Producer Duties & Responsibilities

Fiduciary Duty

Oregon insurance producers have a fiduciary duty to their clients:

Core Fiduciary Obligations:

1. Duty of Care: Exercise reasonable skill and diligence
2. Duty of Loyalty: Act in client's best interest
3. Duty of Disclosure: Reveal all material facts
4. Duty of Confidentiality: Protect client information
5. Duty of Competence: Maintain professional knowledge

Disclosure Requirements

What Must Be Disclosed:

• Policy limitations and exclusions
• Coverage gaps
• Premium and fee structure
• Commission arrangements (upon request)
• Insurer financial ratings
• Conflicts of interest

Timing of Disclosure:

• Before binding coverage
• At policy renewal
• When changes are made
• Upon client request

Exam Tip: Failure to disclose material facts is grounds for license discipline, even if unintentional.

Prohibited Practices

1. Rebating

Definition: Giving back part of commission or providing other inducements not specified in policy

Examples of Rebating:

• Returning commission to client
• Providing gift cards or cash incentives
• Paying client's premium or deductible
• Offering services not available to all clients

Penalty: License suspension/revocation, fines

2. Twisting

Definition: Misrepresenting policy terms to induce client to replace existing coverage

Examples of Twisting:

• Exaggerating benefits of new policy
• Minimizing disadvantages of replacement
• Failing to disclose costs of replacement
• Pressuring client to switch insurers

3. Churning

Definition: Excessive policy replacements to generate commissions

Red flags:

• Multiple replacements in short period
• No clear benefit to client
• Pattern of unnecessary changes
• Focus on commissions over client needs

4. Misrepresentation

Definition: Making false or misleading statements about insurance

Examples:

• Overstating coverage
• Understating exclusions
• Misrepresenting insurer financial condition
• False promises about claims handling

Professional Standards

Competence Requirements:

• Know your products: Understand policies sold
• Stay current: Complete CE requirements
• Specialize appropriately: Don't sell unfamiliar products
• Research when uncertain: Verify before advising

Communication Standards:

• Promptly respond to client inquiries
• Document conversations and recommendations
• Provide written confirmation of coverage
• Explain policy changes clearly

Record Keeping:

• Maintain files: For minimum 5 years
• Document advice: Keep records of recommendations
• Track communications: Emails, calls, meetings
• Preserve evidence: For potential disputes