Late last year a Thurston County, Washington told Washington Insurance Commissioner Mike Kreidler that he did not have the authority to issue a ban on the use of credit scoring to set auto and homeowners and renters insurance rates.
Undeterred, Kreidler plowed straight ahead and last week issued a second “temporary” three-year ban.
“I’m taking this action against insurers’ use of credit scoring in response to the economic harm many people have experienced during the COVID-19 pandemic—harm that has significantly impacted people who are already financially vulnerable,” Kreidler said in a statement. “We know that now, more than ever, credit reporting is unreliable. It is unfair to base how much someone pays for frequently mandatory insurance on an unreliable and fluctuating factor like a credit score.”
The commissioner also wants to add a transparency rule that will force insurers to provide a written explanation of any changes to the policy of a consumer.
Upon the commissioner’s decision to institute the ban, the PIA (Professional Insurance Agents) of Washington, the American Property Casualty Insurance Association (APCIA) and the Independent Insurance Agents and Brokers of Washington (IIABW) immediately filed two legal actions to put a halt to Kreidler’s second attempt at a ban.
Claire Howard, APCIA senior vice president, general counsel, and corporate secretary, spoke for the group and said — once again — insurance agents, brokers and companies stand united against the commissioner’s unilateral action.
“Commissioner Kreidler’s rule to prohibit insurers use of credit-based insurance scores will continue to throw the Washington insurance market into chaos and raise rates for over one million consumers,” she said. “This permanent rule is particularly harmful to seniors on fixed incomes and those struggling to economically recover from the COVID Pandemic.”
Howard said the commissioner continues to ignore the voice of the people and pointed to the thousands of letters and emails he received from consumers upset with the credit scoring ban he put in place last year.
“Commissioner Kreidler is attempting to prohibit an important risk-based rating tool that was put in place by the Legislature nearly 20 years ago for the benefit of consumers,” Howard noted. “Before Commissioner Kreidler’s emergency and permanent rules disrupted the insurance market, Washington policyholders paid less for auto, boat, RV, home, and renters insurance because the use of credit-based insurance scores effectively predicted risk and set accurate rates.”
R Street Western region director, Steven Greenhut agrees and says Kreidler’s COVID excuse is bogus.
“The COVID emergency rule was an ideologically driven excuse by the insurance commissioner to impose a policy he long supported — but it’s a bad idea even as it was recently implemented,” he said. “Credit-based scores are one factor in determining insurance rates because they are a reliable predictor of claims. As Washington residents have already seen, banning their use increases premiums for people who have developed good credit.”
Howard said her organization, the PIA and the IIABW are taking this action because the commissioner is using, and assuming, powers he and his department do not have — again!
“APCIA, PIA, and the IIABW are pursing these additional legal actions for several reasons, to include redressing an abuse of authority, preserving the legislative prerogative to enact statutes, and the public’s right to count on statutes enacted by the Legislature to be faithfully executed by the executive branch of government,” she said.
Source link: Washington Department of Insurance — https://www.insurance.wa.gov/news/kreidler-adopts-rule-temporarily-banning-credit-scoring-proposes-rule-increase-transparency?utm_content=&utm_medium=email&utm_name=&utm_source=govdelivery&utm_term=
Source link: Center Square Washington — https://bit.ly/3snzhRm
Source link: Associated Press — https://bit.ly/3uyXSVT
Source link: Digital Insurance — https://bit.ly/3HAXwSg
Source link: Insurance Journal — https://bit.ly/3uG4jGV