Washington Insurance Commissioner Mike Kreidler. (Wikimedia Commons)

Washington Insurance Commissioner Mike Kreidler. (Wikimedia Commons)

Insurers told to stop using credit scores to set rates

A ban of that practice will be in place until the pandemic is over, Insurance Commissioner Mike Kreidler says.

OLYMPIA — Insurers must stop using credit scores to set rates for home, auto and renter’s insurance policies under an emergency rule issued Tuesday by Insurance Commissioner Mike Kreidler.

The rule would keep the prohibition in force until three years after the state of emergency for the coronavirus pandemic is declared over, by the president or the governor — whichever is later.

Kreidler, a Democrat, has long argued that use of credit scores is discriminatory and results in people with low incomes and people of color paying more for coverage. With federal law preventing the reporting of certain negative credit information during the pandemic, he’s concerned inaccurate credit histories and unreliable credit scores are getting generated for consumers.

“I’m taking action because I recognize the great potential for harm from the unreliable use of credit reporting by the insurance industry,” Kreidler said in a statement. “The federal emergency declaration related to the pandemic will eventually end and leave many consumers vulnerable to harmful data used by insurers.”

Kreidler’s action comes two weeks after a bill he backed, to permanently ban credit-based insurance rate-setting, died in the state Senate.

Democratic Sen. Mark Mullet, D-Issaquah, who opposed the outright prohibition, had refashioned that bill to allow use of credit scores but to prevent their use from leading to an increase in rates. The bill did not get a vote.

Mullet didn’t appreciate Kreidler’s move, which, at least for the near future, gets around the Legislature.

“The majority of people over the age of 50, of all races in all income brackets, would see their costs go up as a result of the insurance commissioner’s action,” Mullet said in a statement. “This is not constructive, it is not fair, and it is not going to help those who need relief from high insurance rates.”

Mullet, as he did in debating the legislation, questioned the data used to support the directive.

“All the data that I have seen, and I’ve been scrubbing this stuff for months, indicates that this type of action will not achieve the results I believe the commissioner hopes to achieve,” he said. He urged the commissioner to share information on which he’s based his directive, because “if that data is out there, I sure haven’t seen it.”

Kreidler countered that he and the senator “have seen the same data that shows without a doubt that people with lower incomes, communities of color and seniors have been harmed by insurers’ reliance on credit scoring.”

And Kreidler, as he did earlier this month, accused Mullet of rewriting the Senate bill to favor insurers’ interests. He “made it clear that his allegiance is to insurers and not the people of Washington state, particularly people who are struggling the most during a worldwide pandemic,” Kreidler said.

Insurers don’t like the rule, either.

“This approach circumvents the legislative process and enacts by fiat a ban on a tool that is saving a vast majority of consumers on their insurance products,” said Kenton Brine, president of the Northwest Insurance Council, whose members include the largest private insurers in the state.

Insurance companies contend the use of credit-based scoring reduces the cost of insurance for most consumers and prevents those considered lower risk from paying more to subsidize consumers considered higher risk.

Removing it will have “a negative impact on many people’s insurance rates,” he said.

The rule issued Tuesday will be in place for 120 days, at the end of which Kreidler intends to enact a permanent rule. Brine said it is too soon to know if insurers will try to block a permanent rule.

The prohibitions apply to new policies that take effect on or after June 20 and existing policies renewed on or after that date. Meanwhile, by May 6, each insurer must amend its current rating plans filed with the commissioner’s office for all insurance policies covered by the rule.

Representatives of senior and consumer advocacy organizations applauded Kreidler’s action.

“Your credit score has nothing to do with whether you are a responsible driver, renter or homeowner and shouldn’t impact how much you pay to insure your property,” said Chuck Bell, program director for advocacy for Consumer Reports, in a statement. “We hope the state Legislature will take action before this order expires to make the ban on credit scores permanent.”

Cathy MacCaul, advocacy director for AARP Washington, called it a “step in the right direction. This temporary ban will help those adversely impacted by the pandemic and provide a measure of relief as people get their feet back on solid ground.”


Talk to us

Please share your story tips by emailing editor@courierherald.com.

To share your opinion for publication, submit a letter through our website https://www.courierherald.com/submit-letter/. Include your name, address and daytime phone number. (We’ll only publish your name and hometown.) Please keep letters to 500 words or less.

More in News

Erica C. Barnett, a Seattle journalist whose coverage includes city hall, homelessness and transportation, poses for a picture outside her Pioneer Square neighborhood office. Barnett was one of several speakers during the April 13 King County Conference on Addiction Disorders. Photo by Alex Bruell
Zooming to recovery: King County panel discusses addiction, sobriety during COVID-19 pandemic

Health experts and recovering addicts shared insight, data on staying sober during isolation

Screenshot
Enumclaw Rotary hosts first-ever online auction next week

The auction is taking the place of the cancelled Street Fair last summer.

A photo of the Moving Wall
Traveling “Moving Wall” will spend four days in Enumclaw

The Moving Wall will arrive in the Plateau Aug. 5.

Image courtesy Wyn Van Devanter
Baby Animals and Blooms Days at Maris Farms

The new event is only being hosted April 24 and 25, and on May 1, 2, 8, and 9.

The members of Enumclaw, in a courtesy photo taken by Raphael Gaultier
“A name that … meant being the best”: how rock band “Enumclaw” got its name

Tacoma’s new indie band “Enumclaw” is named after, you guessed it, Enumclaw

Blotter bug
Enumclaw, Black Diamond police blotter | March 31 – April 8

A broken traffic light, sleeping behind the wheel, and a loud basketball game.

Enumclaw Police Correctional Officer Tyler Ewalt holds open the door to a holding cell at the police department’s jail the afternoon of April 5. The cell, while not the one he rushed to when an inmate attempted suicide last month, is nonetheless where inmates in crisis are typically held. Photo by Alex Bruell
Enumclaw jail officer prevents inmate suicide

Officer Tyler Ewalt noticed the inmate-in-crisis over a video screen in March.

Male police officers standing behind Do Not Cross tape
70-year old domestic violence suspect shot by deputies in Buckley

The man was airlifted to a hospital and remains in stable but critical condition.

The Buckley Multipurpose Center, where the city council meets.
Buckley addresses Phase 2, search for new council member during Council meeting

Council approved union contract, awarded construction bid and more

Most Read