North Dakota Insurance Commissioner Gains Restitution Authority
BISMARCK — May 15, 2024 — A new North Dakota law grants the Insurance Commissioner the authority to mandate restitution from insurance companies found in violation of the state’s insurance code.Signed into law April 10, the new legislation addresses a gap in North Dakota law, giving the commissioner power previously absent.The law was prompted by cases where policyholders,like a farm family,where harmed by deceptive practices. For further details, consult the full text of House Bill 1088.
North Dakota Insurance Commissioner Gains Restitution Authority
New Law Empowers Commissioner to Order Restitution for Policyholder Harm
A new law in North dakota grants the insurance commissioner the power to require insurance companies to provide restitution to policyholders who have been harmed by violations of the state’s insurance code.
House bill 1088, signed into law on April 10 by Gov. Kelly Armstrong, authorizes the commissioner to mandate restitution after conducting a hearing to determine if a person was directly harmed by a violation. The commissioner can also levy fines of up to $10,000 per violation against insurance companies.
Limitations on Authority
The new law includes specific limitations on the commissioner’s authority. The bill explicitly states that the commissioner cannot:
- Determine or adjudicate whether an obligation is owed under a policy.
- Require a person to pay a claim or an amount claimed owed under a policy.
Did you know? This limitation ensures the commissioner’s role focuses on addressing violations of the insurance code rather than directly resolving contractual disputes between insurers and policyholders.
Background: A Case of Deceptive Practices
John Arnold, deputy insurance commissioner, testified in favor of the bill in February. He explained that the legislation was prompted by a specific case involving a broker who sold a deceptive health insurance policy to a farm family.
The family was paying the broker a fee to be uninsured.
John Arnold, Deputy Insurance Commissioner
According to Arnold, the family incurred over $500,000 in medical debt after a medical emergency and nearly lost their farm.
Need for Formal Authority
Arnold emphasized the need for formal authority to ensure victims are made financially whole. He noted that the department of insurance had previously negotiated restitution in lieu of administrative fines but lacked the explicit power to mandate it.
We are not requesting carte blanche authority to attach subjective punitive or pain and suffering damages to any penalties.
John Arnold, Deputy Insurance commissioner
Similar Legislation Elsewhere
A similar bill in Washington was considered by lawmakers earlier this year. While it passed the Senate, it failed to pass a House committee vote.
FAQ: Understanding the New law
- What does this new law do?
- It allows the North dakota insurance commissioner to require insurance companies to pay restitution to policyholders harmed by violations of the state’s insurance code.
- what are the limitations of the commissioner’s authority?
- the commissioner cannot determine if an obligation is owed under a policy or require payment of a claim.
- Why was this law created?
- It was created in response to cases where policyholders were harmed by deceptive insurance practices and the department lacked formal authority to mandate restitution.
Pro Tip: Policyholders who believe they have been harmed by an insurance company’s violation of the north Dakota insurance code should contact the North Dakota Insurance Department to file a complaint.
