Insurance Regulations
Actual Reason Required
whenever an insurer cancels a policy, the insured has the right to know why policy was cancelled with full understanding with simple and clear definitions.
Fines
If commissioner catches a producer violating any of the rules then they may issue a fine up to 1,000 after the hearing. Must be paid between 15-30 days from the date of order. If license is already revoked then license will be recovered in a civil action brought on behalf of the commissioner by the attorney general. Any fine collected is paid by the commissioner to the state treasurer for the account of the general fund.
State Regulations for Property and Casualty Insurance Overinsurance
Overinsurance is when an insured gets insurance from multiple insurers for a property on the same hazard that exceeds the fair value of the property. It is illegal to knowingly do this.
Reply to the Insurance Commissioner
Every licensed person in this state must reply within 15 days to an inquiry of the commissioner regarding the business of insurance. If not it will violate the Insurance Code of WA
Receiving Compensation
To obtain commission the person must be licensed.
Illegal Dealing in Premiums
-Collecting premium then not providing the insurance -collecting excess amount -failing to return excess in premium. If not felony then will be considered a misdemeanor.
Unfair Claims Methods and Trade Practices
The commissioner decides which method of completion are deceptive. Min standards have been defined that, I violated with such frequency as to indicate general business practice then it is unfair.
Persons Required to be license
A person cannot sell, solicit, or negotiate insurance in this state unless licensed for the appropriate line(s) of authority. The purpose of licensing is to ensure that a producer meets educational and ethical standards required to fulfill producers responsibilities to the insurer and to the public.
Continuing Education
Continuing education rules are established to protect the public by maintaining high standards of professional competence in the insurance industry, and to maintain and improve the insurance skills and knowledge of licensed producers. Producers are required to continue education every 2 years, with the exception of resident adjusters. A producer must complete a 24 hour of CE, including 3 hours of ethics. Credits cannot be carried over to the next license renewal period. Insurance provider must provide a certification within 10 days. An approved course for which the licensee has previously claimed credit may be repeated for credit after a period of 3 years from the previous completion date. A licensee can request a waiver (in writing) exempting them from further CE due to medical reasons or military reasons. Washington participates in the NAIC uniform continuing education reciprocity agreement. Generally, a continuing education course will be accepted if its provided by a state-approved insurance education provider from another reciprocal state.
Claimant
Either a first party claimant, a third party claimant, or both, and includes such claimants designated legal representative and a member of the claimants immediate family.
Denial of Storage and Towing Costs
If an insurer denies storage and towing costs, the insurer is required to do the following: -advise the first party claimant by phone or in writing before the insurer stops payment for storage or the loss vehicle -provide reasonable time for the claimant to move the loss vehicle(5 days) -pay any and all reasonable towing charges unless otherwise provided in the policy.
Producer Compensation Disclosure
In most cases, an insurance producer may receive the following compensation -a commission paid by the insurer -a fee paid by the insured -a combination of these If the compensation received by an insurance producer dealing directly with the insured includes a fee for each policy, the producer must disclose: -the full amount of the fee paid by the insured -the full amount of any commission paid to the producer by the insurer -an explanation of any reimbursement of fees or commissions -when the producer receives an additional commission A disclosure signed by both the producer and the insured must be provided prior to the sale of the policy. Producers must maintain written disclosures for 5 years
Twisting
Is a misrepresentation, or incomplete or fraudulent comparison of insurance policies that persuades an insured/owner, to his or her detriment, to cancel, lapse, switch polices, or take out a policy with another insurer.
Misrepresentation
It is illegal to issue, publish, or circulate any illustration or sales materials that is false, misleading, or deceptive as to policy benefits or terms, the payment of dividends, etc. This also refers to oral statements. Committing this illegal act is called misrepresentation. Anyone involved in this is guilty of gross misdemeanor
"Write Your Own" vs. Government
National Flood Insurance is sold directily through NFIP or WYO which is write your own insurance program. The insurers through WYO writes service policies on a no risk bearing basis through a special arrangements with the Federal Insurance Administration (FIA). They retain part of the premiums for commission and administrative costs, The remaining premiums are used to cover losses.
Defamation of Insurer
Occurs when an oral or written statement is made that is intended to injure a person engaged in the insurance business. This also applies to statements that are maliciously critical of the financial condition of any person or a company.
Remedies and Penalties
The following summarizes the remedies and penalties for unfair practices as outlined by the insurance code: -no person engaged in insurance business can engage in unfair practice -after review of facts, commissioner can deem an act unfair - has to explain why he deemed it unfair -no new regulation can be made effective prior to the expiration of 30 days after the date or the order that put it into force -commissioner must mail or hand deliver an order to any person in violation, if cease and desist has been received, a max fine of 250 for each violation will be assessed
Applications and Binders Binding Coverage
When a producer or other representative of an insurer receives premium money when purporting to bind coverage, other than life or disability insurance, the receipt must state the following -that it is a binder -a brief description of the coverage bound -the identity of the insurer in which coverage is bound Binder used for temporary insurance pending the issuance of a policy. A binder may not extend 90 days past policy effective date. If the binders premium is cheaper less than 10 of actual policy, the actual policies premium may be used. Commissioner may suspend or revoke the license of any producer who issues a binder without being given this authority by the insurer.
