Washington House Bill 2394: Tackling Insurance Fraud Effectively

Insurance fraud poses a significant financial challenge in Washington, costing millions annually. Current legislation does not effectively target many complex fraud activities, allowing them to proceed without prosecution. For instance, individuals might purchase an insurance policy only after an accident, then falsely claim the incident occurred subsequently. Under existing laws, such deception often avoids being charged as a distinct crime.

In response, Washington lawmakers are considering House Bill 2394, introduced by Rep. Roger Goodman at the request of the state’s Insurance Commissioner. This proposed bill aims to classify insurance fraud as an independent criminal offense, detailing broader behaviors that constitute fraudulent activities and enabling victims, including consumers, to receive restitution. Each fraudulent act would be considered a separate offense and could be charged as a Class B felony.

Addressing Technology-Driven Insurance Fraud

"Technology-driven schemes are enhancing the prevalence of insurance fraud," said Goodman, emphasizing the need for updated regulatory measures to combat these issues. Currently, Washington does not specifically define insurance fraud under its criminal statutes but rather relies on general laws against theft, false statements, and consumer protection violations. HB 2394 seeks to remedy this by establishing a 10-year statute of limitations beginning either from the date of the act or upon discovering the fraud.

The absence of a dedicated statute has become increasingly apparent as the state’s Office of the Insurance Commissioner (OIC) sees a rise in fraud referrals. According to Deputy Insurance Commissioner Aaron VanTuyl, there were 4,252 referrals in 2025 compared to 3,246 in 2022. Although not all referrals lead to criminal cases, expanded outreach has unveiled new fraud methods.

Expanding Definitions and Enforcement

Nationwide, insurance fraud is estimated to cost consumers over $300 billion annually, as reported by the Coalition Against Insurance Fraud. The National Association of Insurance Commissioners attributes approximately 10% of property and casualty insurance losses to fraud, expenses often transferred to policyholders through higher premiums.

The bill further broadens the definition of insurance fraud to include activities such as identity theft, document falsification, appraisal manipulation, premium fraud, and staged or misleading claims. These fraudulent schemes are notably common within health care, workers’ compensation, and auto insurance sectors. VanTuyl noted that such fraud cases might take extended periods to manifest, especially when they are embedded in digital systems or spread across multiple claims. "These schemes are becoming more advanced and collaborative," he stated.

Enhancing Regulatory Compliance and Accountability

Additionally, the proposal would mandate expanded reporting of suspected insurance fraud by regulators overseeing health care and financial services. Such information would be directed to the OIC's criminal investigations unit, which seeks enhanced authority to tackle larger, tech-facilitated cases. Insurance Commissioner Patty Kuderer highlighted the outdated nature of current enforcement tools, likening them to "bringing pencils to a computer fight."

Parallel legislation, Senate Bill 6031, sponsored by Sen. John Lovick, supports similar goals and has been approved by the Senate Business, Trade and Economic Development Committee. If either bill is enacted, it would become effective 90 days post the legislative session’s conclusion.

Providing the OIC with these legislative instruments is anticipated to improve accountability among violators, as Goodman expressed confidence in the legislation's potential impact.