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1. General Insurance Concepts
2. Producer Roles and Receipt Types
3. Underwriting
4. Health Insurance Basics
5. Required Policy Provisions
6. Optional Policy Provisions
7. Medical Expense Insurance
8. Group Health Insurance
9. The Affordable Care Act (ACA)
10. Disability Income Insurance
11. Accidental Death and Dismemberment Insurance
12. Long Term Care Insurance
13. Dental Insurance
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15. Federal Government Programs
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17. Health Insurance Taxation
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Massachusetts Producer Licensing and Other Licensees

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This chapter covers the Massachusetts licensing rules for producers and the other licensees the exam names: business entities, nonresidents, insurance advisers and reinsurance intermediaries, and the persons exempt from licensing. It also covers keeping a license in force. The chapter on Massachusetts State Regulations covers the age and residency requirements, the prelicensing rule and the 180-day temporary license. The next chapter covers discipline, penalties, appointments and the rules on premiums, compensation and records.

Licensing

Licensing process (Mass. Gen. Laws ch. 175, §§ 162G–162X)

Sections 162G to 162X of chapter 175 are Massachusetts’s producer licensing law. A person may not sell, solicit or negotiate insurance in Massachusetts for any class of insurance unless licensed for that line of authority (Mass. Gen. Laws ch. 175, § 162I).

An individual who fails to appear for the examination as scheduled, or fails to pass it, must reapply and pay all the required fees again before being rescheduled (Mass. Gen. Laws ch. 175, § 162K(d)).

Producers (Mass. Gen. Laws ch. 175, §§ 162H, 162L, 162M)

A Massachusetts producer license may carry one or more lines of authority (Mass. Gen. Laws ch. 175, § 162M(a)), including:

Line of authority What it covers
Life Insurance on human lives, including endowments and annuities; may include accidental death or dismemberment and disability income benefits
Accident and health or sickness Coverage for sickness, bodily injury or accidental death; may include disability income
Property Direct or consequential loss of or damage to property of every kind
Casualty Legal liability, including for death, injury, disability or damage to property
Variable life and variable annuity products Variable life insurance and variable annuities
Personal lines Property and casualty coverage sold to individuals and families for primarily noncommercial purposes
Credit Limited line credit insurance
Travel Limited line travel insurance

The license itself gives the holder no authority, actual, apparent or inherent, to represent or commit an insurer (Mass. Gen. Laws ch. 175, § 162H). A producer may not act as an insurer’s agent unless that insurer appoints the producer (§ 162S(a)), covered in the next chapter.

Business entity producers (Mass. Gen. Laws ch. 175, §§ 162L, 174)

A business entity (a corporation, partnership, limited liability company or other legal entity) that acts as an insurance producer must obtain its own producer license. It applies on the uniform business entity application and must designate a licensed producer responsible for its compliance with Massachusetts insurance law (Mass. Gen. Laws ch. 175, § 162L(b)).

The entity answers for its people. Its license may be suspended, revoked or refused if, after a hearing, the Commissioner finds that an individual licensee’s violation was known or should have been known by a partner, officer or manager, and was neither reported nor corrected (Mass. Gen. Laws ch. 175, § 162R(c)).

Section 174 adds rules for a licensed corporation:

  • Each officer or director named in the corporation’s license is personally liable to the penalties of the insurance laws for a violation, even one done in the corporation’s name. The corporation is liable for a violation that cannot be placed on any individual officer or director (Mass. Gen. Laws ch. 175, § 174).
  • The corporation’s clerk or corresponding officer files certified copies of amendments to its articles of organization within 30 days of adopting them, and notifies the Commissioner at once if it dissolves. On that notice the Commissioner revokes its license without a hearing (Mass. Gen. Laws ch. 175, § 174).
  • The corporation may not place insurance for its own stockholders, other than the officers or directors named in its license, except that a stockholder may buy insurance whose premiums do not exceed 2 percent of the total premiums the corporation writes (Mass. Gen. Laws ch. 175, § 174).

Nonresident producers (Mass. Gen. Laws ch. 175, §§ 162N, 162O, 162U)

The rules the chapter on Massachusetts State Regulations attributes to the NAIC model are written into Massachusetts law. Unless denied a license under § 162R, a nonresident receives a Massachusetts nonresident producer license if the person (Mass. Gen. Laws ch. 175, § 162N(a)):

  • Is licensed as a resident, and in good standing, in the home state
  • Has applied and paid the fees
  • Has submitted the home-state application or the uniform application
  • Lives in a home state that grants nonresident licenses to Massachusetts residents on the same basis

A nonresident producer who moves from one state to another, or a resident producer who moves out of Massachusetts, files a change of address with certification from the new resident state within 30 days of the change of legal residence. No fee or application is required (Mass. Gen. Laws ch. 175, § 162N(c)).

