After a long court and public opinion battle over credit scoring, Washington Insurance Commissioner Mike Kreidler is proposing a new regulation for insurers. It’s one — like credit scoring — that is going to be questioned and protested by insurers and insurance groups.
Kreidler’s new rule will force insurance companies to explain premium increases to their policyholders in language they can understand.
“If your insurance company is going to increase your premium, you have a right to know why,” the commissioner 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 straight answer on why they’re being charged more.”
Kreidler says this kind of confusion is the top complaint his office hears about auto or homeowners insurance policies. The price is going up and insurers don’t say why.
He then pointed out to five meetings the OIC held with “interested parties” about providing more transparency in changes to premiums. Kreidler’s news release said the meetings revealed the people are confused and he blamed insurance companies for the confusion.
“We learned that some insurers’ rating formulas have become so complex, they can’t readily specify the reasons behind someone’s premium change,” the news release said. “Some insurers’ computer systems are unable to generate a clear answer.”
Kenton Brine, president of the NW Insurance Council, said not so fast! His group, along with the PIA Washington, the American Property Casualty Insurance Association (APCIA), the National Association for Mutual Insurance Companies (NAMIC), and others, fought Kreidler over his credit scoring rule.
“Our concern from the outset with the premium change transparency rule is that it would end up requiring policyholders to wade through massive explanatory documents filled with equations and formulas better suited to insurance actuaries and regulators — rendering the information useless to consumers, at the potential cost of hundreds of millions of dollars to insurers,” he said.
Mark Sektnan is the vice president for state government relations for the APCIA. He said this rule — like Kreidler’s credit scoring edict — is problematic because it has “the real potential to delay the approval of rate filings, which will delay the availability of insurance products.”
Erin Collins of NAMIC agreed and said this is an “insurance cost-driver” without “creating any meaningful benefit to the consumer.”
In other words, “Regulation for regulation’s sake is not consumer protection,” Collins said.
Kreidler’s rule — if approved — runs from June 1, 2024, to June 1, 2027. Starting June 1, 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.
A public hearing will be held on the rule on April 25, 2023. Interested parties can attend the meeting in Tumwater, Washington or can catch the proceedings on Zoom.
Source link: Washington Department of Insurance — http://bit.ly/3yUKz31
Source link: HeraldNet.com — http://bit.ly/3FFztTt