (IRS). You also need to be registered at the Florida Department of Revenue to access three of the department's main programs. These include the general taxes administration taxes on property surveillance and child support..
Step 2: Comply with the requirements for obtaining a license.
All Florida companies involved in selling the insurance services and products should be licensed in order to be legally operating. To begin, you'll require an 21-05 insurance agency license. This license is required by any resident or non-resident insurance companies operating in Florida.
You are able to apply for the required licenses via The MyProfile portal on the FLDFS site. You'll need to sign up for an account in order to login and then submit your application.
You can verify whether your application for a license is in good standing via your account. In the event that there were any conditions you did not meet You can locate them under the pending type of license.
You may also utilize MyProfile to update your business information. MyProfile account to make changes to your business's data. This could include changes to your registered business name, the officers who are responsible for running the business as well as the person in charge of the business.
The information on Florida licensing for insurance agencies provides a detailed explanation of the various license requirements you must meet if you intend to begin an insurance sales company within the state.
Step 3: Designate an agent-in-charge.
Each insurance agency is mandated to have an agent-in charge. These experts are required to oversee sales transactions for insurance. The person you choose to appoint should possess a valid license for the field that the company specializes in. If you are planning to sell insurance policies across many lines, the agent in charge must be licensed in every line.
Here's a list of various licenses that your agent in charge could require to obtain:
How to begin an insurance company in Florida Types of licenses that an agent-in-charge requires
| Authorization line | The type of license for insurance | |
| Resident | Non-resident | |
| General lines | 2-20 | 9-20 |
| Life | 2-16 | 8-16 |
| Life and health insurance, which includes variable annuities | 2-15 | 8-15 |
| Health | 2-40 | 8-40 |
| Life and health | 2-18 | 8-18 |
| Life, including variable annuity | 2-14 | 8-14 |
| Personal lines | 20-44 | 90-44 |
If an agent is only carrying an insurance license for limited lines or another license that isn't listed the agent isn't qualified to be appointed the company's agent.
Step 4: Provide fingerprints to the insurance company's top management.
The FLDFS mandates that insurance companies provide fingerprints of all employees and employees who are involved in the management or control of the company. They include:
- Agency owner
- Partners
- Directors
- president
- Senior Vice-President
- secretary
- Treasurer
- Limited responsibility company (LLC) members
The insurance agents who are licensed, which includes the agent in charge, don't have to have fingerprints taken. This is due to the fact that they've already have their fingerprints taken before they were issued their licenses.
The fee for fingerprinting is $50.75 for each person. The fee is directly paid by the company. The FLDFS gives more instructions regarding how to provide fingerprints to your insurance company on its website.
Step 5 Step 5: Display your insurance company license.
You can also determine whether your insurance agency's authorization has been approved via Your MyProfile account. Once you have been approved, you will be able to download a copy license to print. The license for the agency contains the information consumers require to verify the validity of your license. It is mandatory to display your certificate where it is easily visible to anyone who visit your office.
Contrary to insurer licenses that must renew every 2 years Agency licenses last as long as your company has an agent in charge. If you do not have one you will lose your Florida agent license for insurance is due to expire in 90 days.
Are you require an authority certificate to establish an insurance company within Florida?
If your insurance firm is incorporated in a different state, you'll need to obtain a certificate for authority within Florida. In this way the business will be recognized as a foreign company. However, this does not eliminate the need to form a new company.
The charges and requirements are different in accordance with the business structure. The FLDFS offers an list of the documents that are required as well as instructions on how they should be provided. After completing the checklist, all required documents are to be sent by Florida DOS Division of Corporations. Florida DOS Division of Corporations.
Does your insurance company sell policies outside of Florida?
The best part about establishing an insurance company within Florida is that your client base isn't just limited to within the boundaries of the state. Florida is a reciprocity partner with many other states and nations. Insurance agents can pass the licensure exams of these jurisdictions without having to finish any preparatory courses for licensure. They, however, must be able to pass the local licensure examination in order to be licensed to offer insurance outside of Florida.
Insurance companies for life and health licence reciprocity
These states are covered by complete agreement of reciprocity with Florida regarding the health and life line, which includes variable annuities:
- Alaska
- Arizona
- California
- Colorado
- Connecticut
- Delaware
- Idaho
- Illinois
- Indiana
- Iowa
- Kansas
- Maine
- Michigan
- Minnesota
- Mississippi
- Missouri
- Nebraska
- New Jersey
- North Carolina
- Ohio
- Oklahoma
- Pennsylvania
- South Dakota
- Utah
- Wyoming
Insurance agents who have had valid licenses from the past four years are not required to learning pre-licensing within these states. They still must take the licensure state exam to obtain the non-resident license for their agent.
