Washington State Insurance Commissioner Mike Kreidler released Technical Assistance Advisory 2021-01 (Advisory) on February 19, 2021, summarizing current Washington State law and taking a very conservative view on what constitutes the unlicensed transaction of insurance by websites that review insurance products. In particular, the Advisory concludes that review websites that are not licensed producers violate state law when they solicit insurance by encouraging consumers to apply for a particular kind of insurance from a particular insurer even if no insurance is bought or sold. The commissioner already completed two enforcement actions, one against a review website for unlicensed solicitation, and another against a licensed insurance producer for accepting business from the review website.
The Advisory states that providing an objective opinion about a particular insurance product is not a defense if in fact the website urges or encourages a consumer to buy particular insurance from a particular insurer. The Advisory concludes that any such urging or encouragement requires an insurance producer license in Washington State, even if the website does not receive any compensation.
The Advisory also takes the position that being compensated if a consumer completes an application, even if no insurance is purchased, constitutes the unlicensed transaction of insurance because „these websites have an incentive to encourage consumers to purchase insurance.“ This conclusion appears to be based on an assumption that the incentive to encourage consumers to fill out an application necessarily means that the website is „mak[ing] representations to the prospective insured about the terms of or specific need for a policy.“ The Advisory concludes that if a website describes the terms of an insurance product, it is inevitably soliciting insurance business and must be licensed as an insurance producer.
The Advisory then focuses on insurers and insurance producers who pay unlicensed review websites or accept business from them, concluding that they might also be in violation of state law, by paying valuable consideration to an unlicensed person for selling, soliciting or negotiating insurance. In addition, insurance producers cannot knowingly accept insurance business from an unlicensed person.
Takeaway: The broad interpretation of what constitutes the transaction of insurance by a review website as described above makes payment to, or accepting business from, such a website questionable with respect to potential Washington State insureds, unless the website is licensed. Insurers and producers looking to partner with unlicensed review websites should carefully consider the Advisory with respect to potential business emanating from Washington State.