Washington Insurance Commissioner Mike Kreidler late last month issued an “emergency rule” banning the use of credit score reports for personal property insurance rates until 2024, and now industry members warn that individual rates will go up for at least one million state residents. The rule is set to go into effect next month.
Kreidler’s March 24 announcement came after efforts to impose the policy through the legislature via SB 5010 were unsuccessful. The bill cleared the Senate Committee on Business, Financial Services & Trade but was unable to get out of the Rules Committee for a floor vote.
American Property Casualty Insurance Association (APCIA) quickly sued in Thurston County Superior Court, demanding an injunction. However, Judge Mary Sue Wilson ruled that Kreidler had not acted outside his authority as insurance commissioner.
In a statement following Judge Wilson’s decision, Kreidler wrote: “I will continue the fight to permanently ban credit scoring when the Legislature returns in 2022. For now, I welcome the court’s just decision that consumers must be protected.”
APCIA Senior Vice President Claire Howard said in a statement that “we respectfully disagree with the court’s preliminary decision, which we believe is unfair, unjust, and punitive for Washington customers who will now have to pay more for insurance solely because of Commissioner Kreidler’s actions. We look forward to the next steps in the litigation process.”
She further wrote that in the meantime insurance companies will comply with the rule, though she added that the change will result in double-digit rate increases for more than one million residents on policies for car, home, and rental insurance.
Insurers must file their new rating plans by May 6.