{"id":13096,"date":"2020-07-09T21:11:00","date_gmt":"2020-07-10T01:11:00","guid":{"rendered":"https:\/\/www.resourcepro.com\/certificates-of-authority-the-secretary-of-state\/"},"modified":"2024-07-24T12:56:10","modified_gmt":"2024-07-24T16:56:10","slug":"certificates-of-authority-the-secretary-of-state","status":"publish","type":"post","link":"https:\/\/www.resourcepro.com\/blog\/certificates-of-authority-the-secretary-of-state\/","title":{"rendered":"Certificates of Authority & the Secretary of State"},"content":{"rendered":"\r\n

Elaine is a Marketing Associate at ReSource Pro Compliance<\/em><\/p>\r\n\r\n\r\n\r\n

The term\u00a0\u201cCertificate of Authority\u201d (COA)\u00a0actually has several different meanings in insurance compliance. Today, however, I\u2019m talking about the COA issued by a foreign state\u2019s Secretary of State\u2019s Office that documents its approval for an entity to transact business in the state.<\/p>\r\n\r\n\r\n\r\n

Hey, Nobody Said Anything About a COA!<\/h2>\r\n\r\n\r\n\r\n

One of the most common questions we hear is, \u201cRegister my insurance business with the Secretary of State? What\u2019s that about? Nobody at the insurance department said anything about that!\u201d It\u2019s true that the DOI may not mention the need to obtain a Certificate of Authority<\/a>[EN1]<\/a>\u00a0. This is because only a handful of states require a COA as a prerequisite for agency licensing.<\/p>\r\n\r\n\r\n\r\n

That means that in the majority of states, licensing and business registration are entirely separate processes. Since the insurance department usually isn\u2019t responsible for business registrations, it may not provide information about them on its website or during calls. Be careful, though. Just because a state\u2019s DOI doesn\u2019t\u00a0mention\u00a0the need for a business registration doesn\u2019t mean it\u2019s not\u00a0required. Also, depending on how a state sets up tax accounts, you may also need to complete a separate registration with the Department of Revenue.<\/p>\r\n\r\n\r\n\r\n

Domicile vs. Foreign States<\/h2>\r\n\r\n\r\n\r\n

Securing permission to transact business in your domicile state usually occurs at the point of business formation. It\u2019s likely that in-house or contracted counsel takes care of this task. But once the agency moves out to other, foreign states, the agency\u2014or its compliance coordinator\u2014needs to handle it.<\/p>\r\n\r\n\r\n\r\n

Whether you need to register in a foreign state depends on whether you meet the definition of\u00a0doing business\u00a0in the state. Most states base their definitions on either the\u00a0Model Business Corporation Act (MBCA)<\/strong>\u00a0or the\u00a0Revised Model Act<\/strong>. The American Bar Association maintains both of these model laws to provide uniform definitions and best practices for a number of key business functions.<\/p>\r\n\r\n\r\n\r\n

But as with so many aspects of regulatory compliance, the devil is in the details. Which activities rise to the level of doing business varies from state to state. That\u2019s why it\u2019s always a great idea to consult with legal counsel before starting the business registration process. You\u2019ll want to choose an attorney familiar with both your business model and the state\u2019s laws to answer this question for you.<\/p>\r\n\r\n\r\n\r\n

Are You\u00a0SURE<\/em>\u00a0I Need to Register?<\/h2>\r\n\r\n\r\n\r\n

If you\u2019re supposed to register and don\u2019t, legally your business doesn\u2019t exist. That can become a real problem, especially if you become involved in a lawsuit in the state. Some states may allow you to bring your suit after you obtain a remedial registration. But in many states, if you\u2019re not registered at the time of the event that led to the suit, you\u2019re just out of luck.<\/p>\r\n\r\n\r\n\r\n

So if it\u2019s that important, why wouldn\u2019t everyone register their businesses? We\u2019ve already talked about the most common reason. Lots of people simply aren\u2019t even aware of the need to register, especially if they\u2019re new to non-resident licensing. They haven\u2019t yet hit one of the states where the Department of Insurance requires a Certificate of Authority as part of the agency licensing process.<\/p>\r\n\r\n\r\n\r\n

