When you buy an insurance policy, you can safely assume that your agent knows what they are selling. Insurance producers can only sell products for which they have credentials. Licensing and Compliance (L&C) is an important part of producer compensation, since a broker's License, Appointment, Contract, Insurance, and Background Check can have an impact on the broker's commission payment. These rules are established at the Certificate of Authority (from here on referred to as Certificate), Line of Business (LOB), and Product levels.
Producer credentials are managed in the Credentialing Portal. Let’s look at three types of credentials: Licenses, Appointments, and Education.
Licenses refer to credentials issued by a government entity, such as a country, state or province, and are generally assigned for a combination of geography and product or line of business. For example, Max Martinez may have a license to sell life insurance products in both California and Nevada, but only property & casualty (P&C) products in California.
When a license is associated with a producer, a Legal Entity must be identified. The Legal Entity is the financial entity or subsidiary of the company that can own certificates of authority. For example, SafeCare Insurance California would be the legal entity that issues the license for Max to sell life insurance products in Nevada.
Appointments refer to credentials issued by the carrier, and are generally assigned by product or line of business. For example, an appointment by SafeCare Insurance may grant Max the credentials to sell SafeCare P&C and Life Insurance products.
Education allows you to keep track of any continuing education the producer has completed. This can be for reporting purposes only, or you can configure the system to base payouts on completion of required training.
Most states require both the License and Appointment to sell a given Product or line of business, though there are some exceptions.