Kriedler issued the ban because he believes that credit scores are untrustworthy and therefore shouldn’t be used as a predictive model when setting someone’s insurance rates. For example, the Consumer Federation of America says the use of non-driving factors such as credit have disproportionately harmed Black drivers, according to several reports between 20. While insurers and industry groups have maintained that credit-based insurance scores accurately predict risk, consumer advocacy groups have long argued that the scores are inherently discriminatory. The lower your score, the more likely you are to file a claim, which usually translates into higher insurance premiums for those with poor credit scores. Insurers draw a correlation between credit and the chances that a customer will file an insurance claim. Insurance companies have used credit-based insurance scores when setting rates since the 1990s. Scrutiny of Credit-Based Insurance Scores
Insurance companies in Washington will have to make new filings with the state insurance department for rate structures that don’t use credit for the affected policies. “The decision essentially says the multi-billion industry and its associations are unlikely to prevail on their claims.” “The consumers of Washington scored a victory today,” Kreidler said in a statement following the ruling. The ruling means that Kreidler’s emergency rule is maintained. Judge Mary Sue Wilson found that industry associations challenging the rule were unlikely to succeed with their arguments. On April 23, 2021, a Superior Court judge denied the request for a preliminary junction.
The American Property Casualty Insurance Association (APCIA), the Independent Insurance Agents and Brokers of Washington, and the Professional Insurance Agents of Washington filed a petition for declaratory and injunctive relief in early April with Superior Court in Thurston County. Insurance industry groups joined together to try to halt Kriedler’s plan.
Insurance Commissioner Mike Kreidler issued an order on March 23, 2021, that bans the use of credit in setting insurance rates for new and renewed policies as of June 20, 2021. Developments continue around the efforts of Washington state’s insurance commissioner to ban insurance companies from using credit to set rates for auto, homeowners and renters insurance for three years.