An investigation of Washington insurance brokers and brokerages spawned by a national scandal in the insurance industry has not uncovered criminal or unethical behavior in the state, according to a report released by Insurance Commissioner Mike Kreidler.
“I’m pleased to report that although our investigation found some violations where brokers were not disclosing compensation arrangements with consumers, the problems do not approach the magnitude or scope that was revealed at the national level,” Kreidler said.
The report, summarizing the results of a year-long investigation into solicitation activities by Washington’s 11 top brokerages and seven largest Washington-based insurance companies, said investigators did not find that Washington brokers were engaged in the type of conduct alleged in New York by state Attorney General Eliot Spitzer.
The investigation did reveal that many Washington brokers are confused and unclear about their obligations to clients in the area of compensation disclosure. While those problems are not on the same scale as the bid rigging and improper payments uncovered in New York, they nevertheless represent violations of state law intended to protect Washington consumers.
“While the violations we discovered here in Washington aren’t as serious as those found elsewhere, they are still ones that I take very seriously,” Kreidler said. “We will be following up to ensure that consumers are receiving all of the information they need to make insurance purchasing decisions, including who’s getting paid what.”
The agency has initiated individual follow-up investigations into those violations. Penalties range from fines of up to $1,000 per violation to suspension and/or revocation of licenses.
The Insurance Commissioner’s report includes recommendations intended to help brokers comply with requirements. The agency will:
*Continue and expand the distribution of technical advice to help agent/brokers comply with disclosure requirements;
*Place added emphasis on reviewing disclosure documentation when licensees are audited; and
*Conduct random, targeted enforcement efforts to monitor agent/broker compliance with disclosure requirements.
Additionally, the Insurance Commissioner has proposed legislation to extend current disclosure requirements to agent/brokers in the life and disability lines of insurance. Currently, under law, the disclosure requirements apply only to agents/brokers in the property and casualty lines.
“Insurance is a business built on trust,” Kreidler said. “We need to ensure that everyone involved in this business strives for integrity through good faith, honesty and equity in all insurance matters.
View the full report, visit http://www.insurance.wa.gov/publications/news/BrokerFeeReport2036-Report.pdf.