When may a broker receive commissions from an out-of-state agent?

A broker may receive commissions from an out-of-state agent if the agent is licensed in their state. This is because the laws governing insurance practices require that individuals or businesses involved in selling insurance must have the appropriate licensure in their respective jurisdictions. When an out-of-state agent is appropriately licensed, it ensures compliance with legal and regulatory standards, allowing for the broker to receive commissions without violating any laws.

Licensing helps protect consumers and maintain the integrity of the insurance market by ensuring that all parties involved are knowledgeable and adhere to industry regulations. When brokers work with licensed agents, they can confidently engage in business transactions knowing that those agents are qualified to offer insurance products in their own respective jurisdictions.

Options that suggest other scenarios do not accurately reflect the legal and regulatory framework guiding insurance practices. For instance, receiving commissions under any circumstances undermines regulatory compliance, while stating that commissions might be received only if agents are unlicensed could indicate potential legal issues. Similarly, limiting the ability to receive commissions based on specific classes of insurance would also not align with the broader requirements that apply to licensed agents capable of handling various insurance types.