Entering Casualty Producer Practice Lawfully in Washington

Entering Casualty Producer Practice Lawfully in Washington

The Big Idea

In Washington, you need a producer license before you sell, solicit or negotiate insurance, unless a statutory exemption applies. The license must cover the specific kind of insurance involved. This lesson answers four questions: When does that rule apply? How does a Washington resident get licensed? What changes for someone from another state? What about agencies and emergencies?

By the end, you should be able to:

• Decide whether an activity needs a license, and whether a listed exemption applies.
• Put the resident application steps in the correct order.
• Tell a nonresident license apart from the exception for producers moving to Washington.
• Explain what an agency needs to be licensed and who can issue a temporary license.

No earlier lesson is assumed. Each key term is explained as it appears.

Words You Need First

• Insurer: the insurance company that issues the policy and pays covered claims.
• License: a document from Washington's Insurance Commissioner, the state official who regulates insurance. It lets you act as a producer for the kinds of insurance listed on it. A producer is anyone who must be licensed to sell, solicit or negotiate insurance.
• Line of authority: a kind of insurance your license covers, such as casualty. A casualty line does not let you sell life insurance.
• Resident applicant: someone whose legal residence is in Washington and who applies for a Washington resident license.
• Business entity: an organization rather than a person, such as a corporation, partnership or LLC.

One limit matters early. A license does not, by itself, make you an insurer's representative or let you commit an insurer to anything. That authority comes from a separate relationship with the insurer, which is not covered here.

The Three Activities That Need a License

• Sell: exchange an insurance policy for money on behalf of an insurer.
• Solicit: try to sell insurance, or ask or urge someone to apply for a particular kind of insurance from a particular insurer.
• Negotiate: talk directly with a buyer or likely buyer, or advise them, about the benefits, terms or conditions of a particular policy. This counts only when the person also sells insurance or obtains insurance from insurers for buyers.

Example. Priya works at Cedar Ridge, a fictional agency, and her job includes selling policies and getting coverage from insurers for customers. Priya explains the liability limits on a customer's commercial auto policy and recommends a deductible. That is negotiating because two facts are both true:

• Priya is advising a buyer about the terms of a particular policy.
• Priya is someone who sells insurance and obtains it for buyers.

She needs a casualty license for this, and she has one.

Change one fact. Marcus, the unlicensed receptionist, takes a call and says, "Our agent can explain the limits. Let me book you a time." Marcus is scheduling, not advising on policy terms. No license is needed for that.

Change one more fact. Now Marcus tells the caller which limits to choose and urges them to apply with a named insurer. Urging someone to apply with a particular insurer is soliciting, so Marcus would need a license.

Tempting mistake: "I passed the exam, so I'm licensed." The exam is only one requirement. You may not sell, solicit or negotiate until the commissioner actually issues your license.

Exemptions Have Conditions

Washington lists situations where no producer license is required. Every exemption has conditions, and all of them must be met. Here are three examples. The list in the law is longer.

1. Behind-the-scenes staff. An officer, director or employee of an insurer or a producer is exempt only if both of these are true:
   • Their work is executive, administrative, managerial or clerical, and it is only indirectly related to selling.
   • They receive no commission on policies covering Washington risks.
2. In-house insurance advisor. A salaried, full-time employee who advises their own employer about the employer's insurance interests is exempt. This also covers the employer's subsidiaries and affiliates. The employee must not sell or solicit and must receive no commission. An example is a risk manager at a manufacturing company.
3. Multi-state commercial policy. A nonresident who handles commercial property and casualty insurance can be exempt if all of these are true:
   • The policy covers risks in more than one state.
   • The person is licensed in the state where the insured has its main place of business.
   • The policy covers risks in that state.

Tempting mistake: "If I'm not paid commission, I'm exempt." Going without commission is only one condition. The activity must fit the exemption too.

Checkpoint 1. Jordan is a salaried employee at a Washington agency and earns no commission. Jordan calls past customers, describes a named insurer's commercial auto policy and urges them to apply. Does Jordan need a license?

Answer: Checkpoint 1

Yes. Urging someone to apply for a particular kind of insurance from a particular insurer is soliciting.

• The staff exemption requires work that is only indirectly related to selling, and this work is direct.
• The in-house advisor exemption covers advising one's own employer, not the agency's customers.

Earning no commission does not change the result.

Getting a Resident Individual License

Before approving a resident's application, the commissioner must find that the applicant:

• is at least 18,
• has not done anything that is grounds for denying a license,
• has paid the required fees, and
• has passed the exam for each line applied for.

