$20,000 Fines could follow unfixed insurance violations

California insurers would have to do more than argue over an exam report under SB 1209, a bill from Senator Ben Allen. The proposal would require a company flagged in a state insurance examination to take corrective action on the violations the report identifies, rather than treating the report as the end of the matter.

If the company misses the agreed timetable, the bill would allow a penalty of up to $20,000 for each failure to correct. It also gives companies a way to ask for more time when they can show good cause, including circumstances beyond their control and a good-faith effort to comply.

A stronger backstop

State law already lets the Insurance Commissioner examine insurers admitted to do business in California at least once every five years and send them the report with a chance to respond. SB 1209 would add a show-cause process if the commissioner believes a company has not followed the required fixes, leading to a hearing and, if the charges are upheld, an order to pay and comply.

The bill says those powers would sit alongside the commissioner’s existing enforcement tools. For policyholders, the point is leverage: if regulators find a problem in an insurer’s operations, the state would have a clearer way to press for a fix instead of stopping at a written exchange.