Policyholder protections must be stronger, and insurance pricing needs to be more transparent, Washington Insurance Commissioner Patty Kuderer told BestWire while outlining her 2025 legislative priorities.
On Jan. 15, she became Washington’s ninth insurance commissioner. Kuderer, a former state senator, replaced Mike Kreidler, who left after nearly 25 years to retire to ranch life.
Just over a week later, she testified before the state House Consumer Protection and Business Committee in favor of a bill that would give her office the authority to order insurers to pay restitution directly to policyholders for insurance code violations. The bill, a major priority for her, also mandates an 8% simple interest rate on restitution payments.
She said this change would ensure policyholders recover their losses when a carrier violates the insurance code. Currently, fines collected by the commissioner’s office go into a general fund.
House Bill 1199 Seeks Per-Violation Fines for P&C Insurers
The bill would also reduce court burdens by providing a direct resolution method for policyholders, Kuderer said.
Good insurers already pay restitution voluntarily. But bad actors don’t, and we have no way to force them.
Industry trade groups questioned the need for this authority, arguing that property/casualty insurers already compensate policyholders in addition to paying fines.
However, the commissioner’s office countered that current laws lack a specific restitution requirement. For instance, if an insurance producer defrauds a consumer, the commissioner can revoke their license and issue a fine but cannot ensure the consumer gets their money back.
“The bill would allow these consumers to recover their losses without hiring an attorney and going to court,” Kuderer said. Her office clarified that restitution orders would apply to bad actors, not companies that voluntarily resolve claims.
House Bill 1199 and its Senate counterpart would also let regulators impose fines on a per-violation basis for property/casualty insurers. This would align their penalties with those for health insurers, who already face per-violation fines.
The property & casualty insurers opposed this, arguing that regulators already have the power to negotiate penalties exceeding $10,000, making the per-violation language unnecessary.
If the current cap is $10,000, but the Office of the Insurance Commissioner (OIC) can negotiate a $40,000 fine plus restitution, it’s concerning to consider what penalties could result from a per-violation fine
Kuderer dismissed these concerns. “All other types of insurance already have per-violation penalties, and we haven’t seen excessive fines. There’s no reason it would be different for property/casualty,” she said, noting that 40 other states follow similar practices.
Budget Increase for Insurance Claims Review
Beyond legislative changes, Kuderer is requesting an increased budget to establish a claims review team. The $470,000 request would fund three full-time employees to address rising consumer complaints.
People are frustrated with claims handling. They face unreasonable delays and unjustified denials, and that’s reflected in the complaints we receive.
Ideally, the claims team would resolve disputes before they escalate to litigation.
“You shouldn’t need a lawyer to get a valid claim paid,” she said, emphasizing the office’s role in protecting consumers.
Transparency in Underwriting Practices
Kuderer is also pushing for authorization to study underwriting practices that may unfairly impact policyholders based on race, gender, economic status, or national origin. This effort continues the previous commissioner’s push against credit-based insurance scoring.
Mike Kreidler attempted to ban credit-based insurance scoring for certain personal lines, but a state court blocked the rule before it took effect.
Policyholders frequently question why their premiums increase, Kuderer said, reinforcing the need for a more transparent pricing system.
“People saw their premiums go up but didn’t understand why,” she said.
Consumer Education and Disaster Preparedness
Beyond legislation, Kuderer is focused on educating policyholders about claim mitigation and natural disaster preparedness. She is also working with lawmakers to fund investments that strengthen entire communities against disasters.
Referencing the Pacific Palisades fires, she noted that homes with fire-resistant technology survived, but property owners returned to devastated neighborhoods.
This proves that isolated fire-resistant homes aren’t enough. Entire communities need to be strengthened.
Community-wide disaster preparedness will be central to her outreach efforts. She also plans to work with lawmakers to identify threats and develop solutions.
Her time in the Senate gives her an advantage in her new role, as she understands the legislative process and has established relationships with current lawmakers.
In the US, two major hurricanes and frequent severe thunderstorms accounted for at least two-thirds of the year’s global insured losses, which currently exceed $135 bn.
For the fifth consecutive year, insured losses from natural catastrophes have surpassed $100 bn. Rising losses are driven by growing value concentration in urban areas, economic expansion, and higher rebuilding costs. Climate change is increasingly contributing to catastrophe risks, underscoring the need to prioritize mitigation and adaptation measures.”
- Estimated insured losses from natural catastrophes on track to exceed $135 bn in 2024
- Hurricane Helene and Hurricane Milton severely impacted the US, resulting in estimated insured losses approaching $50 bn
- Storm Boris mixed cold Arctic air flowing southwards with unusually warm air from the east and south, drawing moisture from a record-breaking warm Mediterranean Sea.
At least two thirds of this year’s insured losses are attributable to the US: Two major hurricanes made landfall within a fortnight on the coast of Florida in September and October this year. Hurricane Helene made landfall as a major hurricane on 27 September, followed by Hurricane Milton on 9 October.
Insured losses from both hurricanes are expected to amount to below $50 bn as of today. Additionally, 2024 experienced a high frequency of severe thunderstorms (severe convective storms, or SCS), which affected mostly the US.
Insured losses from SCS are expected to add more than $51 bn globally for 2024 as of today, the second-highest loss after the record high of approximately $70 bn in 2023.
FAQ
Kuderer’s top priority is passing a bill that allows her office to order insurers to pay restitution directly to policyholders for insurance code violations. The bill also includes an 8% simple interest rate on restitution payments.
Currently, fines collected from insurers go into a general fund, and policyholders must go to court to recover losses. The bill would give policyholders a direct way to get reimbursed without hiring an attorney.
Industry trade groups argue that regulators already have the authority to negotiate penalties beyond $10,000, making a per-violation fine unnecessary. They fear it could lead to excessive penalties.
She wants authorization to study whether certain underwriting practices disproportionately impact policyholders based on race, gender, economic status, or national origin. This follows previous efforts to eliminate credit-based insurance scoring.
She is seeking $470,000 to fund a claims review team with three full-time employees. This team would help address rising consumer complaints related to delays and denials in claims processing.
She is promoting community-wide investments in disaster resilience. She points to the Pacific Palisades fires as an example, where individual homes with fire-resistant technology survived, but the surrounding community was destroyed.
Her legislative experience gives her an advantage in passing insurance reforms. She understands the process and has established relationships with lawmakers, making it easier to push for policy changes.