A producer licensed in another state who moves to Massachusetts applies for a resident license within 90 days of establishing legal residence, and needs no prelicensing education or examination for lines already held in the prior state, unless the Commissioner determines otherwise by regulation (Mass. Gen. Laws ch. 175, § 162O(b)). An applicant whose prior license has been canceled keeps that exemption only if the application arrives within 90 days of the cancellation and the prior state certifies, or the NAIC producer database shows, good standing (Mass. Gen. Laws ch. 175, § 162O(a)).

A nonresident who meets the home state’s continuing education requirements meets Massachusetts’s, if the home state treats Massachusetts producers the same way (Mass. Gen. Laws ch. 175, § 162U(b)).

Advisers (Mass. Gen. Laws ch. 175, §§ 177A–177D)

An insurance adviser is a person who, for a fee, examines a policy or annuity contract to give advice about its terms, benefits, coverage or premium, or about replacing, surrendering, continuing or buying it. Anyone who uses a title such as “insurance adviser,” “insurance specialist,” “insurance counselor” or “insurance analyst” is also an adviser. The definition excludes officers and salaried employees acting for an insurer, licensed agents and brokers acting as such, and attorneys and certified public accountants acting within their profession (Mass. Gen. Laws ch. 175, § 177A).

  • License. The applicant files a written application under oath, with a statement of trustworthiness and competency signed by at least three reputable Massachusetts citizens, and takes a written examination (Mass. Gen. Laws ch. 175, § 177B).
  • Written contract. An adviser can enforce a fee agreement only if it is in writing, signed personally in duplicate by the client with one copy given to the client, states the fee and the services, and is on a form the Commissioner currently approves (Mass. Gen. Laws ch. 175, § 177C).
  • Advice without a contract. Advice given outside such a contract must be followed by a signed written statement of the advice and a receipt or statement of the fee. A violation can bring a fine of $50 to $500 (Mass. Gen. Laws ch. 175, § 177D).
  • Acting without a license, or while suspended, is punishable by a fine of $50 to $500, imprisonment for up to six months, or both (Mass. Gen. Laws ch. 175, § 177B).

For example, a retired agent who lets her producer license lapse and then charges a family a flat fee to review their life policies and recommend whether to keep them is acting as an insurance adviser and needs an adviser license.

Reinsurance intermediaries (Mass. Gen. Laws ch. 175, §§ 177M–177W)

The Reinsurance Intermediary Act regulates two kinds of reinsurance intermediary (Mass. Gen. Laws ch. 175, § 177N):

Reinsurance intermediary broker Reinsurance intermediary manager
Works for The ceding insurer The reinsurer
Authority Solicits, negotiates or places cessions and retrocessions, without authority to bind Has authority to bind, or manages all or part of the reinsurer’s assumed business
Funds Remits funds due to the insurer within 30 days of receipt, held in a fiduciary capacity in a qualified U.S. financial institution (§ 177P) Remits at least monthly; may retain no more than three months of estimated claims payments and allocated loss adjustment expenses (§ 177S)
Contract Written; the insurer may terminate the broker’s authority at any time (§ 177P) Written, approved by the reinsurer’s board, and filed with the Commissioner at least 30 days before business flows through the manager (§ 177S)

Licensing. An applicant must have been licensed as an insurance agent or broker for the lines involved for at least three years, and takes a written examination (Mass. Gen. Laws ch. 175, § 177O(D)(1)). A license may also be issued to a partnership, firm, association or corporation if each person named on it is individually qualified (§ 177O(D)(1)). Acting without a license is punishable by a fine of not less than $1,000 for each violation, imprisonment for up to six months, or both (Mass. Gen. Laws ch. 175, § 177O(D)(1)).

Duties and limits.

  • A broker keeps a complete record of each transaction for at least ten years after each reinsurance contract expires (Mass. Gen. Laws ch. 175, § 177Q(A)).
  • A manager may not, among other things, commit the reinsurer to participate in reinsurance syndicates or appoint a sub-reinsurance intermediary manager (Mass. Gen. Laws ch. 175, § 177T).
  • Within 30 days of ending a contract with a manager, the reinsurer notifies the Commissioner in writing with all the reasons (Mass. Gen. Laws ch. 175, § 177U(E)).
  • A reinsurance intermediary is in the business of insurance for purposes of chapter 176D. In an administrative action the Commissioner may order a penalty of up to $10,000 for each separate violation and restitution of the net losses it caused (Mass. Gen. Laws ch. 175, § 177W(A)).

