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What Can My New, Unlicensed Employee Do?

What can my new, unlicensed employee do?

From this month’s mailbox comes another frequent question we see at KAIA.  We know hiring continues to be a challenge and a frequent inquiry is what a newly hired, unlicensed employee can and can’t do once she or he begins work at the insurance agency. This would apply to any unlicensed employee, but we know most of our agencies get all of their employees licensed, so new hires are the most frequent example we see.

K.S.A. 40-4904 is the Uniform Insurance Agents Licensing Act and it is the governing statutory framework for all licensed insurance agents in Kansas.  K.S.A. 40-214 makes it unlawful for any person to transact the business of insurance unless such person is duly authorized to transact such business, but the Uniform Insurance Agents Licensing Act provides more information about transacting insurance business.

Based upon these statutes, we provide the following guidelines for licensed and unlicensed personnel in your insurance agency.  These guidelines are by no means all-inclusive and there may be other scenarios that need clarification.  We are happy to provide clarification, however, the Kansas Insurance Department is the final arbiter regarding these rules and we always encourage our members to reach out to it for clarity and guidance.

Unlicensed employees CAN NOT:

  • Sell, solicit, or negotiate insurance contracts.
  • Provide a quote to a prospective or current insured.
  • Discuss the terms of an insurance policy with a prospective or current insured.
  • Sign an agent’s name to insurance documents.
  • Indicate requested coverage is or will be bound or issued.
  • Perform any action or say anything that would put insurance coverage in force.
  • Explain or discuss insurance coverage.
  • Give an opinion or recommendation as to any insurance coverage.
  • Advise on a particular product or coverage a purchaser should consider or buy.

Unlicensed employees CAN perform the following tasks:

  • Receive phone calls or emails reporting additional or replacements items (like vehicles, property, drivers) for policies currently in force.
  • Receive phone calls regarding claims and obtain appropriate information to turn in a claim (being very, very careful not to portray any indication of coverage whatsoever).
  • Receive and record information from a current or prospective client and prepare for a licensed agent’s review items such as endorsements, identification cards, binders, etc.
  • Obtain underwriting information from various publicly available sources (county appraiser websites, Zillow, etc.).
  • Communicate with a current or prospective policyholder to obtain factual information necessary to quote and rate coverage (knowing a licensed agent must review and present the actual quote).
  • Perform rating on carrier or vendor-supplied systems. This is considered data entry and unlicensed employees can perform data entry functions.  However, it is crucial to remember that an unlicensed employee may never give a quote to an insured or discuss coverage.
  • Arrange appointments for licensed agents.
  • Design, create, and post social media messages (with appropriate supervision).
  • Assist with advertising and mailing campaigns.
  • Accept payments on existing policies, so long as there is no coverage discussion.

Again, the important terms to remember are that an unlicensed person cannot sell, solicit, or negotiate insurance contracts.

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