WA Insurance Laws and Rules — Quick Reference Notes

The Insurance Commissioner – Broad Powers

• Administers and enforces the Insurance Code; writes rules to clarify laws for enforcement.
• Conducts investigations into violations; may handle grievances against insurers or licensees.
• May revoke or suspend a Certificate of Authority (license for transacting insurance) or a license.
• Bond requirement: before entering duties, the Commissioner must execute a bond of $25{,}000$.
• May delegate authority to deputies/assistants/examiners; bond may be required for delegates.
• May order immediate cancellation of policies obtained through violations, except where policy is non-cancellable or insured knowingly participated.
• Enforcement tools: cease-and-desist orders; injunctions; prosecutions by attorney general or prosecutors; SHIBA (statewide consumer assistance) program.

Public Access to Records and Examinations

• Examinations Department (Chief Examiner) monitors insurers’ financial status; must examine each certificate holder at least every $5$ years; may rely on independent CPA audits.
• Commissioner may examine books/records of producers, surplus lines brokers, or adjusters.
• Public access: Public Records Officer to assist requests; some documents exempt by statute; records available online.

Rates and Forms

• Washington is a prior-approval state: insurers must file policy forms, manuals, rates, rules, and effective dates with the Commissioner and justify need.
• Commissioner approves forms; approval can be withdrawn; illegal to offer unapproved products.
• Example penalty: selling unapproved product for all policies could incur fines up to $1{,}000$ per violation (e.g., $50{,}000$ for 50 policies).

Penalties, Appeals, and Unlicensed Activities

• Licensing actions: suspension up to $1$ year; revocation up to $1$ year; probation with conditions.
• Timing: at least $15$ days’ notice for suspension/revocation; emergency suspension may be issued with as little as $3$ days’ notice.
• Immediate revocation allowed upon felony conviction if trustworthiness is in question.
• Fines: from $10$ to $1{,}000$ per violation; up to $364$ days in jail per offense; penalties due within $15$–$30$ days; nonpayment can lead to revocation and civil action; fines go to the State Treasurer.
• Right to appeal within $90$ days; new hearing within $30$ days.
• Unlicensed Activities: selling/solicit­ing/negotiating without a license is a Class B felony; penalties include cease-desist, suspension, revocation, or civil penalties up to $25{,}000$ per violation.
• Note: A producer may only sell in lines they are licensed for; lines may be added as licenses are earned.

Terms and Concepts

• Insurance: a social device to transfer financial risk via premiums; contract to indemnify against determinable contingencies.
• Risk: uncertainty of loss; only pure risk is insurable (no possibility of gain).
• Insurer: the issuer of the policy; the company that assumes risk.
• Insured: the person or entity covered by the policy.
• Insurance Policy: the contract defining terms of the agreement.
• Insurance Producer: person licensed to sell, solicit, or negotiate insurance (excludes title insurance agents & surplus lines brokers).
• Person: any individual or organization; an office may be considered a person and require licensing.
• Insurance Transactions: solicitation, negotiation, execution, and post-sale changes; all involved parties must be licensed.
• Certificate of Authority: license for a company to transact insurance; admitted (authorized) vs non-admitted (unauthorized).
• Admitted vs Non-Admitted: admitted = authorized and regulated; non-admitted = unauthorized; violations carry penalties; surplus lines brokers may be used when authorized coverage isn’t available.
• Life and Disability Guaranty Association; Property and Casualty Guarantee Association: safeguard claims if an insurer becomes insolvent; funded by insurers; limits apply (see limits below).

Licensing – Overview

• Insurance Producer: licensed to sell/solicit/negotiation; title insurance agents and surplus lines brokers are excluded.
• Pre-licensing: pass required exams, apply with attachments/fees, obtain license; to act as an agent you must be appointed; to act as a broker you must have a bond.
• Major lines of authority: Life (and Annuities), Disability (Health/Accident & Sickness), Property, Casualty, Personal Lines, and Limited Lines.
• Variable Life/Variable Annuity: requires Life producer license plus securities license from DFI.