Exemptions (Mass. Gen. Laws ch. 175, § 162J)

An insurer itself needs no producer license, but its officers, directors, employees, subsidiaries and affiliates are not “the insurer” for this rule (Mass. Gen. Laws ch. 175, § 162J(a)). No producer license is required of, among others (Mass. Gen. Laws ch. 175, § 162J(b)):

  • An officer, director or employee of an insurer or producer who receives no commission on Massachusetts policies and whose work is executive, administrative, managerial or clerical and only indirectly related to selling; is underwriting, loss control, inspection or claims work; or, as a special agent or agency supervisor, is technical help to licensed producers without selling, soliciting or negotiating
  • A person who gathers information, enrolls people or issues certificates for group insurance, or performs administrative services for mass marketed property and casualty insurance, where no commission is paid
  • An employer or association (or its officers, directors, employees or employee-trust trustees) administering a benefit program for its own employees, not compensated directly or indirectly by the insurer
  • An insurer’s employee who inspects, rates or classifies risks or supervises producer training, and does not sell, solicit or negotiate
  • A person who only advertises, without intent to solicit, in publications or electronic mass media not limited to Massachusetts residents, and does not sell, solicit or negotiate insurance on Massachusetts risks
  • A salaried full-time employee who advises his employer about its insurance without selling or soliciting or receiving a commission
  • A motor vehicle dealer holding a Class 1 or Class 2 license (and its officers, directors and employees) selling credit life, credit disability or guaranteed automobile protection insurance with a vehicle sale or lease

A nonresident who sells commercial property and casualty insurance covering risks in more than one state needs no Massachusetts license if licensed in the state of the insured’s principal place of business and the contract insures risks there (Mass. Gen. Laws ch. 175, § 162J(b)(6)).

Sidenote
Know this...

Several exemptions (§ 162J(b)(1), (2) and (7)) apply only when no commission is paid. An insurer’s clerk who processes applications without commission is exempt; paid a commission on the policies, the clerk no longer fits the exemption.

Maintenance and duration

Reinstatement and renewal (Mass. Gen. Laws ch. 175, §§ 162M(b)–(d), 177B, 177O)

A producer license stays in effect, unless revoked or suspended, as long as the renewal fee is paid and a resident individual producer meets the education requirements by the due date (Mass. Gen. Laws ch. 175, § 162M(b)).

An individual producer who lets the license lapse may reinstate the same license without an examination within 12 months of the renewal fee due date, paying a penalty of double the unpaid renewal fee (Mass. Gen. Laws ch. 175, § 162M(c)). A producer who cannot comply with renewal procedures because of military service or another extenuating circumstance may ask for a waiver of those procedures, and of any examination, fine or sanction for not complying (Mass. Gen. Laws ch. 175, § 162M(d)).

Advisers and reinsurance intermediaries hold licenses with a fixed term:

License Term Renewal
Insurance adviser Expires three years from its date For each succeeding three-year period, at the Commissioner’s discretion (§ 177B)
Reinsurance intermediary (individual) Expires three years from its date of issue For successive three-year periods, at the Commissioner’s discretion (§ 177O)
Reinsurance intermediary (partnership, firm, association or corporation) Issued for a one year period (§ 177O)

Address change (Mass. Gen. Laws ch. 175, § 162M(f))

Licensees inform the Commissioner of a change of address within 30 days of the change (Mass. Gen. Laws ch. 175, § 162M(f)).

Reporting of actions (Mass. Gen. Laws ch. 175, § 162V)

A producer reports to the Commissioner within 30 days (Mass. Gen. Laws ch. 175, § 162V):

  • Administrative action taken against the producer in another jurisdiction, or by another governmental agency in Massachusetts, counted from the final disposition, with a copy of the order or other legal documents
  • Criminal prosecution in any jurisdiction, counted from the initial pretrial hearing date, with a copy of the initial complaint and the resulting order

Assumed names (Mass. Gen. Laws ch. 175, §§ 162P, 175)

A producer doing business under any name other than the producer’s legal name must notify the Commissioner before using the assumed name (Mass. Gen. Laws ch. 175, § 162P). A licensed agent or broker who advertises or carries on business in a name other than the one stated in the license may be fined $10 to $100 (Mass. Gen. Laws ch. 175, § 175).

The same section reaches impersonation: a person who is not licensed and holds himself out to the public as an agent, broker or adjuster of fire losses, or as engaged in the insurance business, by advertisements, cards, circulars, letterheads, signs or other methods, faces the same fine (Mass. Gen. Laws ch. 175, § 175). The test is whether the person is licensed.

Continuing education exemptions and penalties (Mass. Gen. Laws ch. 175, § 177E; 211 CMR 50.00)

The chapter on Massachusetts State Regulations covers the continuing education requirement. Among those exempt from it are (211 CMR 50.03(2)):

  • Nonresidents who hold an equivalent resident license in a home state with CE requirements and are certified in good standing there
  • Auto club agents
  • Producers licensed only for travel or credit insurance
  • Insurance advisers
  • Fraternal agents
  • Holders of a resident license that requires no examination

A producer who does not complete the required credits by the renewal date may have the license nonrenewed or suspended. After a hearing, which the producer may waive, the producer may instead or also be fined $20 to $100 for each hour of instruction short (211 CMR 50.07). A producer who files a false or fraudulent certificate of compliance faces, after a hearing, suspension of all insurance licenses until compliance is shown (Mass. Gen. Laws ch. 175, § 177E(H)). For good cause the Commissioner may grant an extension of time (Mass. Gen. Laws ch. 175, § 177E(F)), and excess hours earned in one 36-month period carry forward to the next (Mass. Gen. Laws ch. 175, § 177E(C)).

