The Washington state Insurance Commissioner Mike Kreidler has
Kreidler initially issued an emergency rule in March 2021 to temporarily ban the use of credit scores but it was struck down by a court last year. The new rule goes into effect March 4.
“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,” said Kreidler 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.”
Kreidler also proposed a new transparency rule that requires insurers to send policyholders a written explanation for any
“If an insurer wants to change how much you pay for coverage, you deserve to know why,” said Kreidler. “And it shouldn’t be difficult to understand the reasons that led to the change. If your insurance company wants your business, you deserve an honest and clear answer. We’re going to help them give you one with this rule.”
The ban is to prevent discriminatory
The American Property Casualty Insurance Association and several insurance agent groups filed litigation on Feb. 3 to stop the ban.
Claire Howard, APCIA senior vice president, general counsel, and corporate secretary, said in a statement: “Insurance agents, brokers, and companies once again stand united in strongly opposing the unilateral action taken by Washington Insurance Commissioner Mike Kreidler. The Commissioner’s extreme action exceeds his authority, bypasses the legislature, and robs consumers of the benefits of a highly competitive private market.”