Producers – Agent vs Broker

• Agent: appointed by insurer; may bind, collect premiums; no bond required; is an instrument of the insurer.
• Broker: represents the insured; cannot bind; bond required before writing business: $2{,}500$ or $5\%$ of premiums brokered in the previous year, whichever is greater, up to $100{,}000$.
• Bond/appointment details vary; an agent may be affiliated with multiple insurers; an exclusive/captive agent is appointed by one insurer; independent agents may be appointed by multiple insurers and own renewals.

Temporary License

• Up to $180$ days; emergency basis; no exam required.
• Available for certain situations (disabled, deceased, in active U.S. service, or other Commissioner-designated needs). Not issued to new applicants if not in special circumstances.

Non-Resident Licenses

• Non-Resident Producer’s License available if the applicant is licensed in their home state and has passed its written exam; no local exam or fingerprint/CE requirements for non-residents.
• Reciprocity: state of residence must reciprocate for Washington producers.
• Service of process: Commissioner designated as attorney for service of process; lines limited to licensing in home state.

Adjusters

• Types: Independent, Public, Crop; separate licenses required for each type; may hold multiple licenses concurrently.
• Independent adjusters settlement for insurers; Public adjusters represent insureds; Public adjuster bond required ($5{,}000$).
• Some adjusters (e.g., attorney, company adjusters) may be exempt from licensing under specific conditions.

Licensing & Examination Exemptions

• Commissioner may grant waivers or require exams if licensee violated laws or to ensure qualifications.
• Exemptions include certain executive/administrative roles within insurers, group plans administration, certain employees training, and other defined scenarios.
• Sharing commissions between licensees is allowed if both are licensed; cannot sell in lines not licensed for.

Appointments / Termination of Appointments

• Producers must be appointed by an insurer to sell for that insurer; notice of appointment/affiliation submitted electronically.
• Appointments require at least one line of authority; continuous until license revocation, non-renewal, or termination notice; appointment renewal fees apply (see below).
• Renewal cycle: appointments renew every $2$ years on a date set by the Commissioner; notices are sent ~60 days prior.
• Captive vs Independent: captive agent = single insurer; independent agent = multiple insurers; no limit on number of independent appointments.
• Termination: insurer must notify Commissioner within $30$ days if terminated for cause; producer may terminate with advance notice; affiliation terms limit authority to the affiliating business entity.
• Affiliation: licensees may be affiliated with a business entity; entity must list all affiliated licensees with the Commissioner.

Penalties for Non-Compliance (Summary)

• The Commissioner may place licensees on probation, suspend, revoke, or refuse to issue/renew for listed causes (misrepresentation, violations, fraud, uninsured activities, etc.).
• Renewal or appointment issues may trigger penalties; repeated violations by an entity may extend to partners/officers.

Maintenance and Duration of Licenses

• Eligibility: be at least 18, a Washington resident, pass required exams, pay fees, and not have grounds for denial.
• Renewal
  • Producer license expiration: last day of licensee’s birth month; renewal due by that date; renewal fee currently $55$.
  • New licenses: expire on the last day of the birth month + 1 year, then every $2$ years.
  • If choosing not to renew, last day to sell is the last day of birth month.
• Continuing Education (CE)
  • 24 hours CE required for renewal; at least $3$ hours in Ethics.
  • Exceptions: limited-lines licenses exempt; active military service exemption; medical waiver may cover one renewal.
  • Retain CE certificates for $3$ years; CE hours may count toward multiple product lines; carryover is not allowed.
• Late Renewal and Reinstatement
  • If renewal is late, renewals cannot transact until renewed; late fees:
  • $1{-}30$ days late: +50 ext{%} surcharge;
  • $31{-}60$ days late: +100 ext{%} surcharge;
  • $61$ days to $12$ months late: +200 ext{%} surcharge.
  • After $60$ days post-expiration, renewal is required by reinstatement with application and fee.
  • All appointments terminate after $60$ days of expiration; after $1$ year, full licensing process must be repeated (including exams and fingerprints).