Washington Insurance Commissioner Patty Kuderer’s office issued more than $839,750 in fines for insurance law violations in the second half of May and the first half of June, including a $275,000 fine for an illegal healthcare sharing ministry, a $300,000 fine for an illegal service contract provider and $45,000 for an unlicensed surplus lines provider.
Health Care Sharing Ministry
Kuderer issued a cease-and-desist order and a fine of $275,000 against ClearShare Health and its associated companies Clearwater Benefits Administrators, Clearwater Benefits Holdings, and Clearwater Benefits Aggregator. ClearShare sold insurance plans, calling them “memberships,” without being authorized to do so by the OIC.
ClearShare sold 376 memberships to Washington consumers between August 1, 2022, and March 1, 2024, collecting $524,095 in monthly contributions from members and paying $54,201 towards expenses with $54,535 in denied expenses and $26,370 in pending requests for expenses.
The membership agreements, however, did not cover abortion services and had pre-existing conditions requirements, and ClearShare does not meet the qualifications of a health care sharing ministry as defined by the Affordable Care Act, according to the OIC.
ClearShare was also ordered to pay taxes, penalties and interest on the premiums it collected.
Service Contract Provider
Kuderer’s office issued a cease-and-desist order and $300,000 fine against CRAST Inc. (doing business as America’s First Choice Home Club) for operating as a service contract provider in Washington without being registered with the OIC.
The OIC started an investigation after receiving a complaint from a consumer who reportedly paid $1,425 for a three-year membership plan in 2022 that claimed to cover up to $2,000 per item. The consumer contacted CRAST in November of 2022 to repair a furnace, but after multiple calls, CRAST did not send a technician out to evaluate the furnace.
During the ensuing investigation, CRAST reported it sold 2,268 home club memberships to Washington consumers between December 26, 2015, and April 28, 2023, for a total of $1,494,317 in membership fees. CRAST reported it made $321,068 in payments to members, while denying 456 requests for benefits.
Surplus Lines Broker
The OIC took action against BC Environmental Insurance Brokers Inc. and producer Marc Robicheau for selling surplus line insurance products without being licensed as a producer or broker for those specific products.
BC Environmental Insurance Brokers was fined $45,000 and agreed to apply for a surplus line broker license for the agency and its employees. The agency was licensed to sell property/casualty insurance but not surplus lines as of January 2023, but it wrote 31 policies in Washington between 2014 and 2021. BC Environmental Insurance Brokers, Inc. obtained its surplus line broker license in Washington in May.
Additional Fines
Following are other companies and fines as reported by the OIC:
Amtrust Insurance Company; Milford Casualty Insurance Company; Security National Insurance Company; Wesco Insurance Company; fined $30,000
The companies used Washington Surveying and Rating Bureau loss costs to calculate premium rates without filing and acquiring approval to do so.
Pennsylvania Lumbermens Mutual Insurance Company; fined $50,000.
The company failed to apply correct rating factors to commercial policies, resulting in $184,633 in overcharged premiums and $43,964 in undercharged premiums across 53 policies. The company refunded the policyholders who were overcharged.
Safeco Insurance Company of America; fined $3,000
Safeco failed to timely refund a cancelled home insurance policy and failed to keep adequate records of its transactions.
Allstate Fire & Casualty Insurance Company, fined $1,250
Allstate failed to timely cancel a consumer’s policy.
UnitedHealthcare of Washington Inc.; fined $40,000
UnitedHealthcare failed to ensure its Association Health Plans enrolled employer groups on the same effective date as their associated Association Health Plan’s Master Contract, resulting in 83 employer groups being offered rolling renewals.
Axis Insurance Company; fined $2,500
Axis used rates that were not in accordance with its effective filings.
Standard Fire Insurance Company; fined $40,000
In 93 instances, Standard applied a higher uninsured/underinsured property damage deductible than is allowed under Washington law. The investigation was prompted by a complaint in which a consumer was charged a $200 deductible for uninsured/underinsured motorist property damage, when only $100 is permitted in Washington for that specific coverage.
American International Group, fined $50,000
American International Group and its subsidiaries used incorrect rates for admiralty coverage, impacting 74 policies. Fifty-five policies’ premiums were overcharged by a total of $148,039, which was credited back to the policyholders.
Brotherhood Mutual Insurance Company; fined $3,000
The company applied incorrect classification codes to commercial package policies.
Since 2001, the OIC has assessed more than $42 million in fines, which are directed to the state’s general fund to pay for state services.
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