District of Columbia Insurance Laws, Rules and Regulations
Licensing and appointment
Anyone who sells, solicits, or negotiates insurance in DC must hold a producer license issued by the Department of Insurance, Securities and Banking (DISB). Nonresidents qualify through reciprocity. Insurers must appoint a producer before the producer may act for them, and must terminate appointments and notify DISB within the period set by regulation; the producer must also be notified and given an opportunity to respond. Producers owe a fiduciary duty on premiums collected - commingling premium funds with business funds is prohibited, and commissions may be paid only to licensed persons. Continuing education must be completed each renewal cycle, including ethics hours.
Conduct and unfair trade practices
DC prohibits misrepresentation and false advertising, twisting and churning, rebating (offering anything of value not stated in the policy), illegal inducements, unfair claim settlement practices, and unfair discrimination in rates or underwriting. Rates may not be excessive, inadequate, or unfairly discriminatory, and policy forms and rates must be filed with DISB as required by regulation. Producers must keep records and respond to DISB inquiries.
Policyholder protections
DC regulates cancellation and nonrenewal notice, requires prompt acknowledgment and reasonable settlement of claims, and provides guaranty association protection when an insurer becomes insolvent.
Rule of thumb
If something of value is offered that is not written into the policy, it is a rebate. Paying commission to an unlicensed person is a violation even when the underlying sale was legitimate.
Trap: apparent authority is a policy concept; licensing is a statutory concept. An unlicensed assistant who solicits business commits a violation regardless of good faith.