Washington state Insurance Commissioner Mike Kreidler held five sessions on how insurers explain premium increases. The meetings were held with insurers, consumers and interested parties.
Those who’ve followed Kreidler’s insurance actions lately, the outcome was a given.
After getting “input” from the aforementioned people, Kreidler has adopted a new rule that goes into effect in June of next year. It says insurance companies have to explain their premium increases in language that a policyholder can understand.
“If your insurance company is going to increase your premium, you have a right to know why,” Kreidler said in his news release on the matter. “This is pretty basic information you should expect from your insurance company, but we hear from hundreds of consumers every year who cannot get a clear, understandable answer on why they’re being charged more.”
But is it needed? Kenton Brine is the president of the NW Insurance Council. He attended several of Kreidler’s sessions and gave a the commissioner a lot of input.
“Insurers, producers and trade associations agree that insurance consumers need accurate, understandable information about their insurance premiums. From the beginning of the OIC’s (Office of the Insurance Commissioner) yearlong rulemaking process, our primary concern has been that providing information that is excessively complex would defeat the purpose of the rule,” Brine told Weekly Industry News.
Here’s what happens in June of 2024 and requires insurers to do until June 1, 2027:
- When a policy renews and the premium increases, insurance companies must give policyholders who ask reasonable explanations using terms they can understand.
Here’s what happens in June 1 of 2027:
- Insurance companies must provide a written notice to policyholders who received a premium increase of 10% or more explaining the primary factors behind the increase. They must also provide this same notice to any policyholder who asks.
- Primary factors include: the vehicle’s location, driving record, miles driven, number of drivers, claims history, discounts, fees and surcharges, the driver’s age, credit history, education, gender, marital status, occupation, property age, and value.
Ironically, while noting a complex and complicated amount of information he wants insurers to compile for consumers like the driving record, miles drive, number of drivers, claims history, and so on, Kreidler pointed out that some insurance companies have rating formulas that are too complex and contends not even they can explain why a premium has changed.
The new rule — Kreidler says — will create more transparency for consumers.
Brine disagrees and says this is especially true with the rule changes in 2027. He told Weekly Industry News that the average policyholder does not want a 13-page analysis of an algorithm that costs the insurer several million dollars to produce and that will ultimately be paid for by the policyholder.
“We believe that the rule’s requirement providing a more straightforward explanation of a premium increase to a policyholder at their request starting next year makes sense. But we hope the OIC will reconsider the second phase of the rule that begins in 2027,” he said. “Providing excessively granular information will frustrate policyholders and needlessly raise the cost of insurance in Washington.”
Source link: Washington Department of Insurance — https://bit.ly/44izNkO
