Washington Insurance Commissioner Mike Kreidler announced today that more than 50 insurance companies met the May 6 deadline to file rating plans that comply with his emergency rule to temporarily prohibit the use of consumers’ credit scores.
A temporary ban on the use of credit scores for insurance takes effect June 20. Companies that failed to meet the deadline are in violation of state law and are subject to disciplinary action by Kreidler’s office.
Roughly 200 companies are licensed to sell auto, homeowner and renter insurance in Washington. However, not all companies licensed to sell property/casualty policies offer them in the state, according to Kreidler’s office.
The companies reported that at least 1.3 million policyholders should expect rate changes – some will see decreases of up to 60%. The new rating plans must be revenue-neutral, meaning insurers cannot attempt to increase their profits using the lack of credit scores as an excuse, according to Kreidler’s office.
Kreidler issued the emergency rule on March 23. Then the Independent Insurance Agents and Brokers of Washington, the Professional Insurance Agents of Washington and American Property Casualty Insurance Association joined together in a lawsuit to halt Kreidler’s ban.
A Thurston County Superior Court judge on April 23 allowed Kreidler’s emergency rule to remain in effect by denying an insurance industry request for a preliminary injunction. Judge Mary Sue Wilson found that industry associations challenging the rule were unlikely to succeed with their two main arguments that Kreidler lacked “good cause” and had no authority to issue the rule.
The groups issued a memo to insurance consumers on Thursday, warning about the impacts of the rule change:
“The Commissioner’s rule is already causing significant disruption in Washington’s insurance market, and the negative effects will be felt over the next several weeks – by consumers and insurance producers, as well as lenders, realtors, auto dealers and others who conduct transactions that require insurance, such as home sales, auto, RV and boat sales, auto leases, rental agreements and more.”
Kreidler has been working to eliminate credit scores from insurer consideration for some time. His most recent effort failed when a bill he backed, Senate Bill 5010, was gutted by an insurance industry amendment in the Senate Business, Financial Services & Trade Committee on Feb. 15.
Kreidler said rate changes will not happen immediately, and consumers will begin seeing changes to their premiums during individual renewal periods, which can occur at different times depending on when policyholders bought coverage.
“The industry associations have put out scare tactics lately about how they’ll be forced to increase premiums because they can no longer use an unreliable practice,” Kreidler said in a statment. “No one should fall for these tactics. If the companies want to retain their policyholders and remain competitive, they should be up front and rely on risk factors that have a real bearing on what you should pay for coverage.”
Related:
- Insurer Group Sues to Stop Washington Insurance Commissioner’s Credit Scoring Ban
- Washington Bill to Ban Insurers from Using Credit Scores Heads to Senate
- Credit Scoring Battle Brewing Between Washington Commissioner and Insurer Groups
Topics Carriers Washington
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