Prompt, Fair and Equitable Settlements
Whenever an insurance company denies PIP claim the insurer within a reasonable time must provide an explanation on why as well as what the policy can do, insurer might limit or terminate benefits due to -not reasonable -not necessary -not related to the accident -not incurred within 3 years of accident
Homeowners Cancellation By the Company
Whenever an insurer cancels a policy other than medical malpractice, disability or life insurance, the insurer must mail a notice 45 days in advance. The notice must include reason for cancellation. Must be stated in clear and simple language. Notice will also be sent to anyone with insurable interest in loss. Considered an unfair trade practice to terminate homeowners insurance solely because the insured operates a day care facility.
Investigation
all activities of an insurer directly or indirectly related to the determination of liabilities under coverage afforded by an insurance policy or insurance contract.
First party claimant
an individual, corporation, association, partnership, or other legal entity asserting a right to payment under an insurance policy arising out of the occurrence of a loss covered by such a policy.
Unfair Practices
-Use a 20 day notice to increase premiums by a change of rates or to change the terms of a policy to the adverse interest of the insured, except on a policy renewal -If a contract permits a midterm change of rates or terms, other than at renewal, effectuate the change with less than 45 days advance written notice to the named insured. -Change rates or terms based on factors other than class or category of the insured. -if an insured decides not to continue insurance, then and you decide return the premium on less than a pro rata basis -For any surplus lines broker, to procure any policy of insurance that is cancelable by less than 10 days advance notice for nonpayment of premium and 20 days Where the rate has not changed, but an incorrect premium has been charged, If the insurer elects to make a midterm premium revision, do these things -If the premium revision is necessary because of an error made by the insurer or its producer the insurer must: -notify insured of error amount -offer to cancel incorrect premium and return with pro rata -offer to continue policy with correct premium. 20 days after notice of premium returned. -If the premium revision results from erroneous or incomplete information supplied by the applicant or insure, insurer must do the following -correct premium -notify applicant or insured of the reason of amount change, if applicant not cooperating then cancel policy -sometimes insured might be able to keep incorrect policy because they are eligible
Premium Accountability
A producer of any other representative of an insurer involved in the procuring or issuance of an insurance contract must report to the insurer the exact amount of consideration charged as premium for such contract. The amount collected must also be shown in the contract and in the records of the producer. Each willful violation of this provision constitutes a misdemeanor. Any money received in the fiduciary capacity needs to be promptly accounted for. Anyone who takes funds is guilty of larceny by embezzlement.
False Advertising
Advertising covers the spectrum from TV to newspapers. Advertisements cannot include any untrue, deceptive, or misleading statements that apply to the business of insurance or anyone who conducts its. It is prohibited to circulate any false advertising that includes misrepresenting -Terms, benefits, conditions, to insurance policy. -any dividends to be received from the policy -financial condition of any person or the insurance company -the true purpose of an assignment representing an insurance policy as a share of stock, or using names or titles that will misrepresent the true nature of the policy is considered false advertising.
Separate Account Requirement
All funds representing premiums or return premiums received by a producer in his or her fiduciary capacity is accounted for and maintained in a separate account from all other business and personal funds. Commingling of funds is not allowed. Each willful violation of this regulation constitutes a misdemeanor. The separate account may be interest- bearing, and interest earned on the deposits held in the spate account may be retained by the producer and used to offset bank charges, establish reserves, pay return premiums A producer that is a firm or corporation may utilize one separate account for the funds received by its affiliated persons operating under its license, and such affiliated persons may deposit the funds they receive in such capacity directly into the separate account of their firm or corporation.
Exemptions
An insurance agent license is not required of any officer, director or employee of an insurer or organizations employed by insurers, provided they are not directly or indirectly involved with the actual sale of an insurance contract and Do NOT receive an commission. Following individuals are not required to hold license. -A director or employee of an insurer whose activities are limited to executive, administrative, managerial, or clerical -The director or employee of a special agent assisting insurance producers by providing technical advice and assistance to licensed insurance producers -a person who secures and furnishes information for group insurance or performs administrative services related to mass marketed property and casualty insurance -an employer who is involved in the operation of employee benefits. -employers engaging in inspection, rating, or classification of risk -employee who only markets -a nonresident who sells, solicits, or negotiates a contract -a salaried full time employee who advises People who are exempt from exam requirement. -Those who are licensed for same lines of authority in another state, or if application is received within 90 days of cancellation of previous license. -applying for limited and specialty lines. -applying for an adjusters license who, for a period of 1 year, have been a full time salaried employee of an insurer or of a managing general agent to adjust, investigate or report claims -deemed by the commissioner to be qualified by experience to deal in ocean marine and related coverages.
