Washington Insurance Commissioner Advances Reforms Despite Legislative Setbacks
Insurance Commissioner Patty Kuderer’s proposal to study the use of credit scores in insurance underwriting will proceed as part of the state budget, despite not passing before the end of Washington’s legislative session. Meanwhile, legislation aimed at expanding the commissioner’s authority to order restitution from insurers is expected to return in the next session.
The restitution bill, which passed the Senate in March, would have allowed Kuderer to require insurers to compensate policyholders directly for insurance code violations. It also sought to impose fines of up to $10,000 per violation for property/casualty carriers, matching penalties already in place for health insurers. However, the bill stalled in the House Consumer Protection and Business Committee after an amendment introduced a cap on total fines, which Kuderer said weakened the bill’s intent.
According to a Best Wire report, Kuderer noted that the cap was introduced amid concerns from industry representatives who argued the bill could lead to excessive penalties and regulatory overreach. The Northwest Insurance Council said the proposed per-violation fines could result in “truly massive fines.”
Despite the setback, Kuderer said the bill will return in the next legislative session. As Washington operates on a two-year legislative cycle, the measure remains eligible for consideration. Kuderer emphasized that some lawmakers may reconsider their position, particularly given the bill’s focus on allowing consumers to recover restitution without needing to take legal action.
“There are times when someone will forego going into the court system because it’s more expensive than the restitution they might receive,” Kuderer explained.
A separate measure to study the use of credit scores in insurance pricing failed to pass as a bill but will advance as a budget proviso. The study will examine whether credit-based insurance scores disproportionately affect certain policyholders and explore alternatives. Kuderer noted that the inclusion of the study in both chambers’ budgets indicates strong legislative support.
The commissioner is also launching a study on a grant program to help homeowners and businesses reduce disaster-related risks. She plans to travel across the state to hear from residents about their insurance concerns and preparedness efforts. Kuderer raised concerns about proposed federal cuts to FEMA, NOAA, and the National Flood Insurance Program, which she said could increase risk for consumers.
“These decisions have broader implications,” Kuderer warned. “We’re not just talking about budgets – we’re talking about people’s access to insurance and financial protection.”
Additionally, Kuderer warned that letting health insurance premium tax credits expire could result in 80,000 Washingtonians losing coverage and destabilize the individual market.
