Washington Commissioner Pushes for More Consumer Protections — Are They Necessary?

Industry trade groups like the PIA Washington and the Northwest Insurance Council are wondering why.

What is obvious is Patty Kuderer taking the reins of the Washington Department of Insurance in January and she is starting to shape her legacy. Kuderer’s first push is for new regulations she says will enhance consumer protections and increase transparency in insurance pricing.

And it will expand her regulatory authority.

At issue are two bills. They are House Bill 1199 and Senate Bill 5331. Both will require insurance companies to pay restitution directly to consumers if an insurance code violation is found in their claim process. Kuderer says current law has fines going directly into the general fund and there is no mechanism to make sure the affected consumers are compensated.

Insurers and insurance associations disagree. They contend consumers are already being made whole. However, most are not disagreeing with the larger picture but do want changes in the fine details like compensation to consumers that comes 8% simple interest added to restitution payments.

Kenton Brine is president of the Northwest Insurance Council. He told Weekly Industry News of doubts that the House bill will move but predicts passage of the Senate bill this Thursday.

“On the restitution side of the bill, we have sought amendments to limit restitution to an insured to actual economic damages so as not to include noneconomic damages like ‘emotional distress,’” he said. “And we've asked for definitional language to say what ‘date of obligation’ means for calculating 8% interest that an insurer must pay in restitution. We believe the OIC (Office of the Insurance Commissioner) is supporting a version of these requests in a way that is agreeable to the industry.”

Just to make sure Kuderer and her department are on the same page as consumers and insurers, she is asking for a budget of $470,000 to put a claims review team into place. Three full-time employees will focus on resolutions on issues between insurers and consumers.

“On the penalties side, the bill [SB 5331] as introduced allows the commission to issue fines between $250 and $10,000 on a ‘per violation’ basis. This exposes an insurer that makes a single billing mistake and overcharges 1,500 consumers to the possibility of up to $10,000 x 1,500,” Brine said. “We are seeking an amendment to do as other states have done with the ‘per violation’ standard: Add aggregate limits, and separate unintentional conduct from willful/intentional conduct. Such an amendment would allow the commissioner to issue fines of $250 to $10,000 per violation, up to $35,000 for unintentional/negligent conduct; and up to $100,000 for intentional/willful conduct.”

Brine expects the bill in the Senate to pass on Thursday “and probably without the ‘fine caps’ amendment, because the OIC will not support that. But it might be a different story when it gets over to the House.”

And, as her predecessor, Mike Kreidler pushed, Kuderer also wants a review of underwriting practices — like maybe credit scoring? — that affects people based on race, gender, income and national origin.

Source: PIA Western Alliance Weekly Industry News

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