Insurance
An insurance contract is an agreement between policy owner and an insurer, where the insurer agrees, for a consideration, to indemnify the insured for loss caused by specific events. In this state, any of the following acts is considered transacting business.: -solicitation -negotiations before taking action -execution of an insurance contract -transaction of matters subsequent to execution of the contract and arising out of it. -insuring
Appointments/ Termination of Appointments
An insurance producer cannot act as the agent of an insurer unless the producer becomes appointed by that insurer. Producers who are not acting on behalf of an insurer do not need to be appointed. To appoint a producer, the insurer mist file a notice of appointment with the commissioner within 15 days. if insurer is deemed ineligible the commissioner will notify the insurer within 10 days. Each appointment is effective until the producers license expires (must be renewed every 2 years) or written notice of termination of the appointment is filed with the commissioner. Commissioner will send notification of renewal. if appointments are not signed up with online services then they will receive notice 45 days before renewal date. If an insurer is registered for online services then 60 day notice will be provided. Payment of renewal fees must occur by the renewal date. If appointed terminates themselves, then notice will be given to producer, and copy will be mailed to commissioner.
Credit Scoring Adverse Actions
An insurer cannot cancel or fail to renew personal insurance based solely on an insured's credit history or insurance score. More specifically, insurers cannot deny personal insurance coverage based on: -the absence of credit history -the number of credit inquires -the score based upon the number of collection accounts with medical industry codes -the use or nonuse of a particular kind of credit or debit card -the initial purchase or finance of a vehicle -the consumers total available lines of credit An applicants bill payment history, number of loans or both may be used to determine eligibility. An insurer that takes adverse action against a consumer based in whole or part on credit history or insurance score must provide written notice to the applicant that states the significant factors that resulted in the adverse action. The insurer must also inform the consumer that the consumer is entitled to a free copy of their consumer reports under the fair credit act.
Insurers
An insurer is any person or company engaged as the principal party in the business of entering into insurance contracts. There are several classifications of insurers depending on the type of ownership. Domestic/Foreign/Alien Domicile of Insurer- Insurers can also be defined by their location of incorporation and whether or not they are authorized to write business in a state. The insurers domicile will determine whether an insurance company is considered domestic, foreign or alien. Authorized Vs. Unauthorized, Certificate of Authority- Before an insurer may transact business in a specific state , they must apply for a license or COA from the state department of insurance and meet any financial requirements set down by the state. If certain coverage cannot be procured from authorized insurers, these cover ages will be considered a surplus lines. Surplus lines may be obtained from unauthorized insurers as long as -The insurance is solicited through surplus line brokers -The potential insured has made a diligent effort and failed to obtain insurance from the insurers authorized. -coverage is not obtained from the unauthorized insurer in order to secure a lower premium rate than an authorized insurer would require A person who issues insurance contracts in this state behalf of an unauthorized insurer may be held personally liable. Each violation constitutes a spate offense punishable by a suspension or revocation of license, and a max fine of 25,000. The commissioner may also order replacement of polices improperly placed with an unauthorized insurer with policies issued by an authorized insurer. Any foreign or alien insurer not authorized by the commissioner that solicits insurance business in this state is legally liable in any action, or suit, or proceeding instituted by an insured, beneficiary, or the commissioner arising out of unauthorized solicitation of insurance business.
