Legislation has been introduced in the California Senate
that would expand the insurance commissioner’s powers in regard to ordering
restitution as part of an administrative enforcement action against an
insurance company.
Senate Bill 631, introduced by California Senator Noreen
Evans (D-District 2), would give the commissioner "unprecedented new
powers to punish broker-agents and other licensees ‘in all instances’ where he
finds any violation of the California Insurance Code."
Commissioner David Jones was quoted in the Insurance
Journal as saying, "The Insurance Commissioner does not have the authority
to order insurers to restore
out-of-pocket expenses or money wrongfully obtained due to insurer misconduct.
This needs to change, and it needs to change now."
Evans commented on the bill, too, saying a "David
and Goliath" situation comes into play when a consumer seeks repayment for
wrongful insurer conduct.
The bill supposedly has provisions that would allow
insurers to contest a restitution order by the insurance commissioner, seek a
judicial appeal and go to court. The bill would also still allow a consumer to
directly pursue legal action against an insurer instead of going through the
insurance commissioner.
The Insurance Brokers and Agents of the West, however,
are concerned about the broad definition of people who can receive restitution
because it includes insurers. This means that brokers or agents could be
mandated to pay restitution to their own insurers for violating the Insurance
Code or regulatory provisions.
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