March 19, 2025
OLYMPIA, Wash. — Washington state Insurance Commissioner Patty Kuderer made her case for Senate Bill 5331 on Wednesday, stressing the importance of restitution payments for people financially harmed by an insurance company or agent.
“As the consumer watchdog, people expect us to help them when they’ve been harmed by a company they’ve trusted,” Kuderer said during testimony before the House Consumer Protection & Business Committee. “They expect us to be able to make them whole.”
The bill, requested by Kuderer and prime sponsored by Senator Adrian Cortes (D - Battle Ground), grants the Insurance Commissioner the authority to require a company or person violating insurance laws to pay restitution.
Kuderer cited the 120 complaints her office received about Seguro Medico, a sham health insurance company with a history of selling fake plans, drafting fees out of victims’ bank accounts without permission and demanding thousands of dollars for new policies after their victims learned their initial plans were useless.
Despite defrauding victims out of an estimated $777,000, the only action Kuderer’s office was legally able to take against the company was a $100,000 fine and suspension of its agents’ licenses.
SB 5331 would change that and would apply in all types of insurance situations. Currently:
- When an insurance company uses rates that haven’t been approved by the Insurance Commissioner, there is no mechanism to order repayment to policyholders who have overpaid.
- If an unauthorized insurer, like an illegal health insurer, defrauds policyholders, the Insurance Commissioner can fine the company but cannot order them to repay the money they took.
- If an insurance agent collects premiums but doesn’t forward that money to the insurance company — leaving the policyholder without coverage — the Insurance Commissioner can’t require them to repay the money they took.
The Insurance Commissioner’s authority to fine property and casualty insurers — which include home and auto insurance companies — is limited to $10,000, regardless of the number of violations. For health insurers, the limit is $10,000 per violation or offense; SB 5331 would align the two, allowing for per-violation fines of up to $10,000 for property and casualty insurance companies.
Washington is an outlier in how it fines property and casualty insurance companies for law violations, Kuderer said, noting that 37 states issue fines on a per-violation basis.
“Fines help incentivize the insurer or individual to come back into compliance and helps deter them from harming consumers in the future,” she added.
Kuderer previously testified on SB 5331’s companion House Bill 1199.
Wednesday’s complete hearing is available on TVW.