Suspicious Activity Reports
Any company that is subject to the AML program is also subject to SAR rules. SAR rules state that procedures and plans must be in place and designed to Identify activity that one would deem suspicious of money laundering, terrorist financing and/or other illegal activities. Any deposits, withdrawals, transfers or any other business deals involving $5,000 or more are required to be reported if the financial company or insurer knows, suspects or has reason to suspect that the transaction: -has no business or lawful purpose -is designed to deliberately misstate other reporting constraints -uses the financial institution or insurer to assist in criminal activity -is obtained using fraudulent funds form illegal activities -is intended to mask funds from other illegal activities Some Flags to look for -customer uses fake ID or changes transaction -two or more customers use similar IDs -Customer conducts transactions so they fall just below amounts that require reporting or recordkeeping -two or more customers trying to break one transaction -customer uses two or more locations to break transaction Relevant SAR reports must be filed with FinCEN within 30 days of initial recovery. Reporting takes place on FinCEN form 108
Third Party Claim
Any individual, cooperation, association, partnership. or other legal entity asserting claims against any individual, cooperation, association, partnership, or other legal entity insured under an insurance policy or insurance contract of an insurer Unfair Methods of Competition -misrepresenting impt. facts -failing to acknowledge and act reasonably promptly upon communications with respect to claims arising under insurance policies -not complying with new rules -refusing to pay claims without reasonable investigation -Failing to affirm or deny coverage of claims within a reasonable time after loss -compelling insured to submit to litigation, arbitration, or appraisal to recover amounts due under an insurance policy by offering substantially less than the amounts ultimately recovered in such actions. -Attempting to settle a claim for less than a reasonable man would have believed he was entitled to. -Unfairly discriminating against claimants because they are represented by a public adjuster. -failing to adopt and implement reasonable standards for the processing and payment of claims once obligation to pay has been established. -communicating with person without attorney present Insurer to producer notification=10 days (15 for group contract Commissioner to Insurer= 15 days 30 days the investigation of the claim has to be done within
Nonresident
Any insurer from out of state of Washington will need to provide proof to the commissioner that they were licensed in another state, they will have same regulations and restrictions we will. All applicants for a nonresidential license must provide written certification form the insurance department of their state of residence which indicates the following; -all currently active license held by an appl. -the lines of insurance for which the producer has qualified to sell -all disciplinary actions taken against an app. A non resident producer will receive a nonresident producer license for the lines of authority that are essentially the same as those granted to the nonresident producer in the producers home state. -is currently licensed as a resident and in good standing in the producers home state -has submitted the proper request for licensure and paid the required fees -comes from a state that provides nonresident producer licenses to residents of WA on a reciprocal basis -furnishes information concerning his or her identity fingerprint, to any government agency or entity authorized to receive this info for a state and national criminal history background check. If anytime during this process the commissioner receives fees, the applicant will pay them. The commissioner will waive any license application requirements for a nonresident license applicant with a valid license from the applicants home state if the applicant home state awards nonresident licenses to residents of Washington on a reciprocal basis.
Failure to issue Proper Receipts
Any payment taken from insured to insurer must provide proof of payment (generaly no later than the next day) with date. -producers name and address -insurers full legal name -name of the person by whom payment is made -amount received -what payment is for
Rates and Forms
Every filing containing a certification by the CEO of the insurer, attesting that the filing complies with the WAC(Washington administrative code), may be used immediately after filing. Any other filing must be made at least 30 days in advance of any such insurance, delivery or use. At the expiration of 30 days, the form is deemed approved unless it has been disapproved by a prior order of the commissioner. The commissioner may extend the approval period for forms by a maximum of 15 days, provided that the notice of the extension is given before the expiration of the initial 30 day period. If this extension period expires, and a notice of disapproval is not given, the form is deemed to be approved. The commissioner, however, may withdraw any approval at any time if necessary. An insurer or rating organization must offer in support of any filing: -The experience of the insurer or rating organization making the filing. -an exhibit detailing the major elements of operating expense for the types of insurance affected by the filing -an explanation of how investment income has been taken into account in the proposed rates. -any other information that the insurer or rating organization deems relevant.
Record Retention
Every producer and adjuster must keep a record o all transactions that occur under his or her license. These records must be kept at the address listed on the license and must include the following information: -a record of each insurance contract procured, issued, countersigned. -the names of the insurers and insured -the amount of premium paid -a statement of the subject of the insurance -the names of any other licesees from whom business is accepted -the names of persons to whom commissions are paid or promised These records must be kept for 5 years after transaction complete.
Flood Disaster Protection Act of 1973
Flood insurance was slow to take hold, so government mandated flood insurance in the following situations 1.flood insurance is required in certain flood prone areas as a condition for receiving loans through, or backed by the federal government 2.Property owners who fail to purchase flood insurance within 1 year after it becomes available will not be eligible for full disaster relief funding These communities involved in NFIP are eligible for the three policies of flood insurance to the full limits. Insurance markets exist for flood coverage above the NFIP amounts. limited amounts are offered to communities that are not quite complying with the regulations. In this case there is an emergency program which offers reduced benefits until everyone complies.
Unreasonable Denial of Claim
If a first party claimant to an insurance policy feels that he or she was unreasonably denied a claim for coverage or payment of benefits, the claimant may bring an action to the superior court of this state to recover the damages sustained, along with the costs of the action (including attorneys fees and litigation costs). If the court determines that the claim denial was unfair, the insurer may be ordered to pay damages up to 3 times the original claim amount. A first party claimant must provide written notice of the basis of the cause of action the insurer and the commissioner 20 days prior to filing an action.
Nonrenewal
If a policy is specifically issued as nonrenewable, insurers may nonrenew the policy. If an insurer nonrenews a policy for an eligible reason, the insured must deliver a notice 45 days before expiration. Vise versa the it will be 5 days for insured.
