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Washington Life & Health and Property & Casualty courses have been updated with outline changes effective March 1, 2017. Continue reading for Life & Health and Property & Casualty Addendums.

Addendum: for use with Washington Life and Health online ExamFX courses and study guide version 19827en/19828en, per exam content outline updates effective March 1, 2017.

The following are content additions to supplement your existing text unless otherwise indicated:

LIFE & HEALTH

Insurance Regulations

1. Marketing Practices

Rebating/Illegal Dealing in Premiums – updated the dollar amount

Rebating is defined as any inducement offered in the sale of insurance products that is NOT specified in the policy. Rebates include money, prizes, or merchandise, and could also include reductions in commissions, promises, employment, dividends, stocks, and personal services. Both the offer and acceptance of a rebate are illegal. This regulation does not apply to the insurer's advertising or promotional programs in which all insureds or prospective insureds are given prizes, goods or merchandise not exceeding $100 in value per person in any 12-month period.

Illegal Inducements – updated the dollar amount

It is unlawful to offer any of the following as an inducement to buy insurance:

• Any shares of stock or securities;
• Any special advisory board contact;
• Any agreement promising profits, special returns or special dividends; or
• Any prizes or goods with an aggregate value in excess of $100.

LIFE

Insurance Regulations

1. Group Life
2. Eligible Groups – additions to the existing text

Associations

To qualify for insurance policies that insure only association members, an association must meet the following requirements:

• Have been actively in existence for at least one year;
• Have a constitution and bylaws;
• Be organized and maintained for purposes other than that of obtaining insurance; and
• Be deemed to be the policyholder.

The policy may insure association employees, members, or their employees. Beneficiaries under the policy are persons other than the association or its officers or trustees. The term "employees" may include retired employees.

Labor Union Groups

Labor union groups – policies issued to insure the members of a union or organization. The following are required of labor union groups:

• Eligible members must include all members of the labor union;
• Premiums for the policy are paid by the policyholder (labor union) either entirely or in some combination with funds contributed by the insured members;
• A policy on which the premium is to be derived in part from funds contributed by the insured members specifically for their insurance may be placed in force only if at least 75% of the then eligible members, elect to make the required contributions;
• A policy on which no part of the premium is to be derived from funds contributed by the insured members specifically for their insurance must insure all eligible members, or all except any as to whom evidence of individual insurability is not satisfactory to the insurer.
• The policy must cover at least 25 members at date of issue; and
• The amounts of insurance under the policy must be based upon some plan precluding individual selection either by the members or by the union.

Public Employee Associations

Public employee associations – policies issued to an employer, or to the trustees of a fund established by an employer, to insure employees. The following are requirements for public employee associations:

• All employees (may include subsidiary companies, affiliated corporations, partnerships, retired employees) must be eligible for insurance under the policy;
• The premium for the policy is paid by the policyholder, in whole or in part, or from the association's own funds, or from both;
• No policy may be placed in force unless and until at least 75% of the then eligible employees, have elected to be covered and have authorized their employer to make any required deductions from salary;
• The rate of charges to the insured employees for the insurance, and the dues of the association if they include the cost of insurance, are determined according to each attained age or in not less than four reasonably spaced attained age groups. In no event will the rate of such dues or charges be level for all members regardless of attained age;
• The policy must cover at least 25 persons at date of issue; and
• The amounts of insurance under the policy must be based upon some plan precluding individual selection either by the employees or members or by the association.

Public employees means employees of the United States government, or of any state, or of any political subdivision or instrumentality of any of them.

1. Other Group Life Provisions – addition to the existing text

Conversion – If the insurance on a person covered under the policy ceases because of termination of employment, the certificate owner is entitled to have issued by the insurer, without evidence of insurability, an individual policy of life insurance without disability or other supplementary benefits. This right should be exercised within 31 daysof group policy termination.  The individual policy may be any form usually issued by the insurer at the age and for the amount applied for (the group policy may exclude the option to elect term insurance). The individual policy may not be for the amount larger than under the terminated policy, but no less than $1,000.