The applicant must also do two things:

• Submit the uniform application, a standard national form, and declare that its statements are true. False statements can lead to refusal, suspension or revocation of the license.
• Provide identity information, including fingerprints, for a Washington State Patrol and FBI background check.

The current requirements do not include a mandatory prelicensing course. A claim that Washington requires 20 hours of prelicensing education is out of date.

The order matters. Washington's Office of the Insurance Commissioner (OIC) describes these steps:

1. Schedule and pass your exam for the casualty line.
2. Apply online. Your confirmation includes a transaction number from either the OIC or NIPR (the National Insurance Producer Registry).
3. Get fingerprinted. You cannot schedule this appointment until you have applied, because you need the transaction number to book it.
4. Wait for your license. The OIC cannot issue it until it receives your background check results. You may start selling only after the license is issued.

Fees can change, so check the OIC's current fee page rather than relying on a remembered amount.

Checkpoint 2. Sam plans to book a fingerprint appointment first to save time, then take the exam, then apply. What's wrong with this plan, and what is the correct order?

Answer: Checkpoint 2

Sam can't book fingerprints first. The appointment requires the transaction number from a submitted application. The correct order is exam, then application, then fingerprints, then waiting for the license to be issued. Sam may not sell after the exam, application, and fingerprinting; Sam must wait until the commissioner issues the license.

Agencies Need Their Own License, and So Do Their People

A Washington business entity acting as a producer needs its own license. To get one, it must:

• file the uniform business entity application,
• pay the fees,
• have no disqualifying conduct, and
• name a licensed producer who is responsible for the agency's compliance with Washington insurance law.

Tempting mistake: "Our agency is licensed, so our staff can sell." The licensing rule applies to every person, and a person can be an individual or an entity. Cedar Ridge's agency license does not cover Marcus. Anyone at the agency who sells, solicits or negotiates needs their own license for that line.

Checkpoint 3. Harbor Point LLC, a fictional Washington agency, is applying for its business entity license. It plans to name its unlicensed office manager as the person responsible for compliance. It also plans to have two unlicensed new hires call prospects and urge them to apply for a named insurer's casualty policy once the agency license arrives. What is wrong with each plan?

Answer: Checkpoint 3

• The office manager. The responsible person must be a licensed producer. An unlicensed office manager cannot fill that role, so the application does not meet this requirement.
• The new hires. Urging prospects to apply with a named insurer is soliciting. The agency's license and its responsible producer do not extend to unlicensed staff. Each new hire needs their own casualty license first.

Coming From Another State: Two Different Situations

Situation A: You live elsewhere and want to sell in Washington

You need a nonresident license. The rules for this use the term home state: the state where you have your main residence or main place of business and where you are licensed as a producer.

You also need to be in good standing. That means your home state's records show your license as valid and not in a problem status there. Washington can check this through the national producer database.

Washington must issue a nonresident license for lines substantially equivalent to your home-state lines, as long as there is no disqualifying conduct and all of these are true:

• you hold a current resident license in good standing in your home state,
• you have made a proper request and paid the fees,
• you have submitted the uniform application,
• your home state gives Washington residents nonresident licenses on the same basis (this is called reciprocity), and
• if you are an entity, you have named a licensed individual producer as responsible.

An individual applicant must also provide identity information for a Washington State Patrol and FBI criminal-history background check. The OIC says individual nonresidents apply through NIPR and have no fingerprint requirement. "No fingerprints" does not mean "no identity information." You still supply identity information as part of your request.

Situation B: You move to Washington

You must apply for a resident license within 90 days of establishing legal residence here. You won't need the exam or prelicensing education for lines you already held, unless a commissioner rule says otherwise.

A related rule covers anyone previously licensed for the same lines in another state. The exam waiver is available only if one of these is true:

• you are still licensed in that state, or
• your application arrives within 90 days after that license was canceled.

You also need proof of good standing. That proof is either a certification from the prior state or the national producer database records.

Tempting mistake: "Any out-of-state producer automatically qualifies." Good standing and reciprocity are required, and the moving exception has a time limit.

A separate federal rule

These Washington waivers and exceptions answer only one question: what Washington requires to qualify for a license. They do not settle a separate federal restriction in 18 U.S.C. § 1033.

Under that federal law, a person convicted of either of these may not willfully work in or participate in an insurance business that affects interstate commerce:

• a felony involving dishonesty or breach of trust, or
• a crime under that same federal section.

The exception is written consent from an insurance regulatory official authorized to regulate the insurer, and the consent must specifically refer to that federal provision. A state exam waiver or nonresident license is not that consent.