Lesson summary

  • A license is required for each line of authority; the license itself gives no authority to represent or commit an insurer, and a producer acts as an insurer’s agent only once appointed (§§ 162I, 162H, 162S).
  • A business entity needs its own license and a designated licensed producer; named corporate officers are personally liable (§§ 162L(b), 174).
  • A producer moving to Massachusetts applies within 90 days; a move away is reported within 30 days (§§ 162O(b), 162N(c)).
  • An insurance adviser gives policy advice for a fee and needs a license that lasts three years; a reinsurance intermediary needs three years as an agent or broker first and keeps records ten years (§§ 177A–177D, 177O, 177Q).
  • A lapsed license can be reinstated within 12 months with a penalty of double the unpaid renewal fee. Address changes and administrative actions are reported within 30 days; criminal prosecutions within 30 days of the initial pretrial hearing (§§ 162M, 162V).
  • CE shortfalls can bring nonrenewal or suspension and a fine of $20 to $100 per hour short (211 CMR 50.07).

Licensing basics & lines of authority

  • Must hold license for each line of authority (life, A&H, property, casualty, variable products, personal lines, credit, travel) before selling/soliciting/negotiating
  • License itself grants no authority to bind/represent insurer — producer must be appointed by insurer to act as its agent
  • Failed/missed exam requires full reapplication and fee payment before rescheduling

Business entities & corporations

  • Business entities (corporations, partnerships, LLCs) need own license via uniform business entity application
  • Must designate a licensed producer responsible for compliance; entity license can be suspended/revoked if violations known but uncorrected
  • Named corporate officers/directors personally liable for violations; corporation liable only if no individual can be blamed
  • Corporation files amendments within 30 days; dissolution triggers automatic license revocation
  • Corporation can’t insure own stockholders (other than officers/directors named in its license) except premiums up to 2% of total written premium

Nonresident producers

  • Nonresident license granted if resident/good standing in home state, reciprocal licensing exists, fees/application submitted
  • Address change (moving states): file within 30 days, no fee
  • Moving TO Massachusetts: apply within 90 days of residency, exempt from prelicensing/exam for lines already held (if the prior license was canceled, only if applied within 90 days of cancellation and in good standing)
  • CE met in home state satisfies MA requirement if reciprocal treatment exists

Insurance advisers

  • Defined as giving fee-based advice on policies/contracts (titles like “insurance adviser/specialist/counselor/analyst” included)
  • Excludes insurer officers/salaried employees acting for the insurer, licensed agents/brokers acting as such, attorneys/CPAs acting within their profession
  • License requires sworn application, 3 citizen references, written exam; license term = 3 years
  • Fee agreements enforceable only if written, signed in duplicate, approved form
  • Advice without contract requires written statement + fee receipt; violations fined $50–$500
  • Unlicensed practice: fine $50–$500, up to 6 months imprisonment, or both

Reinsurance intermediaries

  • Two types: Broker (works for ceding insurer, no binding authority, remits funds within 30 days) vs Manager (works for reinsurer, has binding authority, remits monthly, may hold up to 3 months of claims funds)
  • Licensing requires 3 years as licensed agent/broker + written exam; license term = 3 years (individual) or 1 year (entity)
  • Brokers keep records 10 years; managers restricted from certain acts (e.g., committing reinsurer to syndicates)
  • Unlicensed activity: fine ≥$1,000/violation, up to 6 months imprisonment
  • Treated as “business of insurance” under ch. 176D; penalties up to $10,000 per violation plus restitution

Exemptions from licensing

  • Insurer itself exempt, but not its officers/employees/affiliates
  • Exempt: no-commission roles (executive/clerical/underwriting staff, group enrollment/info gatherers, salaried advisers to employer), employer benefit administrators not compensated by the insurer, non-selling inspectors/raters, non-targeted advertisers
  • Motor vehicle dealers (Class 1/2) selling credit life/disability/GAP insurance with vehicle sale
  • Nonresidents selling multistate commercial P&C risks exempt if licensed where insured’s principal place of business is and the contract insures risks there
  • Key rule: commission payment negates many exemptions

License maintenance, renewal & reporting

  • Producer license continues if renewal fee paid and CE met; lapsed license reinstated within 12 months without exam, penalty = double unpaid fee
  • Military/extenuating circumstances allow waiver of renewal requirements
  • Address changes reported within 30 days
  • Administrative actions reported within 30 days of final disposition; criminal prosecutions within 30 days of initial pretrial hearing
  • Assumed names require prior notice to Commissioner; unlicensed impersonation as agent/broker fined $10–$100

Continuing education

  • Exempt groups: reciprocal nonresidents, auto club agents, travel/credit-only producers, advisers, fraternal agents, exam-exempt resident license holders
  • Noncompliance risks nonrenewal/suspension plus fine of $20–$100 per hour short
  • False CE compliance certificates → suspension of all licenses until compliance shown
  • Excess CE hours carry forward to next 36-month period; extensions available for good cause

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Massachusetts Producer Licensing and Other Licensees

This chapter covers the Massachusetts licensing rules for producers and the other licensees the exam names: business entities, nonresidents, insurance advisers and reinsurance intermediaries, and the persons exempt from licensing. It also covers keeping a license in force. The chapter on Massachusetts State Regulations covers the age and residency requirements, the prelicensing rule and the 180-day temporary license. The next chapter covers discipline, penalties, appointments and the rules on premiums, compensation and records.

