- Permanent Credit Ban Rule Put on Hold - The Thurston County Superior Court has issued a stay for the OIC's permanent credit ban rule until the court makes a final decision on the constitutionality of the case. Thus, the rule will not go into effect until the Superior court rules this summer and through all appeals which could go on for 1-3 years.
- Here is a letter written by the NW Insurance Council and the carrier trade associations about the status of the credit scoring rule which you could share with your customers. consumerletteroncredit.pdf
- On 2/1, the OIC adopted their 3 year credit scoring ban.
Agents testify on a credit scoring bill (SB 5623) which would allow credit scoring for new personal lines business but ban it for renewals unless it benefits the customer. Thank you to Amberlyn McQuary, Claudia McClain, Scott Potter and Wayne Lunday for testifying remotely in favor of the bill. All three bills dealing with credit scoring died during the 2022 legislative session.
The OIC sent a letter to 136 insurers asking them to voluntarily share the premium changes insureds experienced during the emergency credit ban rule and also samples of the renewal notice, emails, and website language they used to notify insureds about the rule.
A two page document developed by APCIA shows a close relationship between credit scoring and actual driving behaviors that are drawn from billions of miles of driving data from telematics.
Our OIC held a public hearing on their proposed three year credit ban the week before Thanksgiving. Over 80% of the people testifying in the zoom hearing were opposed to the proposed rule. To view a recording of the hearing, click here.
Commissioner Kreidler wrote this op ed article for the Seattle Times on November 21.
A Thurston County Superior Court Judge granted its summary judgment motion to invalidate Commissioner Kreidler’s emergency rule banning credit scoring on October 8. Click here for an explanation of how the ruling will impact your customers, the emergency rule and the proposed 3 year credit scoring ban rule.
Commissioner Kreidler spoke at the IIABW/PIA Conference in September 2021. Click here to view the speech. He wrote this article for IIABW's Big I Washington magazine as a follow-up. Kenton Brine of the NW Insurance Council wrote this article in response to Commissioner Kreidler's remarks at the IIABW/PIA Conference. NWICresponse.pdf
The WA Senate Business, Financial Services & Trade Committee held a hearing on Sept. 21 on credit scoring. Click here to watch the discussion. The following IIABW members testified: Scott Potter of Potter Insurance, Pilani Benz of Alliance West Insurance, Ryan Patrick Villafranca of Evergreen Insurance, Ryan Stueber of PNW Insurance Group and Jana Lunday of High Cascades Agency.
The Seattle Times published an op-ed article by State Sen. Mark Mullet, Chair of the Senate Business, Financial Services & Trade Committee, calling on Commissioner Kreidler to rescind the emergency rule. Here are excerpts of an interview with him as well.
IIABW published a 2-pager which attempts to summarize the issues agents are having with the market disruption caused by the emergency rule. It can be shared with customers and staff.
The Coalition for Fair Insurance was created by the carriers to provide information to customers and an easy way for them to write their legislators about the emergency rule.
Here are some TV reports on the emergency rule: KIMA TV in Yakima and Jess Jones on KIRO 7 in Seattle
Commissioner Kreidler has started the rulemaking process to expand the credit scoring ban for three years. He says that it is necessary to ensure that insurance rates are “not excessive, inadequate, or unfairly discriminatory."
The emergency rule is now 'live' for all new business and renewals processed. This is a great opportunity for you to write some new business during this chaotic market in which many people will be shopping. Our regulator is currently on the airways encouraging our state's citizens to shop their insurance. Our value proposition of choice and advocacy is powerful during this disruption.
Sample Language to Customers
Washington’s Insurance Commissioner issued an emergency order in March prohibiting all insurance companies from using credit history to determine premiums or coverage eligibility for personal autos, motorcycles, RVs, homes, mobile homes, condos, and renters for renewals sent out after June 20, 2021.
For the past 20 years, insurance companies have been able to use a person’s credit history as part of their individual scoring process to price policies. Credit history has proven to be a strong indicator of future claims and, thus, has been used to lower premiums for many people.
Premiums at renewal can go up or down for various reasons. Removal of the use of credit will have an impact on almost everyone’s premiums. For many people, insurance companies are able to use credit to provide an extra discount to their insurance premium. So, without the use of credit, their premiums can increase. For others, their premiums will go down as the result of this change.
The Insurance Commissioner’s emergency rule required insurance companies to take credit out of their pricing model without making any other changes. Insurance companies are now in the process of filing with the Insurance Commissioner additional changes to these pricing models to ensure they are accurate and fair. You should be aware that the price for your insurance policy will probably change again next year because of these additional adjustments.
As an independent agent, we represent numerous high quality insurance companies so we can help you find you the right policy at the right price to protect you and your family.
Court Denies Industry Challenge to Emergency Rule on Credit Scoring
A Thurston County Superior Court judge on April 23 denied the insurance industry's request to halt an emergency rule that temporarily bans the use of insurance credit scoring in Washington. The ruling that rejected a request for a preliminary injunction maintains Commissioner Kreidler's emergency rule issued March 23.
IIABW, PIA, and the American Property Casualty Insurance Association (APCIA) argued that the OIC exceeded its authority and bypassed the legislature with their emergency rule. Insurance carriers predict over one million Washington residents will face double digit rate increases on auto, homeowners and renters insurance as a result of the rule starting on June 20th.
The industry is reviewing our legal options and next steps in the litigation process to overturn this preliminary trial court decision.
OIC's Emergency Rule Banning Credit Scoring
The OIC created an FAQ for the implementation of the emergency rule. According to the OIC, “The emergency rule applies to personal auto, homeowners and renters coverage. Personal auto includes motorcycles and RVs. Homeowner's coverage includes dwelling property, mobile homeowners, manufactured homeowners and condominium owner's coverage. The rule does not apply to commercial lines, personal liability and theft coverage, earthquake coverage, personal inland marine coverage, or mechanical breakdown coverage.“
The emergency rule requires insurers to stop using credit history to calculate premiums or for underwriting for new policies or renewals after June 20, 2021. Carrier filings to remove the use of credit scoring were required to be submitted to the OIC by May 6, 2021. The OIC asked carriers to “minimize the complexity of these filings," to “not include other changes to rates and rules that are not necessary for removing CBIS factors" in these filings and these changes should not increase or decrease the total premiums for the insurer's book of business.
"For renewal policies, the emergency rule applies to renewals processed on or after June 20, 2021. Under WAC 284-24-115(1), you may use an effective date for renewal policies up to sixty days after the effective date for new business policies."
IIABW's Opinion on the Emergency Rule
IIABW is disappointed that two bills which would have created additional credit scoring consumer protections were not passed during the 2021 legislative session. We believe that the two bills that passed through policy committees but were blocked from a final vote would have been some of the most far-reaching protections for consumers relating to credit scoring ever passed in our state.
- SB 5010 (as amended) would have allowed the use of credit scores at initial underwriting and rating but would have banned its use for renewals (unless it benefited the customer).
- HB1351 would have allowed consumers to seek credit scoring rating relief if they were experiencing an 'Extraordinary Life Circumstance', including: death of a family member, divorce, interruption of alimony/child support, identify theft, loss of employment, military deployment, etc.
IIABW believes that these two bills would have benefited insurance consumers without significantly disrupting the market at a time when our state is working together on long-term economic recovery. IIABW has collaborated with the OIC and legislature numerous times over the last twenty year on regulations to protect consumers from unfair use of credit scoring. We hope to find some middle ground during the 2022 legislative session on this important issue.