Cancellation/Nonrenewal
If an insurer cancels a policy, that insurer must provide the insurer with written notice of cancellation, accompanied by the reason for cancellation. If applicable, notice of cancellation will be shown to anyone with insurable interest in the loss. The individual making or supervising the delivery will constitute prima face evidence of the mailing Each insurer is required to renew all insurance contracts, except: -the insurer gives prompt notice of cancellation -at least 20 days prior to expiration date, the insurer has communicated, its willingness to renew but insured wont pay premium. -insured got same coverage somewhere else. -the contract is evidenced by a written binder containing an expiration date that has already passed. -because this specific type of coverage is not renewable.
Notice of Hearing
If commissioner suspect that an insurer or its agent has committed a violation or is engaged in an unfair trade practice, the commissioner may issue a statement of charges and hold a hearing for any purpose deemed necessary. A hearing may also be held upon a written demand by an aggrieved person. Any demand for a hearing must specify in what ways the person is aggrieved and the grounds for hearing. The hearing must be held at the place designated by the commissioner, and at his/her discretion it may be open to the public. A licensee also has a right to request that a hearing be presided over by an administrative law judge. This cannot be denied Any person (licensee) receiving notice from commissioner has 90 days to respond. Any notice to commissioner from person has 30 days respond to that.
Trade Practices Specific to Property and Casualty Insurance: Motor Vehicle Insurance and Claims
In addition to the unfair claims settlement practices specified for all lines of insurance, the following practices are also defined as unfair or deceptive acts -Failing to make a good faith effort to communicate with the repair facility chosen by the claimant -Arbitrarily denying a claimants estimate for repairs -Requiring the claimant to travel unreasonably to obtain a repair estimate or to obtain a temporary rental vehicle, or to have the loss vehicle repaired. -failing to tell them where to get car fixed, closest to garaged vehicle. -failing to consider any additional loss related damage discovered by a repair facility -failing to limit deductions for betterment and depreciation to parts normally subject to repair and replacement -recommending that claimants make a claim under their own collision coverage solely to avoid paying claims under the liability insurance policy. cannot use any violations or accidents more than 3 years old.
Consumer Reports
Include written and/or oral info regarding a consumers credit, character, reputation, or habits collected by a reporting agency from employment records, credit reports, and other public sources.
Surplus Lines
Insurance that is not available in the regular market place from admitted insurers is referred to as surplus lines. Usually involves insurance for high risk individuals and is placed with nonadmitted insurers who specialize in offering insurance to the high risk market. While surplus lines insurers are not admitted, most states require that they be on that states "approved list". When the coverage is obtained through a licensed surplus lines broker, the broker must certify to the commissioner, in writing, that the broker made a diligent effort to find the coverage needed from an authorized insurer and was not able to do so. The surplus lines broker cannot secure coverage from an authorized insurer merely for the purpose of obtaining a lower premium. The certification must be filed with the commissioner within 60 days after the insurance is obtained.
Unfair Practice
Insurers and producers transacting insurance in this state must not engage in any unfair methods of competition or unfair trade practices. In addition to unfair methods and practices expressly defined by the insurance code, the commissioner may define other methods and acts as unfair or deceptive.
Federal Law 18 USC Sections 1033 and 1034
It Is considered unlawful insurance fraud to twist or be deceitful willingly. Any oral or written statements made to change application info, or anything done to the financial condition of the insurer can be Imprisoned for up to 10 maybe 15 years. If any of the embezzlement was less than 5,000, prison time may be reduced to 1 year. Federal Law makes it illegal for any individual convicted of a crime involving dishonesty, breach of trust or violation of the Violent Crime Control and Law enforcement Act of 1994 to work in the business of insurance affecting interstate commerce without receiving written consent from an insurance regulatory official. The consent must state that it is granted for the purpose of 18 U.S.C 1033. anyone that was involved in a felony and performs business of insurance will be fined and imprisoned for up to 5 years or both. A violation penalty will be no more than 50,000 if Attorney general brings it to civil action.
Producers Contracts
It is illegal for insurers to cancel or nonrenew a policy because the insurers contract with the independent producer has been terminated. If an insurer intends to terminate a written agency contract with an independent producer, the insurer must give the producer at least 120 days written notice, unless termination is based on the following: -abandonment of the agency -gross and willful misconduct -loss of license by order of the commissioner -sales of or material change of ownership in the agency -fraud or material misrepresentation relative to the business of insurance -default in payments due to the insurer During 120 day waiting period, the independent producer cannot write or bind any new business on behalf of the termination insurer without specific written approval. Routine adjustments are permitted. The terminating insurer mist permit renewal of all its policies in the producers book of business for 1 year following the effective date of the termination, to the extent that the policies meet the insurers underwriting standards and the insurer has no other reason for nonrenewal.