Licensing

Licensing process (Mass. Gen. Laws ch. 175, §§ 162G–162X)

Sections 162G to 162X of chapter 175 are Massachusetts’s producer licensing law. A person may not sell, solicit or negotiate insurance in Massachusetts for any class of insurance unless licensed for that line of authority (Mass. Gen. Laws ch. 175, § 162I).

An individual who fails to appear for the examination as scheduled, or fails to pass it, must reapply and pay all the required fees again before being rescheduled (Mass. Gen. Laws ch. 175, § 162K(d)).

Producers (Mass. Gen. Laws ch. 175, §§ 162H, 162L, 162M)

A Massachusetts producer license may carry one or more lines of authority (Mass. Gen. Laws ch. 175, § 162M(a)), including:

Line of authority What it covers
Life Insurance on human lives, including endowments and annuities; may include accidental death or dismemberment and disability income benefits
Accident and health or sickness Coverage for sickness, bodily injury or accidental death; may include disability income
Property Direct or consequential loss of or damage to property of every kind
Casualty Legal liability, including for death, injury, disability or damage to property
Variable life and variable annuity products Variable life insurance and variable annuities
Personal lines Property and casualty coverage sold to individuals and families for primarily noncommercial purposes
Credit Limited line credit insurance
Travel Limited line travel insurance

The license itself gives the holder no authority, actual, apparent or inherent, to represent or commit an insurer (Mass. Gen. Laws ch. 175, § 162H). A producer may not act as an insurer’s agent unless that insurer appoints the producer (§ 162S(a)), covered in the next chapter.

Business entity producers (Mass. Gen. Laws ch. 175, §§ 162L, 174)

A business entity (a corporation, partnership, limited liability company or other legal entity) that acts as an insurance producer must obtain its own producer license. It applies on the uniform business entity application and must designate a licensed producer responsible for its compliance with Massachusetts insurance law (Mass. Gen. Laws ch. 175, § 162L(b)).

The entity answers for its people. Its license may be suspended, revoked or refused if, after a hearing, the Commissioner finds that an individual licensee’s violation was known or should have been known by a partner, officer or manager, and was neither reported nor corrected (Mass. Gen. Laws ch. 175, § 162R(c)).

Section 174 adds rules for a licensed corporation:

  • Each officer or director named in the corporation’s license is personally liable to the penalties of the insurance laws for a violation, even one done in the corporation’s name. The corporation is liable for a violation that cannot be placed on any individual officer or director (Mass. Gen. Laws ch. 175, § 174).
  • The corporation’s clerk or corresponding officer files certified copies of amendments to its articles of organization within 30 days of adopting them, and notifies the Commissioner at once if it dissolves. On that notice the Commissioner revokes its license without a hearing (Mass. Gen. Laws ch. 175, § 174).
  • The corporation may not place insurance for its own stockholders, other than the officers or directors named in its license, except that a stockholder may buy insurance whose premiums do not exceed 2 percent of the total premiums the corporation writes (Mass. Gen. Laws ch. 175, § 174).

Nonresident producers (Mass. Gen. Laws ch. 175, §§ 162N, 162O, 162U)

The rules the chapter on Massachusetts State Regulations attributes to the NAIC model are written into Massachusetts law. Unless denied a license under § 162R, a nonresident receives a Massachusetts nonresident producer license if the person (Mass. Gen. Laws ch. 175, § 162N(a)):

  • Is licensed as a resident, and in good standing, in the home state
  • Has applied and paid the fees
  • Has submitted the home-state application or the uniform application
  • Lives in a home state that grants nonresident licenses to Massachusetts residents on the same basis

A nonresident producer who moves from one state to another, or a resident producer who moves out of Massachusetts, files a change of address with certification from the new resident state within 30 days of the change of legal residence. No fee or application is required (Mass. Gen. Laws ch. 175, § 162N(c)).

A producer licensed in another state who moves to Massachusetts applies for a resident license within 90 days of establishing legal residence, and needs no prelicensing education or examination for lines already held in the prior state, unless the Commissioner determines otherwise by regulation (Mass. Gen. Laws ch. 175, § 162O(b)). An applicant whose prior license has been canceled keeps that exemption only if the application arrives within 90 days of the cancellation and the prior state certifies, or the NAIC producer database shows, good standing (Mass. Gen. Laws ch. 175, § 162O(a)).

