Broker Licensing

Episode: Broker Licensing
Hosts: John Emmanuel and Zachary Lerner
Aired: February 25, 2026

Zachary Lerner (00:16):
Hi, I am Zach Lerner. I’m here with my partner, John Emmanuel.

John Emmanuel (00:19):
Welcome back. Today we’re going to talk about surplus lines licensing. As you recall, surplus lines placements must always go through a licensed surplus lines broker.

Zachary Lerner (00:27):
Yeah, so let’s talk about some common misconceptions with regards to surplus lines broker licensing. There are actors out there that think, “Hey, let’s just get one license and all trade under that.” Unfortunately, that is a hot topic of enforcement these days. Really, you got to think about those three magic words – sale, solicitation, negotiation of insurance – whether or not you’re a retail agent, a wholesale surplus lines broker, or even an upstream MGA/MGU, depending on the circumstances.

So about a dozen or so states actually don’t have entity surplus lines broker licensing, they operate through the individual. But other than that, you really have to look at what the entity and the individuals are doing. You can’t just rely on a license of a designated responsible licensed producer or DRLP. There are some states with wrinkles and exceptions. So Virginia is actually a state that takes a position on its department website that individuals other than DRLP do not need to be licensed. New York has a number of opinions and ELANY guidance that indicates if you are the MGA or MGU above the surplus lines broker of record in the chain of sale, you only deal with the surplus lines broker of record, and you are not physically in New York, then you don’t also need a surplus lines broker license. You are acting in the shoes of that unauthorized surplus lines carrier. But these are exceptions to the rule. The majority rule is that you have to be licensed if you engage in those three magic words.

Some states like North Carolina have recent enforcement actions on this very issue where people were borrowing the license of that DRLP.

John Emmanuel (01:56):
We hear all the time, especially with the large brokers, “We have so many people who need licenses. How are we going to have everybody be licensed?” But there are various ways to think about how to manage that structure. Who’s actually doing the sales, solicitation, and negotiation of that insurance product? Trying to funnel those activities through particular people, get them licensed, and have people that do more administrative tasks not need that license. So there’s various ways that as an organization, you can modify your structure based on people’s activities to make sure the right people are licensed.

Zachary Lerner (02:23):
One last point we’ll make is that you got to think about the binding of coverage as well. Often you’ll have surplus lines program administrators / program managers that have binding authority. But the binding of coverage is the sale of insurance. So just because you’re a program manager or a wholesaler doesn’t mean that you don’t need to have a license. You can click that button and bind. Unless an exception applies under particular state law or guidance, our recommendation is to be appropriately licensed, both on the entity and the individual level.

John Emmanuel (02:51):
Thanks, we’ll see you next time.

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