March 3, 2025
OLYMPIA, Wash. — The Washington State Senate passed three bills with insurance implications Monday.
The legislation moving on to the House of Representatives includes a bill giving the state Insurance Commissioner the authority to order restitution to harmed policyholders and a bill studying the impacts of insurance rating factors, including credit scores.
“This is great news for the people of Washington,” state Insurance Commissioner Patty Kuderer said. “These consumer protection bills take important steps to hold insurance companies accountable for how they treat their policyholders and how my office is able to enforce violations of our insurance laws.”
The Senate also passed a technical cleanup bill on Monday and passed a bill modifying the authority for fire loss insurance data on Friday.
Restitution for harmed policyholders
Senate Bill 5331 gives the Insurance Commissioner the authority to order restitution for harmed policyholders.
The Office of the Insurance Commissioner features its own administrative law judge and law enforcement officers. It can fine insurance entities that violate the law but can’t order them to pay restitution to the people they’ve victimized.
“The OIC was designed to be a one-stop consumer protection shop,” Kuderer said. “But when people are wronged, we can’t order an entity or individual to pay back the money owed. This bill corrects that.”
Fines collected by the OIC go to the state’s general fund. They do not go to policyholders who were wronged by an illegal actor.
The bill, sponsored by Senator Adrian Cortes (D - Battle Ground) 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. For health insurers, the limit is already $10,000 per violation or offense; SB 5331 would align the two.
Studying the impact of insurance rating factors
Senate Bill 5589, proposed by Kuderer and sponsored by Sen. Bob Hasegawa (D – Seattle), requires the OIC to conduct a study on how insurance companies use credit history, credit-based insurance scores and other rate factors. The study would also explore alternatives to credit scoring that companies could use in determining premiums.
“Companies are using algorithms and technology in an increasing rate to determine premiums,” Kuderer said. “It’s my role to make sure none of those decisions are discriminatory and the data we’ll gather with this study helps us make that determination.”
Insurance companies doing business in Washington state can use a person’s credit history to set premiums for personal lines of insurance, like home, auto, liability and theft coverage. State law requires all rates and rating plans used in Washington be approved by Kuderer’s office before they’re used.
State law also states insurance rates must not be excessive, inadequate or unfairly discriminatory.
The bill requires a preliminary report to be delivered to the Legislature by December 31, 2025.
Technical cleanup bill
Senate Bill 5262 removes language related to eight one-time or outdated reports and workgroups, strikes obsolete language, updates terminology and clarifies how language is applied in the state insurance code.
Modifying reports of fire loss
The Senate passed the OIC’s fire loss reporting bill (SB 5419) on Friday. This bill shifts the authority to collect fire loss insurance data from the State Fire Marshall, within the Washington State Patrol, to the OIC. The agencies agree that the authority to collect this data is better served by the OIC, which already regulates the involved entities and insurance companies.
All four bills now move through the House of Representatives and must pass out of that chamber by April 16.