Committee adds restitution authority to insurance enforcement bill, votes to pass as amended

The Industry, Business and Labor Committee considered language to add consumer restitution authority to the insurance enforcement statute. The amendment approved by the committee would allow the Insurance Commissioner, “in addition to or in lieu of a monetary fine,” to require restitution equal to the direct financial loss sustained by a person directly harmed by a violation of the insurance code.

Commissioner John Godfrey told the committee the department currently cannot direct fined dollars to consumers and that the amendment aims to let the department make harmed citizens whole when regulatory violations create financial loss. "It's our interpretation that those fines cannot be given back to the consumer. So that’s the intention of the bill," Godfrey said, describing a case in which a family suffered significant harm and department staff sought other means to help.

Members discussed existing fine limits in statute and how restitution should be capped, if at all. Committee members noted current law sets a $10,000 per‑violation monetary fine; the amendment keeps the $10,000 fine ceiling in place while allowing restitution in the amount of the actual financial loss. Representative Schauer moved the amendment and later moved that the committee give HB 1088 a do‑pass recommendation as amended.

Committee debate included concerns raised by Representative Casper about a recent rebating enforcement case in which an insurance producer was fined after giving clients items that exceeded the legal rebating limit; members asked whether the department’s enforcement includes due process protections and whether fines had been stacked per violation. Commissioner Godfrey said the department negotiates consent orders with due process and described the rebating case as the result of negotiated consent where the parties agreed to the penalty and probation terms; he also noted the rebating statute and related enforcement are longstanding.

After discussion the committee voted to adopt the amendment and then voted to report the bill as amended. The roll call on the do‑pass motion recorded unanimous committee support. The committee announced a recess after completing its action.

Ending: The committee approved the restitution amendment and reported HB 1088 as amended (recorded roll call vote in committee: 14‑0). The Insurance Department said the change is intended to give regulators a tool to restore consumers harmed by licensing or regulatory violations.