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Insurance Department seeks explicit restitution authority; insurers warn against broad discretionary power
Summary
House Bill 1088 would give the Insurance Department explicit authority to require restitution to victims of unlawful acts by licensed insurance entities. The department said the change would help return money to harmed consumers; insurers warned the proposal creates broad discretionary authority and may overlap existing fraud statutes.
Johannes “Johnny” Palsgraf, general counsel for the Insurance Department, testified in support of House Bill 1088, a commissioner-sponsored bill that would give the department explicit authority to order restitution to victims of violations by licensees under the insurance title.
Paulsgraf described a recent case in which a seller of a self-insured arrangement sold a policy that the department and federal regulators later determined was unenforceable; a farmer incurred roughly $500,000 in medical costs that were not…
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