The states below have reciprocity agreements that are conditional with Florida. This means that insurance brokers have to meet more conditions in order to obtain the non-resident license. They don't need to complete pre-licensing training, but they have to pass a state licensure exam.
- Alabama
- Maryland
- Massachusetts
- Montana
- Nevada
- New Hampshire
- North Dakota
- Oregon
- Rhode Island
- Texas
- Vermont
- Virginia
- Washington
Surplus lines insurance agency license reciprocity
Insurance agents who hold Florida resident licenses and who have successfully passed the exam for surplus lines are exempt from taking the test in the following states:
- Alaska
- Arizona
- Arkansas
- Colorado
- Connecticut
- Georgia
- Hawaii
- Indiana
- Iowa
- Louisiana
- Michigan
- Missouri
- New Jersey
- North Carolina
- Oregon
- Pennsylvania
- South Carolina
- Texas
- Utah
- Washington
- West Virginia
- Wyoming
Puerto Rico insurance agency license reciprocity
Florida enjoys a reciprocal deal with Puerto Rico, which is a US Puerto Rico territory. Puerto Rico for the following areas:
Canada insurance agency reciprocity license
Florida also has agreements of reciprocity with other Canadian provinces, territories and territory with the exception of Quebec with respect to the following insurance categories:
Texas is another state that has reciprocal agreements with nearly all states. This makes it a great location to start an insurance sales enterprise. Here's a step-bystep guide on how to set up an insurance company in Texas.
What is it that makes the Florida insurance market so unique?
Florida is regarded as one of the most expensive states, if not the most expensive states to insure. However, Florida insurance rates are rising due to a wide range of reasons. This includes:
1. More threatening catastrophes are claiming
Florida's geographical location puts it directly in the location of several devastating hurricanes. The weather-related phenomena have a significant impact on raising insurance costs.
Cyclones, storms, and hurricanes have grown stronger in recent times, mainly because of changes in the climate. The most notable of these was 2022's hurricane Ian that caused nearly $118 billion of inflation-adjusted loss. This makes the hurricane Ian the second most expensive storm to hit the United States just behind Katrina in 2005. Katrina in 2005.
Global warming is causing more severe and frequent weather-related storms, Florida homeowners are facing greater risks. As more severe storms are likely to hit Florida in the near future homeowners' insurance companies are being obliged to increase the cost of insurance to cover any potential losses.
2. Rising reinsurance costs
Another thing that makes Florida's market for insurance unique is the fact that it relies heavily on reinsurance.
The state's insurance industry is made up mostly of medium and small insurers who operate solely within the state's borders. Local companies fill in the void left by large national insurers that choose to not do business to Florida due to the increased risk. For local insurers, the reinsurance function is as an “shock absorption device,” accepting the risk that is beyond what larger insurers would accept.
Due to the state's extensive risk of natural disasters, insurance plays a significant role in assisting local insurers to manage risk and settle claims.
3. A litigation-friendly environment
Rising litigation costs are a major issue Florida insurance companies are facing that increases the cost of insurance. A recent analysis conducted by The Insurance Information Institute ( Triple-I) has revealed that Florida accounts for just 9 percent of all homeowner's claims in the United States. However, the state is the top state in terms of lawsuits involving insurance, accounting for 79% of all claims.
Triple-I says the issue is due to an “legal system that encourages litigation.” In the past the state permitted an “one-way lawyer fees” system for claims against property insurance. The law required insurers to pay the costs of attorneys for those who filed lawsuits successful. In addition this system protected the policyholders from paying the cost if they lost.
Although the practice was revoked in Florida's special session, it isn't retroactive. This means that any policies in place prior to January 1, 2023 remain under the old rules.
Does the operation of an insurance agency located in Florida lucrative?
Despite the difficulties that the industry faces, it is growing. This is a great opportunity for those looking to enter the insurance industry in Florida. The insurance products and the services that they offer will be sought-after the duration of time that people require financial security.
Like any other type of business, setting up your own insurance company in Florida requires meticulous preparation and planning. If you're a potential insurance business owner seeking successful industry figures to learn from this leading in Insurance Special Reports page is the perfect place to visit.
We recently revealed some of our top five winners in the fastest-growing insurance Companies at the USA awards. Learn how these companies have come up with creative and entrepreneurial strategies to flourish and grow despite difficult market conditions.
Is establishing an insurance company in Florida an excellent idea? Let us know your thoughts on the subject in the comments.
