Washington State Advances Insurance Compliance with Senate Bill 5331

Washington State is advancing its insurance regulatory framework with the progression of Senate Bill 5331, which passed the State Senate on January 21 with a 29-20 vote. Spearheaded by Washington State Insurance Commissioner Patty Kuderer and supported by Sen. Adrian Cortes, this legislation seeks to align the state's practices with national norms.

The bill aims to grant the insurance commissioner authority to enforce restitution payments by entities violating insurance laws, benefiting affected policyholders. It strives to standardize violation fees across various segments of the insurance market. Currently, the law caps fines for property and casualty insurers at $10,000 regardless of infractions, while health insurers face up to $10,000 per violation. Senate Bill 5331 proposes imposing a per-violation fine structure for property and casualty insurers as well.

Enhanced Compliance and Regulatory Alignment

The intention behind the legislative shift is to bolster compliance measures and deter violations, as highlighted by Commissioner Kuderer. Washington's current setup is unlike the majority of states, where fines are per-violation. The legislative change mirrors existing regulations in 38 other states, with North Dakota serving as a reference point. North Dakota Insurance Commissioner Jon Godfread underscores the need for regulatory powers to restore affected consumers due to insufficient negotiations with insurance carriers.

The passage of Senate Bill 5331 represents a significant stride towards compliance enhancement in Washington, promising to increase the regulatory compliance requirements for insurers. The bill now advances to Washington’s House Consumer Protection & Business Committee for further review, impacting the insurance industry by elevating compliance standards and financial liabilities for insurers in the state.