Change of Address
Licensees must advise the commissioner of any changes of address within 30 days of that change. This includes a change in the persons residence, mailing, business or e-mail address.
Producer
Means a person required to be licensed under the state law to transact business. Title insurance agents and surplus lines brokers are not classified as producers. -Is at least 18 years of age -has not committed any act that is ground for license denial -has completed a relicensing course of study for the appropriate line(s) of authority. -has paid the appropriate fees. -has passed the examinations for the appropriate lines of authority In order to sell, solicit or negotiate variable life and variable annuity products, a resident insurance producer must obtain an insurance producer license with a life line of authority and an appropriate securities license from the financial industry regulatory authority (FINRA). The commissioner will issue a license with a variable life and variable annuity products line of authority when evidence has been produced that this requirement was met.
Renewal
Once a license is issued, it is the licensees responsibility to maintain an active license. In this state, initial and reinstated licenses are valid from the date that they are issued until the licensees next birthday anniversary plus 1 year. Any additional license later issued to the same licensee will continue on the same renewal cycle as the first. The renewal date of a business entity's license is bases on the date of application. The license is valid for 2 years. The commissioner will collect the following renewal fees -producer license (every 2 years) $55 -limited insurance producer(every 2 years)$20 -surplus lines broker(every 2 years) $200 -adjuster licenses (every 2 years) $50
Place of Business
Producers and adjusters must have a place of business in this state that is accessible to the public. This does not however apply to the professionals who are licensed only for life or disability insurance. Non resident producers may have the place of business either in this state or in their resident state. The address of the licensees place of business must appear on all of that persons license
Investigative Consumer Reports
Similar to normal consumer reports except info has to be found through investigative digging, as well as within 3 days that the report was requested. If consumer wants additional info the agency has 5 days to provide more info. Anyone who breaks these laws may be fined and imprisoned for up to 2 years. Anyone who unknowingly violates the act will be held responsible just as much as the consumer Anyone who knowingly commits these acts can pay penalties up to 2,500. Within this, if a policy is denied due to the consumer reports or investigative consumer reports then the consumer has the right to know why, where they got the info, as well as whoever received the copy in the past year. If the consumer challenges any of the info and its not accurate, then the agency must send the corrected info to whoever received a copy in the past two years. Consumer reports cannot contain certain types of info if the report is requested in connection with a life insurance policy or credit transaction less than 150,000. The info can be as old as 7 years.
Deductibles
Single family dwellings are automatically provided with replacement cost coverage if insured to at least 80% of the replacement value, or the maximum allowed under the regular flood insurance program. All other building and all contents are insured on an actual cash value basis. Standard deductible amounts apply separately to building and contents losses, with higher deductibles available. Many of the exclusions you'll find in homeowners policy will be found in flood insurance as well. There is a 30 day waiting period after the applicant has been accepted before coverage is effective except in the following conditions -During the first 30 days after a community enters the emergency or normal programs, then coverage begins at 12:01 am the day after the application and premium payment have been mailed. -when an existing policy is assigneed to a property purchaser -at 12:01 am on the 5th day after an endorsement request and premium has been mailed for an existing policy
Fair Access to Insurance Requirements Plan
The WA Essential Property Insurance Inspection and Placement Program is designed to do the following: -ensure stability in the property insurance market of this state -encourage consumers to obtain essential property insurance through the available normal insurance market in this state -make essential property insurance available when it cannot be obtained through normal means -encourage the improvement of properties located in the urban areas of WA and to further orderly community development -Establish a FAIR plan, an industry placement facility, and a joint reinsurance association for the equitable distribution and placement of risks among insurers. All insurers authorized to write insurance, must participate and pay an annual assessment based on each insurers written premium. Essential property insurance means the coverage against direct loss to real tangible personal property at a fixed location that is provided in the standard fire policy extended coverage endorsement. This include perils of VMM and any other lines the commissioner deems necessary. Essential property insurance specifically includes insurance against direct loss to property that is being constructed or rehabilitated. It does not include automobile insurance or insurance on farms or manufacturing risks. Coverage issued for essential property insurance must be issued on standard policy forms and individual company filings do not apply to risks written under this program. The policies are issued at rates set by the inspection bureau under filings approved by the commissioner, are separately coded, and issued for a 1 year term. The industry placement facility is the organization formed by the insurers to assist applicant in securing essential property insurance. The placement facility cannot cancel o nonrenew a policy issued under this program, unless: -a cause that would have been grounds for non acceptance of the risk under this program -no payments of premium -the governing committee approves the decision commissions under this program are 10% of the policy premium.