A nonresident who meets the home state’s continuing education requirements meets Massachusetts’s, if the home state treats Massachusetts producers the same way (Mass. Gen. Laws ch. 175, § 162U(b)).

Advisers (Mass. Gen. Laws ch. 175, §§ 177A–177D)

An insurance adviser is a person who, for a fee, examines a policy or annuity contract to give advice about its terms, benefits, coverage or premium, or about replacing, surrendering, continuing or buying it. Anyone who uses a title such as “insurance adviser,” “insurance specialist,” “insurance counselor” or “insurance analyst” is also an adviser. The definition excludes officers and salaried employees acting for an insurer, licensed agents and brokers acting as such, and attorneys and certified public accountants acting within their profession (Mass. Gen. Laws ch. 175, § 177A).

  • License. The applicant files a written application under oath, with a statement of trustworthiness and competency signed by at least three reputable Massachusetts citizens, and takes a written examination (Mass. Gen. Laws ch. 175, § 177B).
  • Written contract. An adviser can enforce a fee agreement only if it is in writing, signed personally in duplicate by the client with one copy given to the client, states the fee and the services, and is on a form the Commissioner currently approves (Mass. Gen. Laws ch. 175, § 177C).
  • Advice without a contract. Advice given outside such a contract must be followed by a signed written statement of the advice and a receipt or statement of the fee. A violation can bring a fine of $50 to $500 (Mass. Gen. Laws ch. 175, § 177D).
  • Acting without a license, or while suspended, is punishable by a fine of $50 to $500, imprisonment for up to six months, or both (Mass. Gen. Laws ch. 175, § 177B).

For example, a retired agent who lets her producer license lapse and then charges a family a flat fee to review their life policies and recommend whether to keep them is acting as an insurance adviser and needs an adviser license.

Reinsurance intermediaries (Mass. Gen. Laws ch. 175, §§ 177M–177W)

The Reinsurance Intermediary Act regulates two kinds of reinsurance intermediary (Mass. Gen. Laws ch. 175, § 177N):

Reinsurance intermediary broker Reinsurance intermediary manager
Works for The ceding insurer The reinsurer
Authority Solicits, negotiates or places cessions and retrocessions, without authority to bind Has authority to bind, or manages all or part of the reinsurer’s assumed business
Funds Remits funds due to the insurer within 30 days of receipt, held in a fiduciary capacity in a qualified U.S. financial institution (§ 177P) Remits at least monthly; may retain no more than three months of estimated claims payments and allocated loss adjustment expenses (§ 177S)
Contract Written; the insurer may terminate the broker’s authority at any time (§ 177P) Written, approved by the reinsurer’s board, and filed with the Commissioner at least 30 days before business flows through the manager (§ 177S)

Licensing. An applicant must have been licensed as an insurance agent or broker for the lines involved for at least three years, and takes a written examination (Mass. Gen. Laws ch. 175, § 177O(D)(1)). A license may also be issued to a partnership, firm, association or corporation if each person named on it is individually qualified (§ 177O(D)(1)). Acting without a license is punishable by a fine of not less than $1,000 for each violation, imprisonment for up to six months, or both (Mass. Gen. Laws ch. 175, § 177O(D)(1)).

Duties and limits.

  • A broker keeps a complete record of each transaction for at least ten years after each reinsurance contract expires (Mass. Gen. Laws ch. 175, § 177Q(A)).
  • A manager may not, among other things, commit the reinsurer to participate in reinsurance syndicates or appoint a sub-reinsurance intermediary manager (Mass. Gen. Laws ch. 175, § 177T).
  • Within 30 days of ending a contract with a manager, the reinsurer notifies the Commissioner in writing with all the reasons (Mass. Gen. Laws ch. 175, § 177U(E)).
  • A reinsurance intermediary is in the business of insurance for purposes of chapter 176D. In an administrative action the Commissioner may order a penalty of up to $10,000 for each separate violation and restitution of the net losses it caused (Mass. Gen. Laws ch. 175, § 177W(A)).

Exemptions (Mass. Gen. Laws ch. 175, § 162J)

An insurer itself needs no producer license, but its officers, directors, employees, subsidiaries and affiliates are not “the insurer” for this rule (Mass. Gen. Laws ch. 175, § 162J(a)). No producer license is required of, among others (Mass. Gen. Laws ch. 175, § 162J(b)):

  • An officer, director or employee of an insurer or producer who receives no commission on Massachusetts policies and whose work is executive, administrative, managerial or clerical and only indirectly related to selling; is underwriting, loss control, inspection or claims work; or, as a special agent or agency supervisor, is technical help to licensed producers without selling, soliciting or negotiating
  • A person who gathers information, enrolls people or issues certificates for group insurance, or performs administrative services for mass marketed property and casualty insurance, where no commission is paid
  • An employer or association (or its officers, directors, employees or employee-trust trustees) administering a benefit program for its own employees, not compensated directly or indirectly by the insurer
  • An insurer’s employee who inspects, rates or classifies risks or supervises producer training, and does not sell, solicit or negotiate
  • A person who only advertises, without intent to solicit, in publications or electronic mass media not limited to Massachusetts residents, and does not sell, solicit or negotiate insurance on Massachusetts risks
  • A salaried full-time employee who advises his employer about its insurance without selling or soliciting or receiving a commission
  • A motor vehicle dealer holding a Class 1 or Class 2 license (and its officers, directors and employees) selling credit life, credit disability or guaranteed automobile protection insurance with a vehicle sale or lease

