Insurance Regulation, Licensing, and Washington State Law
The regulator
Washington's market is regulated by the Office of the Insurance Commissioner (OIC), headed by a Commissioner who is elected statewide to a four-year term. That is a favorite trap, because many states use an appointed commissioner. Title 48 RCW and WAC 284 give the OIC authority to license producers and insurers, review rates and policy forms, run market-conduct and financial exams, investigate consumer complaints, issue fines and cease-and-desist orders, and place troubled insurers into rehabilitation or liquidation.
Licensing and appointment
A producer must hold a license for the specific line before soliciting, negotiating, or selling. A license alone does not permit sales for a given insurer: the insurer must file an appointment with the OIC, and the appointment ends when the producer's contract ends. Continuing education is 24 credit hours every two years, including 3 hours of ethics. Premiums belong to the insurer or the insured, never the producer: a fiduciary duty, and commingling is prohibited. Commissions may be paid only to licensed producers; giving back part of a commission to induce a sale is rebating, an unfair practice, along with misrepresentation, twisting, and unreasonable claim handling.
Washington specifics
- Auto minimum limits: 25/50/10. PIP must be offered and may be rejected only in writing; UM/UIM must be offered and may be waived only in writing.
- Credit history may not be used to deny, cancel, or nonrenew personal insurance.
- Insurance Fair Conduct Act (IFCA): a first-party claimant may sue over an unreasonable denial or delay after giving 20 days' written notice to the insurer and the OIC; treble damages and attorney fees are possible.
- The Washington Insurance Guaranty Association pays capped claims of insolvent insurers; it is not a backstop for every loss.
Rule of thumb: license first, appointment second, commission only to the licensed.