Another big concern is cost. Admittedly, registering your agency can significantly increase the cost of nationwide compliance. Most states charge a fee to apply for a COA. You may also need to complete initial returns, initial corporate tax filings, and newspaper publications as part of the registration process. Then once you register, you\u2019ll need to submit\u00a0annual returns\u00a0and\u00a0foreign corporate tax filings\u00a0in most states each year. All these costs are something you need to be aware of and prepare for before you register.<\/p>\r\n\r\n\r\n\r\n

Some clients are willing to gamble on not getting caught doing business without a Certificate of Authority to avoid these extra expenses. But remember, if you meet a state\u2019s definition of \u201cdoing business in\u201d and don\u2019t have an appropriate registration, they can assess penalties and require remedial filings going back to the first date that your agency transacted business in their state. Often, these fees and penalties easily outweigh the costs of securing and maintaining the registrations in the first place.<\/p>\r\n\r\n\r\n\r\n

It\u2019s Your Decision<\/h2>\r\n\r\n\r\n\r\n

Obviously, it\u2019s always your choice whether or not to register your business. But you need to make an informed choice. No one wants to complete unnecessary compliance steps. \u00a0(Hey, we all enjoy our work, but not that much!) \u00a0Still, here at ReSource Pro, we\u2019ve had too many people come to us for help in\u00a0catching up with corporate compliance\u00a0to not share our concerns with you.<\/p>\r\n\r\n\r\n

\r\n\r\n\r\n

Find out how ReSource Pro helps insurance agencies and producers meet their licensing and compliance needs by visiting our compliance page<\/a>.<\/p>\r\n\r\n\r\n\r\n

 <\/p>\r\n","protected":false},"excerpt":{"rendered":"

If you fail to establish approval for your entity to transact business in a specific state, your business legally doesn\u2019t exist. If you\u2019re not registered at the time of an event that led to a legal suit, you may just be out of luck.<\/p>\n","protected":false},"author":64,"featured_media":13097,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":""},"categories":[1],"tags":[],"news-category":[],"insurance-segment":[],"services":[],"type-of-content":[38],"resource-type":[67],"class_list":["post-13096","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized","type-of-content-blogs","resource-type-blog"],"acf":[],"publishpress_future_action":{"enabled":false,"date":"2026-04-19 10:52:54","action":"change-status","newStatus":"draft","terms":[],"taxonomy":"category","extraData":[]},"publishpress_future_workflow_manual_trigger":{"enabledWorkflows":[]},"_links":{"self":[{"href":"https:\/\/www.resourcepro.com\/wp-json\/wp\/v2\/posts\/13096","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.resourcepro.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.resourcepro.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.resourcepro.com\/wp-json\/wp\/v2\/users\/64"}],"replies":[{"embeddable":true,"href":"https:\/\/www.resourcepro.com\/wp-json\/wp\/v2\/comments?post=13096"}],"version-history":[{"count":4,"href":"https:\/\/www.resourcepro.com\/wp-json\/wp\/v2\/posts\/13096\/revisions"}],"predecessor-version":[{"id":15918,"href":"https:\/\/www.resourcepro.com\/wp-json\/wp\/v2\/posts\/13096\/revisions\/15918"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.resourcepro.com\/wp-json\/wp\/v2\/media\/13097"}],"wp:attachment":[{"href":"https:\/\/www.resourcepro.com\/wp-json\/wp\/v2\/media?parent=13096"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.resourcepro.com\/wp-json\/wp\/v2\/categories?post=13096"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.resourcepro.com\/wp-json\/wp\/v2\/tags?post=13096"},{"taxonomy":"news-category","embeddable":true,"href":"https:\/\/www.resourcepro.com\/wp-json\/wp\/v2\/news-category?post=13096"},{"taxonomy":"insurance-segment","embeddable":true,"href":"https:\/\/www.resourcepro.com\/wp-json\/wp\/v2\/insurance-segment?post=13096"},{"taxonomy":"services","embeddable":true,"href":"https:\/\/www.resourcepro.com\/wp-json\/wp\/v2\/services?post=13096"},{"taxonomy":"type-of-content","embeddable":true,"href":"https:\/\/www.resourcepro.com\/wp-json\/wp\/v2\/type-of-content?post=13096"},{"taxonomy":"resource-type","embeddable":true,"href":"https:\/\/www.resourcepro.com\/wp-json\/wp\/v2\/resource-type?post=13096"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}