Insurer groups file lawsuit to limit state use of credit scoring

OLYMPIA – Washington State Insurance Commissioner Mike Kreidler’s passage this week of a rule prohibiting insurers from using credit scoring to set auto, home and renter’s insurance rates has already sparked a legal challenge from the groups of insurers.

The American Property Casualty Insurance Association, Professional Insurance Agents of Washington, and Independent Insurance Agents and Brokers of Washington jointly filed two lawsuits on Wednesday — an administrative challenge and a Superior Court lawsuit — seeking to stop the rule, which must take effect. March 4 and will last for three years after federal and state pandemic-related emergency financial protections end, whichever is longer.

“The commissioner’s extreme action exceeds his authority, bypasses the Legislative Assembly and deprives consumers of the benefits of a highly competitive private market,” Claire Howard, senior vice president of the American Property Casualty Insurance Association, said Thursday.

Kreidler’s office began the process of implementing the permanent rule – announced on Tuesday – after an emergency rule the commissioner issued last year was struck down by a court, which found it there was no justification for circumventing the normal rule-making procedures.

Kreidler spokeswoman Stephanie Marquis said in an email that the office believes “this rule is within the commissioner’s statutory power to adopt and is the best option for consumers in Washington.”

Kreidler said he was also proposing a new rule that would require insurers to provide policyholders with a written explanation of any premium changes.

He said that once federal pandemic protections end, people who have struggled financially in the past two years are at risk of seeing defaults show up on their credit reports, and noted that insurers charge good drivers with low credit scores almost 80% more for mandatory auto. Assurance.

Republicans and insurers have denounced the move, saying it will incur additional costs for people on fixed incomes, like seniors, who have benefited from reduced insurance rates because of their good credit scores.

“Commissioner Kreidler’s rule prohibiting insurers from using credit-based insurance scores will continue to throw the Washington insurance market into chaos and drive up rates for more than a million consumers” , wrote Howard.

Gov. Jay Inslee said he supports the insurance commissioner’s efforts.

“I just don’t think it’s fair for good drivers to punish them if they’ve had credit issues,” he said during his weekly press conference with reporters on Capitol Hill.

Two other states do not allow homeowners’ credit scoring and auto insurance rates: California, which passed a ballot measure in 1988, and Massachusetts. Maryland allows credit scoring to determine auto insurance rates, but not for homeowners, and Hawaii allows credit scoring for home insurance, but not auto.

Kreidler said he plans to use the time while the ban is in effect to work with the legislature, consumer groups and the insurance industry in an effort to permanently end the use of credit rating. credit in setting insurance premiums.

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