A nonresident who sells commercial property and casualty insurance covering risks in more than one state needs no Massachusetts license if licensed in the state of the insured’s principal place of business and the contract insures risks there (Mass. Gen. Laws ch. 175, § 162J(b)(6)).

Sidenote
Know this...

Several exemptions (§ 162J(b)(1), (2) and (7)) apply only when no commission is paid. An insurer’s clerk who processes applications without commission is exempt; paid a commission on the policies, the clerk no longer fits the exemption.

Maintenance and duration

Reinstatement and renewal (Mass. Gen. Laws ch. 175, §§ 162M(b)–(d), 177B, 177O)

A producer license stays in effect, unless revoked or suspended, as long as the renewal fee is paid and a resident individual producer meets the education requirements by the due date (Mass. Gen. Laws ch. 175, § 162M(b)).

An individual producer who lets the license lapse may reinstate the same license without an examination within 12 months of the renewal fee due date, paying a penalty of double the unpaid renewal fee (Mass. Gen. Laws ch. 175, § 162M(c)). A producer who cannot comply with renewal procedures because of military service or another extenuating circumstance may ask for a waiver of those procedures, and of any examination, fine or sanction for not complying (Mass. Gen. Laws ch. 175, § 162M(d)).

Advisers and reinsurance intermediaries hold licenses with a fixed term:

License Term Renewal
Insurance adviser Expires three years from its date For each succeeding three-year period, at the Commissioner’s discretion (§ 177B)
Reinsurance intermediary (individual) Expires three years from its date of issue For successive three-year periods, at the Commissioner’s discretion (§ 177O)
Reinsurance intermediary (partnership, firm, association or corporation) Issued for a one year period (§ 177O)

Address change (Mass. Gen. Laws ch. 175, § 162M(f))

Licensees inform the Commissioner of a change of address within 30 days of the change (Mass. Gen. Laws ch. 175, § 162M(f)).

Reporting of actions (Mass. Gen. Laws ch. 175, § 162V)

A producer reports to the Commissioner within 30 days (Mass. Gen. Laws ch. 175, § 162V):

  • Administrative action taken against the producer in another jurisdiction, or by another governmental agency in Massachusetts, counted from the final disposition, with a copy of the order or other legal documents
  • Criminal prosecution in any jurisdiction, counted from the initial pretrial hearing date, with a copy of the initial complaint and the resulting order

Assumed names (Mass. Gen. Laws ch. 175, §§ 162P, 175)

A producer doing business under any name other than the producer’s legal name must notify the Commissioner before using the assumed name (Mass. Gen. Laws ch. 175, § 162P). A licensed agent or broker who advertises or carries on business in a name other than the one stated in the license may be fined $10 to $100 (Mass. Gen. Laws ch. 175, § 175).

The same section reaches impersonation: a person who is not licensed and holds himself out to the public as an agent, broker or adjuster of fire losses, or as engaged in the insurance business, by advertisements, cards, circulars, letterheads, signs or other methods, faces the same fine (Mass. Gen. Laws ch. 175, § 175). The test is whether the person is licensed.

Continuing education exemptions and penalties (Mass. Gen. Laws ch. 175, § 177E; 211 CMR 50.00)

The chapter on Massachusetts State Regulations covers the continuing education requirement. Among those exempt from it are (211 CMR 50.03(2)):

  • Nonresidents who hold an equivalent resident license in a home state with CE requirements and are certified in good standing there
  • Auto club agents
  • Producers licensed only for travel or credit insurance
  • Insurance advisers
  • Fraternal agents
  • Holders of a resident license that requires no examination

A producer who does not complete the required credits by the renewal date may have the license nonrenewed or suspended. After a hearing, which the producer may waive, the producer may instead or also be fined $20 to $100 for each hour of instruction short (211 CMR 50.07). A producer who files a false or fraudulent certificate of compliance faces, after a hearing, suspension of all insurance licenses until compliance is shown (Mass. Gen. Laws ch. 175, § 177E(H)). For good cause the Commissioner may grant an extension of time (Mass. Gen. Laws ch. 175, § 177E(F)), and excess hours earned in one 36-month period carry forward to the next (Mass. Gen. Laws ch. 175, § 177E(C)).

