Panel Hears Bill to Ban Post‑Loss Assignment of Benefits; OIC and Consumer Groups Support

The Consumer Protection and Business Committee on Jan. 23 considered House Bill 2399, which would prohibit soliciting, coercing, requiring or contracting for post‑loss assignment of insurance benefits (AOBs) and render such agreements void and unenforceable. Megan Mulvihill, committee staff, said the bill authorizes enforcement by the insurance commissioner and includes a civil penalty of up to $50,000 per violation.

Vice Chair Representative Hackney, prime sponsor, described AOB clauses placed in repair contracts after fires or floods that transfer policy rights to contractors and deny homeowners control over claims, settlements and litigation. "This is a predatory practice," he told the committee, urging a "do pass" recommendation to protect consumers.

Rory Payne Donovan and David Fort of the Office of the Insurance Commissioner urged the committee to act, citing frequent complaints that policyholders are pressured to sign documents transferring claim rights and that assignments can inflate claim costs and drive higher premiums. Kelly Carson of the Washington State Association for Justice and Marian Smith of the National Insurance Crime Bureau echoed support, saying AOBs have enabled contractor abuse, inflated claims, and litigation that harms consumers. Janet McDaniel, director of property claims at PEMCO Insurance, said insurers routinely work with contractors without AOBs and supported the bill as protection of policyholder rights.

Lawmakers asked technical questions about whether the bill addresses "steering" by adjusters — staff and the sponsor said the measure specifically targets post‑loss assignment clauses and does not ban adjuster referrals — and where fines would be deposited (the general fund). The committee did not take a vote during the hearing.

Committee members signaled interest in the consumer protection rationale and sought clarifications about enforcement and exceptions that the bill would carve out.