A business entity wishing to act as an insurance producer MUST do what?

• A. Form a corporation
• B. Obtain a producer's license
• C. Hire a broker
• D. Register with the SEC

Answer: (B)

To legally sell insurance, a business entity must be licensed as a producer by the state. This license (issued by the state Department of Insurance) authorizes the entity to solicit, negotiate, or bind insurance contracts and to appoint licensed individuals to represent insurers. Forming a corporation isn’t required just to act as a producer since you can operate as a different legal structure and still obtain the license. Hiring a broker isn’t a prerequisite to being licensed, and registering with the SEC isn’t relevant for insurance producers, as the SEC handles securities, not insurance. The license ensures compliance, education, and ongoing duties for those selling insurance.