Property and Casualty Insurance Guaranty Association
The Washington property and casualty insurance guaranty association is a nonprofit unincorporated entity that helps the insured obtain timely claim payments and avoid financial loss when an insurer becomes insolvent. It also assists in the detection and prevention of insurer insolvencies The association applies to all direct insurance except life, title, surety, disability, credit, mortgage guarantee, workers compensation and ocean marine, and is divided into 3 separate accounts. 1. Automobile insurance 2. Longshore and harbor workers comp. 3. All other applicable insurance The association is obligated to pay claims of insolvent insurers that occur within 30days of a liquidation order or before a policy's expiration, if the policy expires less than 30 days after the liquidation order. The association will pay claims in excess of 100 but not more than 300,000 and will not pay any more than the amount of the coverage that would have been provided in the original policy. it is unfair practice to make any statement that an insurers policies are guaranteed by the existence of the Insurance association
Marketing Practice Protection of Public Interest
The business of insurance is one affected by the public interest, requiring that all persons act in good faith, abstain from deception, and practice honesty and equity in all insurance matters. The insurer, the insured, their provider, and their representative are responsible for preserving the integrity o the business of insurance.
Penalties
The commissioner has the power to suspend, revoke or refuse to issue or renew a producer license, as well as levy a fine as established by the state law for violations in any of the following areas of producer activities: -laws, rules or regulations of the insurance code -licensing laws -producers fiduciary responsibility -unfair trade practices
Temporary
The commissioner may issue a temporary insurance producer license for the servicing of existing business, for a maximum of 180 days without requiring a written exam to the following individuals. -The spouse or representative of a licensed producer who dies or becomes disabled, to allow time for producers recover, sales of the business, or to train someone new -A member or employee of a business entity licensed as an insurance producer, in the event of the death or disability of an individual that is designated in the business entity application or the license. -The designee of a licensed insurance producer entering active service In the US armed forces. -Any other circumstances deemed fit by the commissioner. The commissioner may limit the temp license even less or revoke it.
Charges for Extra Services
The commissioner may permit a producer to enter into reasonable arrangements with the insured's and prospective insured's to charge a reduced fee in situations where services that are charged for are provided beyond the scope of services customarily provided in connection with the solicitation and procurement of insurance. Considered unfair practice for any insurance producer or surplus line broker providing services in connection with the procurement of insurance to charge a fee in excess of the usual commission without having advised the insured in writing in advance of the rendering of services, that there will be a charge and its amount.
Commissioner Broad Powers
The insurance commissioner in this state is elected for a term of 4 years. The commissioners main duties include administration and enforcement of the provisions of the insurance code. Title 48 is the Washington insurance code and its purpose is to protect the public. These are some powers: -Adopt rules and regulations to enforce provisions of the insurance code -Conduct examinations, investigations -maintain confidentiality of documents, materials, or other information used in regulatory. -issue a cease and desist order if any person is believed to have violated any provisions. -issue insurance licenses and certificates of authority, and take action against, fine, or suspend the license of any company and or producers. -disseminate info concerning insurance laws of this state and provide assistance to the public in obtaining info. -appoint a chief deputy commissioner to assist the commissioner, as well as additional deputies
By the Insurerd
The insured may cancel any applicable policy, effective as of written notice. Short rate refers to the percentage of premium retained by the insurer to cover costs
Flood Definition
The key to triggering a flood policy is for the damage to be caused by flood. This is how a flood is defined A flood is a general and temporary condition of partial or complete inundation of 2 or more acres of normally dry land area, or of 2 or more properties(at least one that Is insured) Floods may be caused by -overflow of inland or tidal waters -unusual and rapid accumulation of surface waters from any source -mudflow and collapse -Collapse or subsidence of land along the shore of a lake of a lake or similar body of water as a result of erosion or undermining caused by waves or currents of water exceeding anticipated cyclical levels that result in a flood as defined as above Following are excluded from coverage -landslides -backup of sewers -windblown rain, snow or fleet -flooding within the insureds control
Coverage Limits
The maximum coverage available under the regular NFIP (smaller emergency limits are available until a community has been approved by the NFIP The federal emergency flood insurance program goes into effect when a community applies for the program and ends when all NFIP criteria have been met and the regular program can begin. It provides a limited amount of coverage with subsidized rates.
Examination of Records
The purpose of the examination is to ensure that the companies remain solvent and conduct business of insurance in compliance with state laws and regulations pertaining to licensing, policy forms, rates, claims, and market conduct. As often as deemed necessary, but at least every 5 years, the commissioner may examine accounts, transaction records, and documents of all authorized insurers, rating organizations, joint underwriting associations, and any insurance producer or adjuster. Examination of an alien insurer may be limited to its insurance transactions in the US. The commissioner may elect to accept and rely on an autit report made by an independent certified public accountant for the insurer in the course of that part of the commissioners examination covering the same general subject matter as the audit.
