Update — Judge Issues Final Ruling on Credit Scoring

The final ruling is just a formality.

On July 22nd, Thurston County Superior Court Judge Indu Thomas unofficially ruled that Washington Insurance Commissioner Mike Kreidler’s attempts to ban credit scoring exceed his authority. The commissioner has twice stepped out and, unilaterally, banned the use of credit scoring to assist in setting insurance rates. He contends the practice is unfair to consumers.

The judge said the commissioner lacked the constitutional authority to prohibit the use of credit scores.

For months associations like the PIA Washington and other insurance associations have been battling Kreidler over the use of credit scoring. Last week, Judge Thomas made the ruling official.

Kreidler said he will not appeal the judge’s decision.

“I adopted the credit scoring rule because I believed it was good public policy and would protect policyholders financially impacted during the pandemic,” Kreidler said. “Obviously, I’m disappointed by the ruling, but I was heartened to hear the judge affirm that our temporary rule protected consumers from discrimination.”

The PIA Washington and the American Property Casualty Insurance Association (APCIA), the Independent Insurance Agents and Brokers of Washington (IIABW) and the National Association of Mutual Insurance Companies (NAMIC) disagree with the commissioner’s assessment that credit scoring is discriminatory.

“We are pleased the court considered our legal arguments and agreed that the commissioner exceeded his authority when he put forth a rule to ban the use of credit-based insurance scores for an indefinite time but for no less than three years,” the associations said in a joint statement. “Judge Thomas agreed with our arguments that Commissioner Kreidler exceeded his authority when he acted contrary to the longstanding statute that has authorized the use of credit in the property and casualty insurance space.”

The PIA Washington and the other associations hope this ends Kreidler’s push.

“Commissioner Kreidler’s rule disrupted the Washington insurance marketplace and forced over a million policyholders to pay higher insurance rates,” the group said. “Today’s final order is an important victory for Washington consumers, particularly lower-risk senior policyholders who were forced to pay more to subsidize higher-risk policyholders because the rule eliminated the use of credit.”

Source link: Insurance Business America — https://bit.ly/3x0kLlw

Source link: The Washington Department of Insurance — https://bit.ly/3Bi0gDv