Washington State Insurance Commissioner Patty Kuderer is considering a rulemaking that would clarify and update the minimum standards for first-party and third-party insurers to comply with during any claim investigation and adjustment.

“While the state’s total number of automobile and homeowners’ insurance claims has remained consistent over the past six years, the insurance commissioner has received an increase in consumer complaints and Insurance Fair Conduct Act notices, which indicate a consumer’s intent to sue their insurer,” states a post on the Office of the Insurance Commissioner (OIC)’s website. “The spike in consumer complaints and lawsuits against insurers indicates potential insurance code violations.

“In the midst of a changing technological and workforce environment, rulemaking may update and clarify requirements to maintain a fair claim environment for consumers that will provide transparency into the decisions that affect their financial recovery.”

According to the June 18 notice of rulemaking, a claims process public meeting held by OIC in 2023 included dozens of comments and hours of testimony from consumers who explained their difficulties with insurance claims.

In July 2023, the OIC’s Consumer Advocacy Program reported a historic volume of complaints since 2021, including 467 complaints in April of that year, up from the historic average of 287 per month — a 63% increase.

Based on a 2023 survey by the Washington Independent Collision Repair Association (WICRA), only 6.9% of nearly 1,100 photo-based claims were paid in full by insurers without supplements, and only 26 of them were accurate.

The survey was on photo estimating — its accuracy, the claims handling process, and the length of time from keys to keys. Questions were sent to more than 65 independent collision repair shops, and 30 responded. The results were presented to the OIC during a July 2023 workshop.

The recent OIC notice states that Kuderer has received studies and reports from local and national observers about the claims environment, which detail delays and inaccuracies by insurance companies that harm consumers.

“[T]he commissioner has received articles, reports, and studies from insurance experts that the insurance industry is changing their claim process from an in-person, on-site, loss examination to the use of artificial intelligence and photo-based loss adjusting to maximize efficiencies,” the notice states. “Claim process disputes can occur when the insurance company fails to fairly and fully investigate the loss, and at times, forces the consumer to complete the insurance company’s investigative duties. With a changing technological and workforce environment, rulemaking may update and clarify requirements to maintain a fair claim environment for consumers that will provide transparency into the decisions that affect their financial recovery.”

Written comments from the public are due Aug. 1.

Earlier this year, Kuderer advocated for legislation that would have allowed OIC to order insurance companies to pay restitution to consumers for bad acts.

The original bill, SB5331, would have also given the insurance commissioner the authority to fine home and auto insurance companies up to $10,000 for each violation. It passed in the Senate.

A committee-approved substitute bill would have created a cap on total fines for the OIC at $100,000. That bill also passed in the Senate but was voted down in the House Consumer Protection and Business Committee.

Kuderer has testified on multiple occasions in the House and Senate about the bill, saying the OIC currently lacks options to order restitution for consumers. The OIC can fine insurance companies, but those fines go to the state’s General Fund.

Images

Featured image: Screenshot of Commissioner Patty Kuderer testifying during a Washington House Consumer Protection and Business Committee meeting.

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