Public Records Examination
The state administrative code established the procedures that the office of the insurance commissioner (OIC) must follow to provide the public with full access to public records pertaining to the conduct of the office. Public records must be available for inspection and copying during regular business hours at the offices of the OIC. Any person wishing to inspect the records mist make a written request on an approved form. Some records may be exempt from public inspection based on privacy and protection of confidentiality laws.
USA PATRIOT Act/Anti money Laundering
This act is a anti terrorism act. This is to address social, economic, and global initiatives to fight and prevent terrorist activities. The Financial Crime Enforcement Network (FinCEN) incorporated the insurance companies to the group to help establish new anti money laundering (AML) standards. To secure the goals of the act, the FinCEN has required monitoring of all financial transactions and reporting of any suspicious activity to the government. The AML program consists of the following min requirments -Assimilate policies, procedures and internal controls based on an in-house risk assessment, -appointing a qualified compliance officer responsible for administering the AML program -continual training for applicable employees -allow for independent testing of the program on a regular basis.
Fair Credit Reporting Act
This is established to ensure that records are confidential. accurate, relevant, and properly used. Also to make sure financial information is not circulated. The acceptability of risk is determined by two separate of reports. These reports can only be used by someone with a legitimate business purpose.
Eligibility
To be eligible you must live in a community that has min floodplain management guidelines. An eligible structure must have 2 solid walls, and a roof, be principally above ground, and not entirely over water. FIMA may deny coverage through a 1968 ACT that's outside of guidelines. Certain restrictions might also apply to anything apart of the Coastal Barrier Resource System. 30 day waiting period after purchasing insurance.
National Flood Insurance Program (NFIP)
Was created by the federal government to fill the gap left by the private insurance industry, and is administered by the Federal Insurance and Mitigation Administration (FIMA), a part of the Federal Emergency Management Agency (FEMA) 1968 congress created NFIP due to rising cost of taxpayer funded siaster relief for flood victims. It consist of 3 components 1.insurance 2.floodpain management 3.floodplain mapping 20,000 communities across the US participate in NFIP to reduce future flood damage, in exchange, the NFIP makes federally backed flood insurance available to homeowners, renters, and business owners in these communities
Late Renewal/Reinstatement
Whenever a producer submits a request for a license renewal after a due date, the producer may not transact business until license renewal or reinstatement is complete. If a license renewal is received after its due date, producers are required to submit the following -A completed reinstated application -proof of continuing education -appropriate fee and surcharges Producers whose lisenced has been expired for more than 60 days but less than 12 months can reinstate the license by submitting all the requirement documents and fees to the department of insurance. After 12 months, the producer must retake and pass all applicable prelicensing education courses and license examinations.
Notification of Claim
any notification to an insurer or its producer, by a claimant, which reasonably apprises the insurer of the facts pertinent to a claim
Discrimination
discrimination in rates, premiums, or policy benefits for persons within the same class or with the same life expectancy is illegal. No discrimination unless distinction is made or required by law.
Rebating/Illegal Dealing in Premiums
Any inducement offered in the policy that is not specified in the policy. Like money, prizes or merchandise, reductions in commission or promises, employment, dividends, stocks, and personal services . Doesn't apply to the actual advertising with prizes not exceeding $100 per person in any 12 month period.
Unlicensed Activities
No insurance company or agent may pay a commission, service fee, or other valuable consideration if that person is not properly licensed or accept these terms. If this happenes it is considered a class B felony and is to be -issued a cease and desist order -suspend or revoke any licenses -pay a civil penalty of no more than 25,000 for each violation.
Producer Responsibilities Policy Delivery
Washington Administrative Code required that policies be delivered to insured within a reasonable period of time. If an insurer relies solely on its producers to deliver, then both producer and insurer are held liable for any delay. Insurer must make an actual physical delivery. producers may hold on to policies briefly for analysis or servicing.
Illegal documents
It is unlawful to offer any of the following; -shares of stock or securities -special advisory board contact -agreement promising profits -prizes with an aggregate value in excess of 100.
Penalties for Noncompliance
The commissioner may suspend, revoke or refuse to issue or renew any license, or any of the following causes: -Providing incorrect information in the licnese application. -violating any insurance laws -obtaining a license through misrepresentation or fraud. -improperly handling money or property -intentionally misrepresenting the terms of an insurance contract or application -having been convicted of a felony -having been found guilty of an unfair trade or fraud -using dishonest practice -demonstrating incompetence -having a producer license denied in another state -forging another's name on documents -using notes to cheat on exam. -accepting insurance from someone who is not licensed -obtaining a loan from an insurance client if producer is convicted of a felony the licenses may be removed immediately The license may be revoked or suspended by an order delivered to the licensee within 15 days prior to the effective date. 10 days after the date of the order. The commissioner may be temporarily suspend a license by an order sent through the mail, not less than 3 days prior to the effective date Every order suspending any such license mist specify the period during which the suspension will be effective. This period may not last longer than 12 months