June 10, 2021
OLYMPIA, Wash. – Consumers in Washington state have the best opportunity in two decades to shop for insurance coverage for their automobiles and homes after June 20, when companies are no longer permitted to rely on the outdated and unfair practice of credit scoring.
Insurance Commissioner Mike Kreidler says companies selling auto, homeowner and renter policies should compete vigorously for business. Over 160 insurers, or 97% of those licensed in Washington to sell property and casualty insurance, met the May 6 deadline to file new rating plans to comply with the emergency rule to temporarily prohibit the use of consumers’ credit scores.
The temporary rule takes effect June 20.
“If you think you’re getting a bad deal on your policy, shop around for a better deal,” Kreidler said. “Companies will now have to rely on risk factors that truly matter – how safely you drive and how well you maintain your property. For decades, insurers have used secret formulas based on your credit scores to determine your premium. Starting June 20, you have a chance to shop for coverage in a new and fairer market.”
About 200 companies are licensed to sell auto, homeowner and renter insurance in Washington.
Because of the temporary ban on the use of credit scoring, the companies reported that about 1.3 million policyholders should expect rate changes – some will see decreases of up to 60%. The new rating plans must be revenue neutral. This means insurers cannot increase their profits using the lack of credit scores as an excuse.
Although the emergency rule is effective June 20, rate changes will not happen immediately for everyone. Consumers will begin seeing adjustments to their premiums during individual renewal periods. These can occur at different times of the year depending on when policyholders bought coverage.
“Don’t fall for scare tactics some companies and industry associations have been ginning up for a while at the same time they’ve been raking in huge profits and giving their CEOs millions in bonuses,” Kreidler said. “Despite what they say, companies don’t have to raise your rates – they are choosing to. Don’t let a company play the victim. If an insurer truly wants to keep your business, it can make sure that happens.
“Ask for a better deal. If you don’t get it, shop around.”