As Pennsylvania continues to deal with its budget problems, agents groups in the state say they do not expect to see higher licensing fees.

In Connecticut, as part of a new budget, the state doubled the majority of its licensing fees levied by the department of insurance as one way to help eliminate an $8.5 billion deficit.  That left agents’ groups in the state to figure out how their members, many of whom are small business owners, can operate with the new fee schedule while the economy already presents them with daily challenges.

Shelly Bloom

“I don’t think Pennsylvania is looking at that as a way to make up some budget shortfall, but since Connecticut broke the ice, it could be something they’ll consider in the future,” said Shelly Bloom, president of the Pennsylvania Association of Health Underwriters.

Bloom added “without any logic for the increase,” it was unlikely to get PAHU support.

“Paying the fee is a necessary part of doing business as an agent,” she said. “There are some carriers and employers that pay that fee on behalf of their licensed agents.  It’s a good way to make sure that all stay current.”

‘Quite a hardship’

Kathleen Glattly, chairwoman of the Insurance Agents & Brokers Service Group, serving Pennsylvania and Delaware, said an increased fee “would be quite a hardship,” given the toll on the industry the economy is having already.

“We are hearing from our agencies a decrease in revenues from last year and not hearing a lot of people growing their business,” she said. There are also businesses not making it, so it would be difficult for agencies we represent if there was an increase in licensure.”

In New Jersey, there is also no word on raising licensing fees, according to the Independent Insurance Agents & Brokers of New Jersey.

“For now, we are hopeful there are no plans for a change, but it could change with a new budget cycle [in the spring],” said Jeanne M. Heisler, government affairs representative for the IIABNJ.

N.J. fee ‘adequate’

Heisler added that with the switch from a four-year to two-year license renewal process in the state, paying $150 every two years “is adequate, and we would oppose any change.”

“In New Jersey, anyone who deals with the public needs a license,” she said. “So an agency needs to be licensed and so does its agents, so to increase that would be difficult, especially in this economy.”

Among the increased fees facing Connecticut’s agents and brokers directly are licenses or renewals for insurance producers ($80; up from $40), public adjusters ($250; up from $125) and surplus lines brokers ($625; up from $500). Fees for other services such as exams, copies of licenses and filings for appointments also doubled.

Warren Ruppar, president of the Independent Insurance Agents of Connecticut, told IFAwebnews.com the increase “is one of those hard pills to swallow, but you know as a businessperson you are going to see it.”

“You have to pay the fees to stay in business,” he said. “The difficulty of the increases, for an agent, is that you can’t pass the increase on to your customer. You need to absorb it. You throw that [on top of the difficulties from the economy] into one big pot and it’s difficult.”

Diane Fowler, executive director of the Professional Insurance Agents of Connecticut (PIACT), said her group also “anticipated” the fee increases “as the state is looking for solutions to a growing budget crisis.”

This story originally appeared in the November 2009 print edition of Insurance & Financial Advisor.