Wash. Judge: Insurer Can Be Held Liable for Agent’s Actions

May 3, 2010

In a ruling that’s being closely watched by some insurers, a Thurston County, Wash., judge has affirmed that the state insurance commissioner may hold an insurance company liable for the actions of the company’s appointed agent.

“If you allow someone to do business on your behalf, it only stands to reason that you can be held responsible for what they do,” said Washington state Insurance Commissioner Mike Kreidler.

In an order dated April 23, 2010, Superior Court Judge Paula Casey ruled that Chicago Title Insurance Co.could be held responsible for illegal inducements offered to solicit title insurance business by one of its appointed agents, Land Title Company of Kitsap County Inc.

The alleged violations included illegally “wining and dining” real estate agents, builders and mortgage lenders by providing them with such things as:

  • hundreds of dollars in meals,
  • thousands of dollars for a golf tournament,
  • monthly advertising for at least one real estate agent,
  • purchases at a Board of Realtors’ auction, and
  • Seattle Seahawks playoffs game tickets.

Although Land Title was Chicago Title’s exclusive agent in the Washington counties at issue, Chicago Title argued that it was not responsible for Land Title’s acts. At a hearing in the matter last year, the company maintained that there was no legal basis to hold it accountable for its agent’s actions.

In a consent order last October, the company said it would appeal the agent liability issue, but agreed to pay a fine of $48,334 if it did not prevail. Chicago Title has not yet exhausted all appeals.

Title insurance practices have long been a concern to Washington state Insurance Commissioner Mike Kreidler. In 2005, his office scrutinized 18 months of employee expense reports and general ledgers of the largest title companies in King, Pierce and Snohomish counties. “This examination reveals many instances where companies provided goods or services to middlemen, including co-advertising, refreshments at educational classes and ‘broker opens,’ gifts, golf tournament sponsorships, parties, ski and shopping trips, sports tickets, meals and others…”

New rules took effect on March 21, 2009 which clearly outline what can be given. There are limits on advertising, donations to trade associations, meals, training, leasing workspace and gifts.

Source: OIC

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