From the Office of Rep. Steve Bergquist

This session, the Office of the Insurance Commissioner (OIC) had agency-request legislation aimed at banning the use of credit scores in setting insurance premiums (such as auto, homeowners, and renter’s insurance). The bill died and the Legislature did not take action on it. However, the OIC ended up banning credit scores through an emergency rule-making order for the next three years. 

Why the rule change?
Due to the pandemic, the federal CARES Act placed a temporary hold on credit scoring, resulting in bureaus collecting inaccurate credit histories. Because insurers use these credit histories to set rates, the models they use are now unreliable.

The OIC issued an emergency rule banning the use of credit scores in setting insurance premiums for the next three years, helping ensure that insurance rates are not excessive or unfairly discriminatory. With the pandemic causing devastating financial hardships across the state, this rule change helps protect low-income and other vulnerable people who would otherwise have experienced unfair treatment due to their credit score.

Although the emergency rule is intended to provide positive change in the insurance industry, legislators are hearing concerns that the end result of the rule is problematic. Consumers with a good credit score may be able to shop for a policy with a smaller rate increase, but they may not find a similar policy with a rate comparable to what they paid before the rule was issued. Switching insurance companies can wipe away years of accrued benefits, like accident forgiveness or lower deductibles. People who switch and are involved in a collision can see rates spiked or even their policy dropped. That is less likely to happen to longtime customers.

I've also been led to understand that senior citizens are the vast majority of those seeing increases. Ninety-two percent of Washington's seniors have a credit-based insurance score above 700, which normally would qualify them for a credit-based rate discount.

To be better able to tackle this issue, I need to hear from you about if and how this rule change has affected you. Please take a moment to answer the questions below, and know that I will work with my colleagues in the Legislature to explore ways to address this situation and find a solution that benefits all consumers.

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* 1. How has your insurance rate changed for the 2022 fiscal year?

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* 2. Should the Legislature ensure that credit scores and credit history only factors into insurance rates when it improves a consumer's insurance score and lowers their premium (such as in SB 5010, which was introduced in the 2021 session)?

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* 3. Do you think that credit scores should factor into insurance rate decisions?

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* 4. What do you think?
   Leave a comment with your thoughts, feedback and suggestions.

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* 5. Your responses are anonymous, so if you'd like a personal reply:
    1. Send me an email; or
    2. Leave your name and phone number (optional)

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