The Washington state Office of the Insurance Commissioner (WA OIC) issued a Technical Assistance Advisory (TAA) 2021-01 regarding unlicensed producer activity. The purpose of the TAA 2021-01 is to assist insurers, insurance producers, and websites in complying with Washington Insurance Code prohibitions on unlicensed solicitation, accepting business from unlicensed producers and paying commission to unlicensed producers.
The Washington Insurance Commissioner, Mike Kreidler, has taken the position that websites reviewing insurance plans (“review websites”) potentially violate statutes regarding producer licensure and unlicensed producer business. Commissioner Kreidler undertook two related enforcement actions, one against a review website for unlicensed producer violations. The other against a licensed insurance producer for accepting business from this review website.
The TAA states that review websites violate the Washington Insurance Code when they are not licensed as producers and solicit Washington consumers by urging a consumer to apply for a particular kind of insurance from a particular insurer. The TAA further states that any such urging or encouragement requires an insurance producer license in Washington, even if the website does not receive any compensation. All websites offering, selling, soliciting or marketing insurance should be aware of the practices noted by the TAA below:
- Many review websites receive compensation for each consumer that fills out an application. Thereby, these websites have an incentive to encourage consumers to purchase insurance.
- Those that receive a commission, service fee, or other valuable consideration for unlicensed solicitation are in violation of the Washington Insurance Code. Such websites may believe that they are accepting compensation for referrals permitted by law. However, an unlicensed website may only receive referral compensation or a referral fee if certain conditions are met.
- Insurers and insurance producers who pay unlicensed review websites or accept business from them may be in violation of the Washington Insurance Code.
- Insurance companies and insurance producers shall not pay a commission, service fee, or other valuable consideration to a person for selling, soliciting, or negotiating insurance in Washington if that person is required to be licensed under Washington law and is not so licensed.
- The Washington Insurance Code prohibits insurance producers from knowingly accepting insurance business from a person who is required to be licensed under this title and is not so licensed.
Frost Brown Todd’s Insurance Industry Group has significant experience with U.S. and international regulation of insurance, including licensing, operational compliance, and claims administration/cost containment. For those businesses that need to understand the impact of the TAA or implement compliance solutions, we provide comprehensive licensing compliance and maintenance services. Our services are tailored to the insurance industry’s unique requirements and designed to fully implement licensing requirements throughout our clients’ entire distribution channel and back-end operations (e.g. TPA, UR, MGA/MGU) in all jurisdictions. We also offer services related to compliance throughout the various distribution channels of insurance, including assistance with appropriate compensation methods, preparation of program agreements, regulatory settlement agreements, implementation of corrective action, and effective compliance and training programs for companies in the insurance industry, including both insurance carriers and non-insurance entities, such as call centers, selling or administering insurance.
If you have questions regarding the Washington Technical Assistance Advisory or to otherwise implement a compliant insurance licensing program, please contact Greg Mitchell, Jay Holley, Nikki Parrott or Frost Brown Todd’s Insurance Regulation & Risk Management practice group.