SSB 5331
In CommitteeSenate
Insurance code violations
Strengthening consumer protection through increased insurer accountability for violations of the insurance code.
This status may be delayed. See Action History below for the latest updates.
How does a bill become law?
- Introduced: The bill is filed and assigned a number.
- Committee: A subject-matter committee holds hearings, takes public testimony, and decides whether to advance the bill.
- Floor Vote: The full chamber (House or Senate) debates and votes on the bill.
- Opposite Chamber: The bill repeats the committee and floor vote process in the other chamber.
- Governor: The Governor reviews the bill and decides whether to sign or veto it.
- Signed: The bill has been signed into law.
AI Analysis
This bill strengthens the Insurance Commissioner’s ability to enforce insurance laws by expanding tools to penalize insurers who break the rules—such as issuing cease and desist orders, ordering restitution to consumers, and imposing civil fines up to $10,000 per violation. It also clarifies how restitution and fines are handled and ensures legal support for enforcement actions.
- Empowers the Insurance Commissioner to issue cease and desist orders, file lawsuits to stop violations, and order restitution to harmed consumers.
- Requires the Commissioner to refer criminal insurance violations to local prosecutors for potential criminal charges.
- Allows the Commissioner to order insurers to pay restitution with 8% simple interest within 30 days of the order.
- Increases the Commissioner’s authority to impose civil fines on insurers from $250 to $10,000 per violation, with fines due within 15–30 days.
- States that failure to pay fines may result in automatic revocation of the insurer’s license and civil collection by the Attorney General.
- Clarifies that the Attorney General and local prosecutors must represent the Commissioner in legal proceedings related to insurance code enforcement.
Who is affected
- Insurance companies — Insurance companies that may face fines, restitution orders, or loss of operating licenses if they violate state insurance laws.
- Washington consumers — Consumers who may receive refunds or compensation if insurers overcharged, withheld benefits, or otherwise violated insurance rules.
- Prosecutors and the Attorney General — State and local prosecutors who may be asked to support enforcement actions initiated by the Insurance Commissioner.
- State of Washington — The state government, which receives fines collected under the bill and uses them to support the general fund.
Pro/Con Analysis
Stronger case for benefits
Potential Benefits (4)
Consumers harmed by insurer violations (e.g., overcharging, denied benefits) gain a stronger, faster path to restitution—including 8% interest—and the Commissioner can now order refunds within 30 days, improving access to justice and timely redress.
consumer protectionPeopleRef: Sec. 1(5); Sec. 1(3)(c)Enhanced enforcement tools—including cease-and-desist orders, lawsuits, and mandatory criminal referrals for penal violations—strengthen deterrence against systemic insurance fraud or bad-faith practices that harm public trust and financial security.
Public SafetyPeopleRef: Sec. 1(2); Sec. 1(3)(a)-(d)Clarified legal representation obligations for prosecutors and the Attorney General reduce jurisdictional ambiguity and improve coordination in enforcement, supporting consistent application of insurance law across counties.
Local GovernmentLean peopleRef: Sec. 2The state general fund receives fines up to $10,000 per violation, generating modest new revenue; however, this is offset by increased enforcement costs borne by state legal offices, resulting in a net fiscal neutral-to-slightly-positive effect.
FinancialRef: Sec. 2
Potential Concerns (1)
Insurers may face significant financial penalties ($10,000/violation) and operational disruption (license revocation) for violations, potentially increasing compliance costs and reducing profitability—especially for smaller insurers with limited legal resources.
Business & EmploymentPeopleRef: Sec. 1(5); Sec. 2
Who Is Most Affected
Consumers who experience insurance violations (e.g., wrongful denial of claims, overcharging) gain a more effective and timely path to restitution and redress, especially low- and middle-income households who may lack legal resources to pursue individual claims.
Insurers—particularly small- and mid-sized firms—face higher compliance risks and costs due to expanded penalty authority and automatic license revocation for nonpayment of fines; large insurers may absorb costs more easily but still face reputational and operational risks.
Prosecutors and the Attorney General gain clearer statutory mandates to support enforcement actions, reducing legal uncertainty—but may face increased workload without additional funding, straining already limited resources.
The state benefits from increased fine revenue and stronger consumer protection, but must allocate resources to support the Commissioner’s enforcement capacity and legal representation, potentially diverting funds from other priorities.