January 23, 2025
OLYMPIA, Wash. — If an insurance company violates Washington state law in a way that financially harms a policyholder, the path to financial justice goes through the court system.
House Bill 1199, agency request legislation prime sponsored by Representative Jamila Taylor (D–Federal Way), would close that loophole by granting the state Insurance Commissioner’s office the authority to require a company or person committing illegal actions to pay restitution.
Insurance Commissioner Patty Kuderer will testify to the House Consumer Protection and Business Committee about HB 1199 on Friday morning.
“Their only way to get their money back is to take the company or person to court,” Kuderer said. “Any fine we collect goes into the state general fund. It does not make the policyholder whole.”
Restitution could 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 care sharing ministry, 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.
Additionally, 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; HB 1199 would align the two, allowing for per-violation fines of up to $10,000 for property and casualty insurance companies.
“As the new insurance commissioner for Washington state, I don’t believe we should be passing people off to seek help in the already clogged court system when we could be providing restitution directly,” Kuderer said. “Our primary mission at the OIC is consumer protection. People expect us to help them when they’ve been so clearly wronged.”
Kuderer’s office investigates complaints from consumers about insurance companies or their licensees, issues cease-and-desist orders, imposes fines, and takes action in court to prevent that person or business from continuing their illegal actions. The OIC issued $1.86 million in fines last year and has collected a total of $42.3 million in fines since 2001 — but that money goes to the state general fund.
Restitution payments would also include 8% simple interest from the date the obligation arose.
A companion bill, SB 5331, has also been introduced in the Senate by Senator Adrian Cortes (D – Battle Ground).
Friday’s complete hearing will be available on TVW.