State of Washington Insurance Office Reviews Producer Commission Sharing Rules
Jun 10, 2014
The Washington State Office of the Insurance Commissioner (“WOIC”) held a hearing this morning, June 10, 2014, on proposed Rules that would permit a licensed insurance producer to share commissions, service fees or other valuable consideration with an unlicensed person.
To view the proposed Rule text and Rulemaking notice, click here.
The primary purposes of the proposed Rules are to delineate the conditions and parameters under which a licensed insurance producer may make charitable contributions, compensate others for the use of lead cards and mailing lists, and offer small rewards for referrals and conduct promotional games of chance. The WOIC is also seeking to provide regulatory guidance as to activities that would not run afoul of the anti-rebating and prohibition against inducement payment statutes in the State of Washington.
Section 48-17-490(4) of the Washington Insurance Code, in part, prescribes that a licensed insurance producer “may pay or assign commissions, service fees, or other valuable consideration to an insurance agency, or to persons who do not sell, solicit, or negotiate insurance in this state, unless the payment would violate RCW 48.30.140, 48.30.150, 48.30.155, 48.30.157, or 48.30.170.”
According to the WOIC, insurance producers have inquired about whether or not certain activities comply with these statutes. The proposed Rules are intended to provide guidance to licensed producers as to what activities may or may not violate these statutes.
Like other states that have confronted the issue of what constitutes “rebating” and improper inducement payments to insurance producers, the WOIC rulemaking is designed to offer some guidance to the State of Washington producer community. In many respects, this represents an attempt to modify what some in the insurance industry view as the “unintended consequences” of anti-rebating statutes adopted years ago with the intention of protect policyholders from discrimination.
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