Tuesday, May 27, 2014

2014 May/June OIC

Avoiding Compliance Issues with your State Regulator

There are many producer compliance issues my staff routinely addresses, ranging  from timely response to an OIC inquiry, updating a producer’s address in the proper time frame, or naming a designated responsible licensed person (DRLP) for a licensed insurance agency. Our approach to most producer compliance issues has been to educate our licensees and assist them  in meeting compliance standards rather than beginning with fines and penalties.  Here, I will address two common compliance issues: the use of DBAs--that’s “doing business as” for those not familiar with the term--and affiliations.

Let’s begin with DBAs. While not the norm in the insurance industry, some agents and agencies use them. If you do use  a DBA, there are laws and rules you need to follow to avoid compliance issues.


A Washington State insurance licensee wishing to use a DBA needs to know the law in order to comply. The specific reference can be found in Chapter 48.17.18 RCW:

“An insurance producer or title insurance agent doing business under any name other than the insurance producer's or title insurance agent's legal name is required to register the name in accordance with chapter 19.80 RCW and notify the commissioner before using the assumed name.” (Chapter 19.80 RCW provides specific guidance for each type of entity.)

There is a two-step process you must follow prior to using the DBA:

1)      The trade name must be filed and approved with the Washington State Department of Revenue’s (DOR) Business Licensing Service.

2)      The approved DBA must be submitted to our office to be added to the insurance producer license.

DOR has an online application and requires a $19 fee to file the trade name. Simply go to their website at www.dor.wa.gov, look for “add or change trade names,” and follow the instructions. Once DOR has approved your trade name, login to your OIC online account, select “change DBA” from the left-hand menu, and follow the instructions. You will need to submit a copy of your approved DOR registration and pay a $5 fee.

The second compliance issue I will address is affiliations. Agencies are responsible for assuring all licensed producers representing them are properly licensed and affiliated. This is defined in WAC 284-17-001:

“An affiliation is a type of appointment whereby a business entity authorizes an individual insurance producer or surplus lines broker to represent it when conducting insurance business.”

In layman’s terms, an affiliation is the legal tie an insurance agency files to show the named licensee represents the insurance agency.  

Let’s review some common compliance questions regarding affiliations.

Are affiliations required in Washington State?

Yes, they are. Individual licensees that represent a business entity or act on its behalf must be affiliated with the licensed business entity. Each business entity must provide our office with the names of all individual licensees authorized to represent the business entity and act its behalf. The regulation reference is 284-17-473.  

Who can file the affiliation?

This is the sole responsibility of the insurance agency. An individual producer is not allowed to affiliate himself or herself to an insurance agency. Once the agency has ensured the producer is licensed for the proper lines of authority, the agency can file the affiliation electronically through our online services at a  cost of $20 per affiliation. It is important to note that a licensed insurance agency must have at least one affiliated individual licensee in order to transact business. Each agency is required by law to name a designated licensed responsible producer (DRLP), who is responsible for the agency’s compliance with the laws and regulations of this state. A common agency oversight is not affiliating its DRLP.  

By filing the affiliation for each of the insurance agency’s producers and establishing the legal tie between the two, the producer is allowed to use the insurer appointments held by the agency rather than requiring each producer within the agency to obtain individual direct appointments. Since the agency holds the direct appointment, commissions are paid to the agency and then may be dispersed to the affiliated selling producer.

When do affiliations renew?

Affiliations are a part of the license renewal process for the agency. We will send an email to the business’ registered email address 60 days prior to the expiration date of the agency license. The agency’s renewal notice will include a list of all affiliated producers; the agency should review those for accuracy and pay the affiliation renewal fees as part of the license renewal.

It is imperative that the agency’s registered email address be kept current for two reasons:

·         This is the email address where we will send all correspondence.

·         licensees are required to notify us of a change in the registered email address within 30 days of a change.

Many of these types of compliance issues are situational; however, having the basic understanding of what is required by law or regulation is a great starting point. You can reach us at 360-725-7144 or through our website. You can also follow us on Twitter and Facebook.

Jeff Baughman,

Producer Licensing & Oversight Program Manager,

Washington State Office of the Insurance Commissioner

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