Insurtechs are built to move fast — and in the race from idea to launch to scale, compliance infrastructure often lags behind. The Designated Responsible Licensed Producer requirement is one of the most commonly neglected compliance obligations among insurance startups, and it's almost always an oversight rather than a deliberate choice.
Here are the DRLP mistakes insurtechs make most often — and what to do instead.
Mistake 1: Assuming Compliance Will "Sort Itself Out" at Launch
Many insurtech founders assume that once they've secured their agency license, the DRLP designation will be handled as part of the process. Sometimes it is. Often it isn't — and the DRLP designation may not have been filed in all required states, or the designated individual may not hold the right lines of authority.
The fix: Before going live in any state, confirm that a valid DRLP is designated in that state and holds the appropriate lines. This should be on the pre-launch checklist alongside the agency license itself.
Mistake 2: Designating Someone Who Doesn't Want the Liability
It's common to see insurtechs designate a co-founder, general counsel, or compliance advisor as DRLP — often without a full conversation about what that designation means. The DRLP bears personal legal liability for the organization's compliance with state insurance law. That's not an abstract risk; it's the reason many qualified people decline the role.
The fix: Have an honest conversation with whoever you're considering for DRLP about what the role entails. If they're not comfortable — or if they don't hold the right licenses — outsourced DRLP management is likely the better path.
Mistake 3: Not Planning for Multi-State Expansion
An insurtech might launch in three states with a co-founder serving as DRLP. When they expand to 15 states six months later, that same person now needs to hold licenses in all 15 states — a licensing burden that can take months to resolve. Meanwhile, the company may be operating in states where they don't yet have a valid DRLP.
The fix: Build multi-state DRLP coverage into your expansion planning from the start. DRL Advisory's licensed producers are already active in all 50 states — there's no lag time for new state entries.
Mistake 4: No Succession Plan
The co-founder serving as DRLP leaves for another opportunity. The compliance contractor serving as DRLP ends their engagement. In either case, the clock starts — and most states give only 30 days to name a replacement before the license is at risk.
The fix: Treat DRLP continuity like any other mission-critical business continuity issue. Know your succession plan before you need it.
Mistake 5: Assuming the DRLP Requirement Doesn't Apply to Your Model
Insurtechs with referral-based models, embedded insurance integrations, or API-driven distribution sometimes assume they're not subject to standard agency licensing requirements — and therefore don't need a DRLP. This is a risky assumption. State insurance departments have shown increasing willingness to treat technology-driven distribution as licensable activity, and the DRLP requirement follows the license.
The fix: Get a clear-eyed assessment of your licensing obligations before assuming you're exempt. The cost of a licensing opinion from outside counsel is far less than the cost of operating without proper licensure.
The Insurtech Solution: Outsourced DRLP from Day One
For most insurtechs, the cleanest solution is outsourcing the DRLP function entirely from launch. DRL Advisory provides immediate coverage, all 50 states, all lines of authority — and as the organization grows and expands, coverage expands with it. No search, no hiring, no single point of failure.
DRL Advisory specializes in DRLP compliance for insurtechs and insurance technology companies. Contact us to discuss what outsourced DRLP management looks like for your program.