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 OIC will be collecting public comment through July 31. You can send comments on his three year extension of the credit scoring ban to: firstname.lastname@example.org.
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.
- Here is a table which tracks when carriers will start using their new rates (without credit scoring) for renewals. Thank you to Claudia McClain for creating this helpful tool. renewaldates621.pdf
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.