He asked the state Legislature to prohibit the use of credit ratings by insurers when determining how much they pay for car and home owners. Pay-per-mile auto insurance takes into account how someone actually uses their car, particularly how far someone drives or whether they drive often. Washington State recently proposed that insurance companies stop using credit scores to determine how much someone should pay for auto, homeowners or renters insurance. California, Hawaii, Maryland, Massachusetts, Michigan, Oregon and Utah prohibit insurance companies from using scores based on someone's credit or credit history to set rates or make insurance decisions, such as canceling a policy, refusing coverage, or renewing a policy for auto or homeowners insurance.
housing. The American Property Casualty Insurance Association (APCIA), Washington Independent Insurance Agents and Brokers, and Washington Professional Insurance Agents filed a petition for injunctive and declaratory relief in early April with the Thurston County Superior Court. Developments continue around the Washington State insurance commissioner's efforts to prohibit insurance companies from using credit to set rates for auto, homeowners and renters insurance for three years. Insurance companies in Washington will have to file new returns with the state insurance department for rate structures that do not use credit for affected policies.
For example, California, Hawaii, Massachusetts, and Michigan prohibit the practice of auto insurance rates. Washington State is not the first state to try to restrict insurance companies from using credit-based insurance scores. Insurers are concerned that this will increase insurance rates for millions of policyholders in Washington. Insurers say credit or insurance scores are blind to race or income, but he believes the practice has a disparate impact on people with lower incomes and communities of color.
If auto insurers consider credit, they could use it in conjunction with factors such as the driver's experience or history, history of accidents or claims, the type of car driven, or the distance a person normally drives. Kreidler has said he plans to use time while the ban is in place to work with the Legislature, consumer groups and the insurance industry in an effort to permanently end the use of credit scoring in setting insurance premiums. Howard also noted that a new LexisNexis report indicates that credit-based insurance scores have remained stable during the pandemic both nationally and in Washington State, making Kriedler's emergency rule unnecessary. Drivers who previously received a lower rate because they have a strong credit history could now see their car insurance premiums rise due to the credit rating ban.
We believe that the commissioner lacks the authority to ban credit history because two pre-existing statutes in Washington explicitly authorize insurers to use it and has no power to revoke or suspend statutes. Republicans and insurers have denounced the measure, saying it will add costs to people on fixed incomes, such as the elderly, who have benefited from reduced insurance rates due to their good credit scores.
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