Resident State Change: Compliance Tips

Elaine is a Senior Specialist at ReSource Pro Compliance

Don’t let a resident state change create compliance issues.

One of the great things about a career in our industry is the ability to pursue it anywhere, especially these days with more companies adopting remote-working strategies. Typically, insurance professionals on the move don’t face major compliance hurdles. They simply need to notify state regulators of a new home or business address within the mandated time frame—usually 30 days. Licensees (or their compliance coordinators) can notify resident and non-resident states of the address change at the same time.

If a move takes a licensee across state lines, however, the process becomes more complicated. A change of resident state isn’t a simple address change. Therefore, it’s essential to take the appropriate steps in the proper order to ensure that there is no gap in licensure.

Changing Your Resident State—The Right Way

To begin a change of resident state, first, request a letter of clearance from the Department of Insurance (DOI) in the current resident state. This letter is documentation provided by the regulators that affirms that the individual or entity has an active license and no unmet compliance obligations.

Once the letter of clearance is in hand, the resident license in that state cancels automatically soon after. This means that the insurance professional has no resident license until the new resident state approves their application. Failing to secure a new resident license within 30 days may result in the cancellation of any existing non-resident licenses. In many states, the clock begins ticking as soon as the licensee requests a letter of clearance; so don’t procrastinate!

Send the letter of clearance with the appropriate license application form and fee to the insurance department in the new resident state. This usually allows applicants to avoid any pre-licensing or examination requirements that normally apply. Depending on the state and the license type, the DOI may still require fingerprinting or a background check.

Some people believe that obtaining a non-resident license in the state they’re moving to will “speed things up.” Sometimes it can, but it depends on the states the licensee is moving to and from. Check with compliance experts before taking this step to avoid unnecessary costs and delays.

After the new resident license is issued, contact the DOI in the previous resident state about changing the license’s status there from resident to non-resident. In many states, the letter of clearance request form includes an option to request this change. The change won’t take effect, however, until the DOI receives proof of the new resident license. Regulators may charge a fee to alter the license status or to print an updated license copy.

More Pro Tips

It’s a great idea to notify the DOIs in non-resident states when a licensee plans a change of resident state—just in case there are any unexpected delays in the process.

Verify the license renewal schedule for residents in the new state. How expiration dates are calculated varies among jurisdictions.

Individuals need to understand their new continuing education requirements. It’s also important to determine if any CE credits already accumulated will “transfer” to the new jurisdiction.

In addition to regulators, licensees need to notify other interested parties—for example insurance companies, registered agent service providers, etc.—of their move. Business entities also may need to complete a re-domiciliation or re-domestication with the Secretary of State’s Offices, but more about that process in a future article.

Find out how ReSource Pro helps insurance agencies and producers meet their licensing and compliance needs by visiting our compliance page.