A bill that would provide restitution for policyholders harmed by their insurance company or agent passed the Washington State Senate with a vote of 29-20 on January 21. Senate Bill 5331 was requested by Washington State Insurance Commissioner Patty Kuderer, with Sen. Adrian Cortes, D- Battle Ground, serving as the prime sponsor.
The bill grants the state insurance commissioner the authority to require a person or company violating insurance laws to pay restitution to affected policyholders. The Office of the Insurance Commissioner’s ability to fine would include all insurance entities regulated by the office.
“As the consumer watchdog, people expect us to help them when they’ve been harmed by a company they’ve trusted,” Kuderer said in a release. “They expect us to be able to make them whole.”
SB 5331 doesn’t just grant the commissioner the authority to impose fines, but it also aligns violation fee schedules between property and casualty insurers and health insurers. Under current state law, the commissioner may only fine certain P&C insurers a total of $10,000, regardless of the number of violations. For health insurers, however, the fine limit is $10,000 per violation. This bill allows for per-violation fines up to $10,000 for property and casualty insurance companies.
Kuderer noted that Washington’s current fine schedule is an outlier in the U.S., with 38 other states currently operating 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,” Kuderer said.
SB 5331 would cover all types of insurance situations where a policyholder was harmed, with the commissioner’s office providing the following examples of when it may apply:
- When an insurance company uses unapproved rates, there is currently no mechanism to order repayment to customers who have overpaid.
- If an unauthorized insurer defrauds policyholders, the insurance commissioner may currently only fine the company, not order it to repay the money it took.
- If an agent collects premiums but doesn’t forward them to their insurance company, it could leave policyholders without coverage. Under current law, the commissioner can not require the agent to repay the money in these situations.
North Dakota enacted similar legislation in April 2025 that Washington’s OIC says was based on Kuderer’s bill. Recently, North Dakota Insurance Commissioner Jon Godfread sat down with Kuderer on the Washington OIC’s podcast to discuss why he felt the legislation was important.
Godfread told Kuderer that there is an assumption among insurance policyholders that if they go to their state’s insurance authority with a problem and the insurance company is found to be in the wrong, they will get their money back. However, he said, there are instances where the OIC is unable to negotiate with companies to compensate the affected insureds, and these bills give the commissioner more power to enforce restitution.
“We’re going to make that consumer whole, to the best of our ability,” Godfread said on the podcast. “And because again, if this wasn’t a fault of their own or if this was done by a bad action of a company, you know, it’s our responsibility to make sure that they’re whole, and this law gives us the ability to do that.”
SB 5331 will now go to Washington’s House Consumer Protection & Business Committee for consideration.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.