Ohio proposes stricter licensing rules for insurance agents and businesses

The Ohio Department of Insurance has unveiled sweeping revisions to its licensing rules for insurance agents and business entities, tightening regulations on naming practices, license renewals and agent appointments. 

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Under the proposed rule, designated 3901-5-099(7), business entities applying for licensure in Ohio must use their legal name as registered with the Ohio Secretary of State. The superintendent of insurance would have the authority to reject names that are too similar to those of existing businesses or that could mislead the public - a measure intended to prevent consumer confusion. 

The proposal outlines specific conditions under which non-resident insurance business entities - firms based outside Ohio - may obtain licenses to operate within the state. These businesses would be required to: 

• Submit a completed application, 
• Comply with Section 3905.07 of the Ohio Revised Code, 
• Pay all applicable fees, and 
• Provide any additional documents requested by regulators. 

Notably, while registration with the Ohio Secretary of State is not mandatory for licensure, non-resident firms may still need to register separately in order to conduct business, depending on their operations. 

The rule would also require non-resident entities to designate at least one Ohio-licensed insurance agent to oversee compliance with state insurance laws. Failure to maintain such oversight could result in license revocation. 

The rule proposes standardizing license renewal deadlines: 

• Individual agents must renew every two years, by the last day of their birth month. 
• Resident business entities would renew by September 30 of even-numbered years, while non-resident business entities would renew in odd-numbered years. 
• Surety bail bond agents would renew annually by April 1. 

The regulation also sets continuing education (C.E.) requirements based on license type: 

• Major line agents would need 24 credits, including three ethics credits, per cycle. 
• Title agents would require 12 credits, 10 of them title-specific. 
• Surety bail bond agents would need seven credits, with exemptions for first-year licensees. 

Agents renewing late would face additional fees, though waivers would be available for military service, medical disabilities or other special circumstances. 

The rule mandates that insurers electronically report all agent appointments and terminations within 30 days. Appointments would automatically renew each July unless terminated. Insurers would also be obligated to disclose detailed reasons for any terminations related to regulatory violations. 

Agents who leave the industry temporarily would have the option to request inactive status, during which they would be exempt from continuing education requirements. However, agents who reactivate after two years would be required to complete fresh education credits or pre-licensing courses and pay reactivation fees. 

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Agents could voluntarily surrender their licenses unless under investigation. Any surrendered license would void all related appointments, and agents seeking to re-enter the profession would need to meet all requirements for new applicants. 

Finally, the rule clarifies how commissions and compensation may be distributed. Commissions must be paid to licensed agents under their legal or registered trade names. Agents may assign commissions to unlicensed entities through formal agreements, but the arrangement cannot serve as a pretext for unlawful commission-splitting or prohibited lead fees. 

Public hearings on the rule are expected in the coming months. State officials say the changes are aimed at bolstering consumer protections while streamlining regulatory compliance for insurers and agents alike.