Washington State Insurance Commissioner Patty Kuderer (pictured) has launched a formal rulemaking process aimed at updating regulations on claims-handling standards, fire loss reporting, and the registration of umpires in auto damage appraisal disputes.
According to documents from the Office of the Insurance Commissioner (OIC), the move to revise claims-handling rules follows a rise in consumer complaints and lawsuits related to auto and home insurance claims.
Despite a stable volume of claims over the past six years, the increase in complaints may suggest possible violations of existing code provisions, the documents said.
The proposed rulemaking would establish requirements to ensure that insurance carriers are conducting full and fair loss investigations. It also seeks to clarify that insureds should not be expected to perform investigative tasks that fall under the responsibilities of either first-party or third-party insurers.
OIC cited a broader shift in the claims environment as one factor prompting the update. Industry practices are evolving from traditional, on-site claims handling toward systems that use artificial intelligence and photo-based loss adjusting.
While there is acknowledgment that these technologies are influencing claims processing, OIC has not yet determined whether the new regulations will directly address AI or image-based estimating systems.
“It’s clear the claims environment is changing due to the use of these tools, but right now it’s unclear if any specific language would be considered directed at AI or photo-based estimating, or if this would cover more broad language clarifying rules on how to be fair and transparent,” said Aaron VanTuyl, communications manager for OIC’s public affairs division.
VanTuyl also said that the claims-handling regulations have not been updated in nearly 20 years. As part of the process, the commissioner’s office will consider how other states have handled similar developments in claims oversight.
“The goal, as always, is fairness and protection for consumers,” he said.
While not part of this rulemaking effort, Kuderer has also established an artificial intelligence advisory board to study regulatory issues connected to emerging technologies, VanTuyl said.
Alongside the rulemaking on claims practices, Kuderer is backing a separate legislative effort that would expand the authority of her office to secure restitution payments for policyholders when insurers violate state insurance codes.
Under the proposed measure, the commissioner would be able to order companies to pay directly for damages related to those violations. The initiative is aimed at enhancing consumer remedies without requiring individuals to pursue legal action independently.
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