MGA Background Check Requirements: What States Screen For and How to Prepare
MGA Background Check Requirements: What States Screen For and How to Prepare
Background checks are a mandatory part of the MGA licensing process. Every state requires key personnel to pass character and fitness evaluations before granting insurance licenses. Here's what to expect and how to prepare.
What Do States Screen For in MGA Background Checks?
States screen for criminal history (via FBI fingerprinting and state records), prior regulatory actions, financial responsibility issues, and pending charges. The goal is to evaluate the character and fitness of every individual who will have operational control or fiduciary responsibility within the MGA.
1. Criminal History
FBI Criminal Background Check
- National criminal records check via fingerprinting
- Covers federal and state criminal records
- Most states require electronic fingerprinting through approved vendors
- Results sent directly to the state DOI
State Criminal Records
- State-level criminal history check
- May be separate from FBI check in some states
- Covers both felony and misdemeanor records
2. Disqualifying Offenses
Most states consider these disqualifying:
- Felony convictions (especially financial crimes)
- Insurance fraud convictions
- Forgery, embezzlement, or theft
- Money laundering
- Federal offenses under 18 U.S.C. §1033 (insurance-specific federal statute)
3. Regulatory History
States also review:
- Prior insurance license denials or revocations
- Administrative actions by other state DOIs
- FINRA or SEC disciplinary actions
- Civil judgments related to insurance or financial services
- Consent orders or regulatory settlements
4. Financial Responsibility
Some states evaluate:
- Personal bankruptcy history
- Outstanding tax liens
- Judgments and collections
- Credit history (in some states)
What Are the Steps in the Background Check Process?
The background check process involves three sequential steps: completing the NAIC Uniform Biographical Affidavit, undergoing FBI fingerprinting through an approved vendor, and then waiting for the state DOI to review all results against regulatory databases a process that takes 4–8 weeks total.
1. Biographical Affidavit
Complete the NAIC Uniform Biographical Affidavit:
- Personal identification information
- Employment history (10+ years)
- Education background
- Criminal history disclosure
- Regulatory action disclosure
- Civil action disclosure
- Financial history
2. Fingerprinting
- Schedule appointment with approved fingerprinting vendor
- Electronic fingerprinting (Live Scan) preferred
- Fingerprint cards accepted in some states
- Cost: $30–$75 per person
- Results: 2–4 weeks
3. State Review
The state DOI reviews:
- FBI background check results
- State criminal records
- NIPR (National Insurance Producer Registry) records
- Other state regulatory databases
- Biographical affidavit disclosures
Who Must Complete Background Checks?
All individuals who hold key roles in the MGA including the CEO, CFO, compliance officer, directors, partners with 10%+ ownership, designated responsible persons, and licensed producers must complete background checks, though the specific roles required vary by state.
1. Required Individuals
| Role | Background Check Required |
|---|---|
| CEO/President | Yes |
| CFO/Controller | Yes |
| Compliance Officer | Yes |
| Directors/Board Members | Yes (in most states) |
| Partners (LLC Members) | Yes (if 10%+ ownership) |
| Designated Responsible Person | Yes |
| Licensed Producers | Yes |
2. State Variations
- Some states require checks for all owners regardless of percentage
- Some states require checks only for individuals with operational control
- A few states require background checks for all employees with access to premium funds
How Should You Prepare for Background Checks?
Preparation centers on full disclosure undisclosed issues that surface during the background check are far more damaging than disclosed issues. Always disclose all criminal charges (including dismissed cases), regulatory actions (even informal ones), and pending matters, with context and documentation of rehabilitation.
1. Disclosure Best Practices
Always disclose. Undisclosed issues that surface during the background check are far more damaging than disclosed issues.
- Disclose all criminal charges, including dismissed cases
- Disclose all regulatory actions, even informal ones
- Disclose any pending matters
- Provide context and explanation for any issues
- Include documentation of rehabilitation or resolution
2. Common Issues and Solutions
Minor Offenses (Misdemeanors)
- Disclose fully with explanation
- Provide court documents showing resolution
- Most non-insurance-related misdemeanors don't prevent licensing
Old Felony Convictions
- May be disqualifying in many states
- Some states have rehabilitation pathways
- Consult with insurance regulatory counsel
- Consider whether the individual must be a named principal
Regulatory Actions in Other Industries
- Disclose fully
- Explain circumstances and resolution
- Demonstrate relevance (or lack thereof) to insurance
3. 18 U.S.C. §1033 Considerations
Federal law prohibits individuals convicted of certain crimes from engaging in the business of insurance without written consent from the state insurance commissioner:
- Applies to felonies involving dishonesty or breach of trust
- Requires formal waiver application to state DOI
- Process is separate from standard licensing
- Consult legal counsel if this applies
What Are the Multi-State Considerations for Background Checks?
Multi-state licensing is facilitated by NIPR (National Insurance Producer Registry), which allows single submission of biographical information and sharing of background check results across participating states reducing duplicate fingerprinting requirements, though not all states participate fully.
1. NIPR (National Insurance Producer Registry)
NIPR facilitates multi-state licensing:
- Single submission of biographical information
- Background check results shared across participating states
- Reduces duplicate fingerprinting requirements
- Not all states participate fully
2. Reciprocity
- Background check results from one state may be accepted by others
- Non-resident licensing often relies on home state background check
- Some states require additional state-specific checks
How Should You Plan the Background Check Timeline?
The total background check timeline runs 4–8 weeks, encompassing one week for biographical affidavit completion, 1–2 weeks for fingerprinting, 2–4 weeks for FBI results, 2–4 weeks for state review, and potentially 2–8 additional weeks if issues require resolution.
| Activity | Timeline |
|---|---|
| Biographical affidavit completion | 1 week |
| Fingerprinting appointment | 1–2 weeks |
| FBI results | 2–4 weeks |
| State review | 2–4 weeks |
| Issue resolution (if needed) | 2–8 weeks |
| Total | 4–8 weeks |
Start background checks early in your formation process to avoid delays.
Frequently Asked Questions
1. What do states check in MGA licensing background checks?
Criminal history, prior regulatory actions, financial responsibility, administrative actions by other states, and pending charges. FBI fingerprinting required in most states.
2. Can you get an MGA license with a criminal record?
Depends on the offense. Felonies generally disqualify, especially financial crimes. Some states consider rehabilitation and relevance. Disclosure is always required.
3. Who needs to complete a background check?
All designated responsible persons, officers, directors, and individuals with control over the MGA entity.
4. How long does the background check process take?
3–6 weeks total, including fingerprinting and state review.
5. What is the NAIC Uniform Biographical Affidavit?
A standardized form required by most states capturing personal identification, employment history (10+ years), education, criminal history, regulatory actions, civil actions, and financial history for each key MGA individual.
6. How much do MGA background checks cost?
FBI fingerprinting costs $30–$75 per person, plus $20–$50 for state-level checks. Total costs for a small MGA team typically range from $200–$500 depending on the number of key personnel.
7. What happens if an issue is found during the background check?
The state DOI reviews the circumstances, severity, and relevance. Disclosed issues with documentation are treated more favorably than undisclosed ones. Resolution can add 2–8 weeks to the timeline.
8. Do background check results transfer between states?
Through NIPR, results may be shared across participating states, and non-resident licensing often relies on the home state check. However, some states require additional state-specific checks regardless.
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