Washington Proposal to Ban Insurers’ Use of Credit Scores Stalls

Washington insurers can continue to use credit scores when rating and underwriting insurance, at least for the time being. Washington Senate Bill 6252, which would have banned credit-based insurance scores, failed to come to a vote on the floor of the Senate prior to the crossover deadline for bills to pass out of their house of origin and cross to the opposite chamber. It’s companion bill, HB 2513 was defeated in the House Financial Institutions Committee on Feb. 3.

Insurance Commissioner Mike Kreidler wanted to prohibit the use of credit history, education and income for rating and underwriting personal insurance, but the insurance industry said credit-based insurance scoring was an objective, proven rating tool.

“What consumers don’t understand if they have no claims, their rates can still go up based on their credit score. … this is inherently unfair,” Kreidler said in his support of the bills. “Especially in times like this, there are a lot of people who have lost their jobs, a lot of people had to run up their debt, may not even have health insurance and the medical debt has risen for them, all of that can negatively impact the credit score that the insurance company is using.”

Yet Property Casualty Insurers Association of America (PCI) Assistant Vice President Kenton Brine said, “Industry research allowed us to present the strongest possible evidence that credit-based insurance scores are accurate, fair and highly predictive — and that insurers’ use of credit history benefits insurance consumers. Legislators simply considered the mountain of evidence that supports the fair and regulated use of credit scores in insurance rating — and joined the growing list of state legislatures that have rejected credit scoring bans over the past three years.”

Sources: PCI, Washington Legislature

Topics Carriers Washington