The Washington State Senate passed a bill that gives the insurance commissioner authority to order restitution for consumers by companies or people committing illegal acts. 

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

Sen. Andrian Cortes (D-18), bill sponsor, told the Senate Monday that the bill strengthens consumer protection in the state by giving the insurance commissioner additional enforcement tools if an insurance company is violating the law. 

“It’s critical that we have pathways for consumers to receive restitution if they’ve been harmed by an insurer,” Cortes said. “Right now, if someone has been harmed by an insurer, they can only receive justice if the insurers consent to do so.” 

Cortes said the insurance commissioner continues to discuss and work with insurance groups on the bill. 

Sen. Perry Dozier (R-16) spoke against passage of the bill. He said more collaborative effort is needed to strengthen the bill. 

“Insurance rates are going up dramatically, and we need to be able to protect those consumers,” Dozier said. “At this point right now, I don’t believe that they have come together between OIC and the industry to move this bill forward.” 

Currently, the OIC can fine insurance companies if they violate the law but cannot order restitution to consumers, an OIC press release says. Collected fines go to the state’s general fund. 

“The OIC was designed to be a one-stop consumer protection shop,” said Insurance Commissioner Patty Kuderer in the release. “But when people are wronged, we can’t order an entity or individual to pay back the money owed. This bill corrects that.”

Kuderer previously told the Senate Committee on Business, Financial Services & Trade that most insurers do the right thing and cooperate with the OIC when a mistake is made. 

“But not every one of them does,” Kuderer said. 

Insurance advocacy groups have spoken against the bill. 

A representative of the American Property Casualty Insurance Association (APCIA) previously 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.

The bill passed 30-19. It still needs approval from a House committee and the floor before moving to the governor.

Another bill passed the Washington state Senate Monday that would require a study on how insurance companies use credit history, credit-based insurance scores, and other rate factors to set premiums. For more information read here.

IMAGE

Sen. Andrian Cortes (D-18) speaks in support of his bill SB5331 on the Washington Senate floor March 3/screenshot.