Lesson summary

  • A license is required for each line of authority; the license itself gives no authority to represent or commit an insurer, and a producer acts as an insurer’s agent only once appointed (§§ 162I, 162H, 162S).
  • A business entity needs its own license and a designated licensed producer; named corporate officers are personally liable (§§ 162L(b), 174).
  • A producer moving to Massachusetts applies within 90 days; a move away is reported within 30 days (§§ 162O(b), 162N(c)).
  • An insurance adviser gives policy advice for a fee and needs a license that lasts three years; a reinsurance intermediary needs three years as an agent or broker first and keeps records ten years (§§ 177A–177D, 177O, 177Q).
  • A lapsed license can be reinstated within 12 months with a penalty of double the unpaid renewal fee. Address changes and administrative actions are reported within 30 days; criminal prosecutions within 30 days of the initial pretrial hearing (§§ 162M, 162V).
  • CE shortfalls can bring nonrenewal or suspension and a fine of $20 to $100 per hour short (211 CMR 50.07).
Key points

Licensing basics & lines of authority

  • Must hold license for each line of authority (life, A&H, property, casualty, variable products, personal lines, credit, travel) before selling/soliciting/negotiating
  • License itself grants no authority to bind/represent insurer — producer must be appointed by insurer to act as its agent
  • Failed/missed exam requires full reapplication and fee payment before rescheduling

Business entities & corporations

  • Business entities (corporations, partnerships, LLCs) need own license via uniform business entity application
  • Must designate a licensed producer responsible for compliance; entity license can be suspended/revoked if violations known but uncorrected
  • Named corporate officers/directors personally liable for violations; corporation liable only if no individual can be blamed
  • Corporation files amendments within 30 days; dissolution triggers automatic license revocation
  • Corporation can’t insure own stockholders (other than officers/directors named in its license) except premiums up to 2% of total written premium

Nonresident producers

  • Nonresident license granted if resident/good standing in home state, reciprocal licensing exists, fees/application submitted
  • Address change (moving states): file within 30 days, no fee
  • Moving TO Massachusetts: apply within 90 days of residency, exempt from prelicensing/exam for lines already held (if the prior license was canceled, only if applied within 90 days of cancellation and in good standing)
  • CE met in home state satisfies MA requirement if reciprocal treatment exists

Insurance advisers

  • Defined as giving fee-based advice on policies/contracts (titles like “insurance adviser/specialist/counselor/analyst” included)
  • Excludes insurer officers/salaried employees acting for the insurer, licensed agents/brokers acting as such, attorneys/CPAs acting within their profession
  • License requires sworn application, 3 citizen references, written exam; license term = 3 years
  • Fee agreements enforceable only if written, signed in duplicate, approved form
  • Advice without contract requires written statement + fee receipt; violations fined $50–$500
  • Unlicensed practice: fine $50–$500, up to 6 months imprisonment, or both

Reinsurance intermediaries

  • Two types: Broker (works for ceding insurer, no binding authority, remits funds within 30 days) vs Manager (works for reinsurer, has binding authority, remits monthly, may hold up to 3 months of claims funds)
  • Licensing requires 3 years as licensed agent/broker + written exam; license term = 3 years (individual) or 1 year (entity)
  • Brokers keep records 10 years; managers restricted from certain acts (e.g., committing reinsurer to syndicates)
  • Unlicensed activity: fine ≥$1,000/violation, up to 6 months imprisonment
  • Treated as “business of insurance” under ch. 176D; penalties up to $10,000 per violation plus restitution

Exemptions from licensing

  • Insurer itself exempt, but not its officers/employees/affiliates
  • Exempt: no-commission roles (executive/clerical/underwriting staff, group enrollment/info gatherers, salaried advisers to employer), employer benefit administrators not compensated by the insurer, non-selling inspectors/raters, non-targeted advertisers
  • Motor vehicle dealers (Class 1/2) selling credit life/disability/GAP insurance with vehicle sale
  • Nonresidents selling multistate commercial P&C risks exempt if licensed where insured’s principal place of business is and the contract insures risks there
  • Key rule: commission payment negates many exemptions

License maintenance, renewal & reporting

  • Producer license continues if renewal fee paid and CE met; lapsed license reinstated within 12 months without exam, penalty = double unpaid fee
  • Military/extenuating circumstances allow waiver of renewal requirements
  • Address changes reported within 30 days
  • Administrative actions reported within 30 days of final disposition; criminal prosecutions within 30 days of initial pretrial hearing
  • Assumed names require prior notice to Commissioner; unlicensed impersonation as agent/broker fined $10–$100

Continuing education

  • Exempt groups: reciprocal nonresidents, auto club agents, travel/credit-only producers, advisers, fraternal agents, exam-exempt resident license holders
  • Noncompliance risks nonrenewal/suspension plus fine of $20–$100 per hour short
  • False CE compliance certificates → suspension of all licenses until compliance shown
  • Excess CE hours carry forward to next 36-month period; extensions available for good cause

Related readings

  • Producer Roles and Receipt Types
  • Underwriting
  • Health Insurance Basics
  • Required Policy Provisions
  • Optional Policy Provisions