Checkpoint 4. (a) Alex lives in another state and holds a casualty license there in good standing. Alex's home state does not give Washington residents nonresident licenses on the same basis. Does Alex qualify for a Washington nonresident license under the rule above?

(b) Riley moved to Washington five months ago. Riley's prior-state casualty license was canceled at the move, and Riley is applying only now. Can Riley count on skipping the exam?

(c) Taylor moves to Washington and applies within 30 days, holding a current casualty license in good standing elsewhere. Taylor has a felony conviction involving dishonesty. Does the moving exception resolve whether Taylor may lawfully participate in the insurance business?

Answer: Checkpoint 4

(a) No. Reciprocity is one of the required conditions, and good standing alone is not enough.

(b) No. Riley missed the 90-day application window, and the canceled license is more than 90 days old. Riley should expect to need the exam and should confirm with the OIC.

(c) No. The moving exception only removes Washington's exam and education requirements for lines Taylor already held. The federal restriction is separate. If Taylor will willfully work in or participate in an insurance business that affects interstate commerce, Taylor needs written consent that specifically refers to the federal provision, from an insurance regulatory official authorized to regulate the insurer.

Temporary Licenses: The Commissioner Decides

Only the commissioner can issue a temporary producer license. It requires no exam and lasts no more than 180 days. The commissioner issues one only if it is needed to keep servicing an insurance business, in situations such as these:

• A licensed producer dies or becomes disabled. The temporary license can go to their surviving spouse or court-appointed personal representative. It allows time to sell the business, for the producer to recover, or to train and license new staff.
• The individual named on a licensed agency's license dies or becomes disabled. The temporary license can go to a member or employee of the agency.
• A licensed producer enters active U.S. military service. The temporary license can go to the person they designate.
• Any other case where the commissioner decides it serves the public interest.

The commissioner can control a temporary license in several ways:

• Limits: the commissioner can restrict what the temporary licensee may do.
• Sponsor: the commissioner can require a licensed producer or insurer who takes responsibility for the temporary licensee's acts.
• Revocation: the commissioner can revoke the license if insureds or the public are at risk.

A temporary license also ends once the business is sold or otherwise disposed of.

Checkpoint 5. A licensed agency owner enters active military duty and writes a letter naming the office manager "temporary agent for one year." Is the office manager now authorized to sell?

Answer: Checkpoint 5

No. An employer or owner cannot create a license. Military service is one of the listed situations, so the office manager could seek a temporary license from the commissioner. Even then, it would last at most 180 days, not a year, and it could come with limits or a sponsor requirement.

What to Remember

• Selling, soliciting or negotiating requires a license for that line unless an exemption applies. Passing the exam is not the license.
• Negotiating counts only when the person also sells insurance or obtains it from insurers for buyers.
• An exemption applies only when all its conditions fit. Earning no commission is never enough by itself.
• Resident steps: exam, then application, then fingerprints, then wait for the license to be issued. No prelicensing course is required.
• An agency needs its own license and a licensed responsible producer. Its staff still need individual licenses.
• Nonresidents need home-state good standing, reciprocity and identity information, but no fingerprints. Producers moving to Washington have a 90-day window.
• State waivers do not replace federal § 1033 written consent when that federal rule applies.
• Only the commissioner grants temporary licenses. They last at most 180 days, need no exam and apply only in listed situations.

Sources (for editors; descriptive)

• Washington definitions of license, sell, solicit, negotiate, business entity and home state: https://app.leg.wa.gov/RCW/default.aspx?cite=48.17.010
• License required (version effective until January 1, 2027): https://app.leg.wa.gov/RCW/default.aspx?cite=48.17.060
• License exemptions: https://app.leg.wa.gov/RCW/default.aspx?cite=48.17.062
• Resident and business entity application requirements: https://app.leg.wa.gov/RCW/default.aspx?cite=48.17.090
• Nonresident licensing, including identity information for background checks: https://app.leg.wa.gov/RCW/default.aspx?cite=48.17.173
• Applicants previously licensed in, or moving from, another state: https://app.leg.wa.gov/RCW/default.aspx?cite=48.17.175
• Temporary licenses: https://app.leg.wa.gov/RCW/default.aspx?cite=48.17.510
• OIC, producer license steps: https://www.insurance.wa.gov/producers-adjusters/licensing/get-licensed/producer-license-full-and-limited-lines
• OIC, fingerprint requirements: https://www.insurance.wa.gov/producers-adjusters/licensing/get-licensed/fingerprint-requirements
• Federal restriction on participation by persons with certain convictions, and written-consent exception: https://uscode.house.gov/us/usc/119-118/t18/s1033/