Insurance fraud modernization bill passes state Senate

OLYMPIA, Wash. — Washington state Insurance Commissioner Patty Kuderer’s bill to modernize how her office combats insurance fraud passed the state Senate on Tuesday, Feb. 17, by a unanimous vote of 49-0.

Senate Bill 6031 defines insurance fraud as its own crime — a Class B felony — in state law. The definition includes billing an insurance company or consumer for services not provided, impersonating others in insurance-related claims or transactions, and stealing insurance premium payments or premium financing loans.

The Office of the Insurance Commissioner’s Criminal Investigations Unit (CIU) was established by state law in 2006, but that law hasn’t been updated since then.

SB 6031, Kuderer said, gives the CIU modern tools to investigate modern fraud.

“Defining the most serious acts that defraud insurance companies and consumers as the crime of insurance fraud helps us hold the most egregious actors accountable,” she said. “This approach shifts CIU’s focus away from simple scams — like crashing a car and then buying a policy — to more complicated schemes, like exploiting loopholes to steal large amounts of money in smaller denominations to avoid prosecution.”

Insurance fraud costs insurance companies $300 billion a year, which is passed along to consumers in the form of higher premiums.

The bill expands “victims of insurance fraud” to include insurance consumers and insurance beneficiaries, making them eligible for criminal restitution. It would also expand statutory reporting of suspected insurance fraud to the insurance commissioner by adding regulators of health care or financial services professions, and other law enforcement and public safety agencies as required reporters. 

The bill now moves to the House of Representatives for consideration.