Types of Life Policies

1. Flexible Premium Policies

Indexed Universal Life – new topic on the outline

Indexed universal life is a universal life policy with an equity index as its investment feature. It has many of the same characteristics as the variable universal life (flexible premiums, an adjustable death benefit, the policyowner decides where the cash value will be invested) with the primary difference being the investment feature. Under a variable universal life policy, the policy’s cash value is dependent upon the performance of one or more investment funds. Under the equity index universal policy, the policy’s cash value is dependent upon the performance of the equity index. Cash values and death benefit are not guaranteed. Sale of the equity indexed universal life product does not require a securities license (whereas the sale of variable universal life does require a securities and life license).

Federal Tax Considerations for Life Insurance

1. Qualified Plan Requirements – topic deleted from the outline

C. Taxation of Qualified Plans – topic deleted from the outline  

The following are content additions to supplement your existing text unless otherwise indicated:

PROPERTY & CASUALTY

Insurance Regulations

1. Marketing Practices

Rebating/Illegal Dealing in Premiums – updated the dollar amount

Rebating is defined as any inducement offered in the sale of insurance products that is NOT specified in the policy. Rebates include money, prizes, or merchandise, and could also include reductions in commissions, promises, employment, dividends, stocks, and personal services. Both the offer and acceptance of a rebate are illegal. This regulation does not apply to the insurer's advertising or promotional programs in which all insureds or prospective insureds are given prizes, goods or merchandise not exceeding $100 in value per person in any 12-month period.

Illegal Inducements – updated the dollar amount

It is unlawful to offer any of the following as an inducement to buy insurance:

• Any shares of stock or securities;
• Any special advisory board contact;
• Any agreement promising profits, special returns or special dividends; or
• Any prizes or goods with an aggregate value in excess of $100.

PROPERTY

Other Types of Property Insurance

1. Farmowners/Ranchowners Policy

Farm Liability Coverage Forms – new topic on outline

The farm liability form is similar to the commercial general liability coverage form. It provides protection for bodily injury and property damage, personal and advertising injury, and medical payments in the form of coverages H, I and J.

Coverage H – Bodily Injury and Property Damage Liability provides protection for bodily injury and property damage claims from liability arising out of the farming business and personal acts of the insured. Although it covers the business of farming, it specifically excludes coverage for businesses other than farming and contains the business pursuits and professional services exclusions similar to personal liability coverage.

Coverage I – Personal and Advertising Injury Liability is similar to the coverage as provided in the general liability coverage form. However, advertising injury is covered only if the offense is committed in the course of advertising the insured's farm-related goods, products, or services.

Exclusions under this coverage include intentional acts, contractual liability, breach of contract, failure of goods to perform, and any offense committed by an insured who is in the broadcasting business.

The personal injury coverage follows the coverage provided in the General Liability coverage form.

Coverage J – Medical Payments agrees to pay reasonable medical expenses caused by an accident, regardless of fault, if the expenses are incurred and reported to the insurer within 3 years of the accident date. Coverage applies only to a person who is not an insured. This means that farm employees are excluded from this coverage. However, resident employees are included.

CASUALTY

Commercial General Liability and Commercial Crime

1. Commercial Crime

Employee Dishonesty

Employee dishonesty, also known as fidelity, is defined as a loss of company money, securities and other property caused by employee theft, burglary, and robbery.

This commercial crime fidelity bond does not cover losses that can only be proved by inventory computation. Coverage may be written on a blanket basis (covering all employees), on a per-loss basis, or on a scheduled basis (the coverage applies per employee). Further, scheduled coverage may be written on a named-schedule basis, in which each covered employee is named, or on a position-schedule basis, in which just the job title (position) is named and whoever holds the position is covered.

Other Types of Casualty Insurance

Farmowners/Ranchowners Policy – new topic on outline

The farmowner or ranchowner policy is a package policy designed for family-owned farming or ranching operations. This design of this policy is patterned after the homeowners policy. Section I of the policy covers the dwelling and other structures, personal and farm property of the insured. Section II provides personal liability coverage for the insureds and also includes farm liability coverage for the business of farming or ranching.

