The Washington Senate Committee on Business, Financial Services & Trade approved a bill last week that would grant the state’s Insurance Commissioner the authority to require a company or person committing illegal actions to pay restitution 

SB5331 also authorizes the Insurance Commissioner to fine property and casualty insurance companies up to $10,000 per violation rather than issue a total fine of $10,000. 

Washington Insurance Commissioner Patty Kuderer testified in support of the agency requested legislation during a January public hearing for the bill. 

“The Commissioner Request Legislation provides critical additional enforcement tools to the Office of the Insurance Commissioner,” Kruderer said. “I want to be very clear, this bill is designed to address bad actors only.” 

She said her office needs the authority to hold the illegal insurers and the scammers accountable. 

“Most insurers and producers, they do the right thing by their policy holders and cooperate with us when a mistake is made,” Kuderer said. “But not every one of them does.” 

Imposing fines, which the office is already authorized to do, helps incentivize insurers or individuals to come back into compliance and helpt turn them from harming future consumers, she said. 

“We need the authority to institute restitution at the same time that we find a violation of the law,” she said. 

Restitution will keep consumers having to go through the court system, she said. 

“Every other insurer in our state and producer is held to a per violation standard, except property casualty insurers,” Kuderer said. “We think it’s time to put them on parity with the rest of the insurers in the state and have a per violation fine schedule.”

Kenton Brine, president of the Northwest Insurance Council, said property casualty insurers routinely either discover errors on their own or have errors that are discovered by the Insurance Department or by a consumer complaint. He said insurance companies routinely pay fines well in excess of ten thousand dollars or more. Companies also pay restitution by refunding premiums or taking other actions to reimburse policy holders, he said. 

A representative of the American Property Casualty Insurance Association (APCIA) said 35 states do have a per violation penalty option but many of those states have caps or a penalties tier. 

“The overarching concern with the penalties piece of the bill is the risk of unfair treatment of good actors,” the representative said. 

The representative mentioned that the current law hasn’t been amended or changed since 1980, referring to a comment made earlier by Kuderer. 

“There have been four different commissioners in the office since 1980,” the representative said. 

He said future commissioners could have a different methodology than Kuderer on how to interpret the law. 

“We want to mitigate that risk of unfair treatment of good actors and put some additional sideboards around that penalties piece.” 

Kuderer also testified to the House Consumer Protection and Business Committee in January for a companion bill HB1199. The bill missed its Friday deadline to move to the Rules Committee, ultimately dying in committee.

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Washington Insurance Commissioner Patty Kuderer testifies during a Washington Senate Committee on Business, Financial Services & Trade during a January public hearing/screenshot of hearing