For a number of years Oregon has placed restrictions on Washington surplus line brokers trying to obtain a non-resident license. Here is an email from the Oregon licensing division that was received by one of our brokers:
"Surplus Lines applicants must be licensed for property and casualty and take a surplus lines exam. Oregon is accepting producer applications for surplus lines licensing from all states, except Washington. We apologize for any inconvenience to Washington producers, but must note that Washington is the only state in the country that imposes a second examination requirement on surplus lines producers who are licensed as resident producers in Oregon and already have passed an examination in Oregon. We are attempting to work out a solution to this situation that is mutually beneficial to Oregon and Washington."
It is our understanding that other states are considering this type of action. As you will see from an excerpt of a letter received from Linda Hall, Director of Alaska's Department of Commerce, Alaska is putting pressure on Washington to revise the testing approach.
Excerpt:Although we have had numerous informal conversations over the past several years, I am writing today to request that the Office of Insurance Commissioner in Washington make changes in the licensing of non-resident surplus lines brokers. Today Alaska freely licenses non-resident surplus lines brokers as long as the broker is licensed in the resident state. Washington, however, does not similarly reciprocate. Washington continues to require in-state testing, a bond, fingerprinting and ten years experience for non-resident applicants.
I would urge you to meet the federal provisions of Gramm-Leach-Bliley that require reciprocity and allow a non-resident producer seeking licensure in your state to obtain a license without imposing additional requirements.
The position taken by the Office of the Insurance Commissioner on this matter has created an inequity for Alaska licensees seeking to obtain a non-resident surplus lines broker license in Washington. Washington surplus lines brokers are granted non-resident licenses in Alaska but Alaska surplus lines brokers are severely hampered. I will expect some action on this matter by July 1, 2008 or I will find it necessary to restrict any new surplus lines brokers licenses for Washington resident licensees.
The Association feels it is important to maintain non-resident testing. Washington has a unique set of regulations that need specific review. The test ensures that individuals know and understand these regulations along with demonstrating they have a certain level of proficiency in surplus lines. Most states have minimal testing requirements.
The surplus line broker doing business in Washington has enjoyed a long history of meeting unique market needs with a high degree of professionalism and ethical behavior. By removing the testing requirement for a certain producer segment, the skill and practice of surplus line brokering will certainly deteriorate. Ultimately it comes down to the consumer and with relaxed standards the quality is expected to decline.
The commissioner's office is looking closely at this matter and is indicating a desire to drop the non-resident testing requirement. The issue is a difficult one. Drop the testing and quality may drop, however, maintaining the status quo creates other business and political issues. One thing is certain, there is more and more pressure to follow other states reciprocity in licensing.
What are your thoughts?
4 comments:
Who are we kidding about consumer protection. The only benefit to testing non resident brokers is to courtesy filing brokers in Washington. Testing basically blocks out of state brokers from doing their own filings. Let's join the real world and drop the testing requirement for non-resident brokers.
I certainly support dropping the testing requirement for non-resident licensees. Retaliatory action from OR, AK and others will only make it more difficult to do business outside of WA. Manage the knowledge/awareness of unique law provisions by providing regular mailings or similar communications like other states do.
I agree with John and Jeff. The testing requiremnt provides only illusory protectionism. Given courtesy filings are allowed, we really enjoy no special privelege and might as well make it easier for ourselves to branch out.
The previous responders have it right. While I agree with the association’s feeling that it would be desirable to maintain testing requirements, easy access to courtesy filings in Washington renders any potential benefit moot. Meanwhile, our own ability to conduct business legally in other states is severely restricted. In sum, it’s a losing battle, and no one benefits from further delaying reciprocity. We have much to gain and nothing to lose by joining other states in complying with Gramm-Leach-Bliley and NAIC Model laws. Or as my mom used to say: “Time’s a wasting.”
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