 Surety Bonds – additions to existing text

Bond Underwriting Process

When the principal comes to a surety in need of a bond so as to perform a function, get a license, appeal a court judgment, get out of jail, or whatever else it may be that demands a guarantees provided by a surety, the bond underwriting process begins. Depending upon the nature of the guarantee, the surety will wish to satisfy itself that if a bond is written, there will be no default. In the underwriting process the surety will satisfy itself on the character of the principal, the principal's financial resources, and the experience or capabilities of the principal to perform.

If the principal is lacking in financial resources, the surety may require a financially responsible indemnitor to guarantee the bond in the case of default by the principal. Other tools used by a surety to secure a bond may be the requirement that the principal collateralize the bond by the deposit of cash or other valuable property to be held by the surety for the lifetime of the bond, subject to return when the principal has fulfilled the obligation.

Once the surety has satisfied itself, the bond is executed by an attorney-in-fact. Usually, a surety will appoint their general agents as attorney-in-fact through a limited power of attorney to execute bonds of certain types, subject to maximum penalties, requiring others be executed by their own specialists.

Public Official Bond

A public official holds office through election, selection, appointment, or employment, and is held accountable to the public to faithfully perform his or her duties according to the respective governing laws and regulations. A public official can be a government manager, a judge or court clerk, a mayor or sheriff, or even a tax collector. The public official is most often required to obtain a public official bond. These bonds are issued so as to comply with a statute requiring the bond, cover whatever liability the statute impose, and are written for the term the public official is elected.

Statutory, Common Law, or Voluntary

A public official bond may be required by law, or it may be voluntary. A bond required by law may be statutory and due to a written law passed by the legislature. It may also be required by a common law based on previous court rulings. A public official bond may also be voluntarily obtained by the public official. A statutory bond is obtained from the government entity. A non-statutory bond uses a generic public official form.

Individual vs. Schedule

A public official individual bond is written in the name of a single public official. The guarantee is limited to the actions of the named individual.

A named schedule bond is issued to an employer, and attached to the bond is a list, or schedule, of names of employees or public officials to be covered by the bond. A specific amount of dollar coverage is assigned to each employee. The named schedule bond is used for a group of public officials, such as a school board or city council.

A position schedule bond is also issued to an employer, but rather than insuring individuals by name, attached to this bond is a schedule of positions. A specific amount of dollar coverage is assigned to each position. Turnover is often the reason a position schedule bond is chosen over the individual or named schedule bonds.

Fiduciary Bonds

Fiduciary Bonds, which may be issued for executors or administrators of an estate, guardians, or trustees, guarantee that the fiduciary will perform and act in the best interest of the party they represent. A fiduciary is someone that handles property or money for another, and has a duty to do so in a responsible manner.

Insurance Regulations

1. State Regulations for Casualty Only
2. Automobile Insurance

Total Loss – new topic on outline

When adjusting or settling vehicle total losses, insurers must take reasonable steps to ensure that the agreed value is accurate and representative of the actual cash value (ACV) of a comparable motor vehicle in the principally garaged area. Methods for settlement of total loss claims include the following:

1. Replacing the loss vehicle: offering to replace the loss vehicle with a comparable motor vehicle that is available for inspection within a reasonable distance from where the loss vehicle is principally garaged.
2. Cash settlement: offering a cash settlement based on the cash value of a comparable motor vehicle, minus any applicable deductible. The insurer may use licensed dealer quotes (at least two), advertised data comparisons, or other applicable statistically valid computerized sources.
3. Appraisal: invoking an appraisal provision, in the case that the first party claimant and the insurer fail to agree on a cash value of the loss vehicle.

The Washington Administrative Code has established the following settlement requirements for insurers for total loss claims:

• Communicate settlement offers to the claimant by phone or in writing (the information must be documented in the claim file, including the date, time, and name of the person to whom the offer was made);
• Base all offers on itemized and verifiable dollar amounts for vehicles that are currently available, or were available within 90 days of the date of loss;
• Use relevant information when determining deductions and additions;
• Provide a true and accurate copy of any valuation report; and
• Include all applicable government taxes and fees had the claimant purchased the loss vehicle immediately prior to the loss must be documented in the settlement amount.