Washington Commissioner Adopts 3-Year Credit Scoring Ban, Proposes Transparency Rule

Washington Insurance coverage Commissioner Mike Kreidler has adopted his rule banning insurers from utilizing credit score data to set auto, home-owner and renter insurance coverage for 3 years.

The transfer is efficient March 4.

Kreidler can be proposing a brand new “transparency rule” requiring insurers to supply policyholders with a written rationalization for any premium change.

“I’m taking this motion towards insurers’ use of credit score scoring in response to the financial hurt many individuals have skilled throughout the COVID-19 pandemic—hurt that has considerably impacted people who find themselves already financially weak,” Kreidler mentioned in a press release. “We all know that now, greater than ever, credit score reporting is unreliable. It’s unfair to base how a lot somebody pays for incessantly necessary insurance coverage on an unreliable and fluctuating issue like a credit score rating.”

Kreidler’s rule is designed to be charge impartial for the insurers, that means any charge change is unfold throughout all policyholders, in keeping with a press release from his workplace.

Some will see a one-time charge enhance and others will get a charge lower, relying on how a lot their insurer relied on credit score scoring.

Kreidler requested insurers to supply further data, together with:

• A histogram that reveals the vary of premium adjustments as a consequence of eradicating credit score data as score issue. Some insurers already supplied these illustrations as a part of their charge filings.
• Copies of any communications insurers used to explain the brand new credit score rule to their policyholders.

Solely 12 firms representing 5.2% of the affected market supplied the knowledge Kreidler requested.

The American Property Casualty Insurance coverage Affiliation has been preventing Kreidler on this scoring ban.

In April, the APCIA together with different insurer teams filed a petition for declaratory and injunctive relief in Superior Court docket in Thurston County, which asks the court docket to declare the commissioner’s motion invalid and enjoin its enforcement. The APCIA has mentioned the ban will imply “increased premiums for greater than one million low-risk policyholders who buy auto, owners’ insurance coverage, renters’ insurance coverage, and different private traces of protection.”

The APCIA has been reached out to for feedback on the most recent growth.

Kreidler can be proposing a rule that requires insurers to supply policyholders with clear written explanations for any charge change. This proposed rule will embody stakeholder involvement and a public listening to.

Associated:

Subjects
Washington