Washington’s Senate Bill 5331, a newly presented piece of consumer protection legislation sponsored by Senate Business, Financial Services & Trade Committee and requested by the state’s Insurance Commissioner, would give the Office of the Insurance Commissioner (OIC) new authority to order restitution to policyholders harmed by established violations of state insurance law. Under current law, the OIC can issue fines and cease-and-desist orders but cannot compel insurers or agents to pay back money wrongfully taken. Senate Bill 5331 aims to change that and allow restitution with 8% simple interest, as well as update fines for property and casualty insurers to $10,000 per violation, rather than a single $10,000 cap.
Senate Bill 5331 passed the Washington State Senate with a bipartisan supported vote of 29-20 and is currently moving to the House Consumer Protection & Business Committee for further consideration. If it clears the House and is signed by the governor, it would take effect 90 days after adjournment of the session in which it is passed. Should Senate Bill 5331 become law, insurance carriers doing business in Washington should prepare for enhanced enforcement tools at the OIC’s disposal. This includes potential orders to provide direct restitution to policyholders, not just fines, when violations are found, and exposure to per-violation fines for compliance gaps. Insurers should review compliance protocols, documentation practices, and premium handling procedures to mitigate risk of enforcement actions that could result in restitution obligations.
Lether Law Group has extensive experience in handling insurance regulatory violation claims and provides comprehensive legal advice to insurance carriers for how to avoid regulatory violations. To the extent you have any questions regarding Senate Bill 5331 and the potential implications should the bill pass, or compliance with Washington insurance regulations, we invite you to contact us directly.
