For Consumers

Kreidler: Deadline is May 6 to comply with emergency rule on credit

Insurers must file new rating plans for review, approval

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April 27, 2021

OLYMPIA, Wash. – Insurance Commissioner Mike Kreidler is reminding insurance companies of the May 6 deadline to file rating plans that comply with his emergency rule to temporarily prohibit the use of consumers' credit scores.   

A Thurston County Superior Court judge on April 23 allowed the emergency rule to remain in effect by denying an insurance industry request for a preliminary injunction. Judge Mary Sue Wilson found that industry associations challenging the rule were unlikely to succeed with their two main arguments that Kreidler lacked “good cause” and had no authority to issue the rule. 

Kreidler issued the emergency rule on March 23

The temporary ban on the use of credit scores for insurance takes effect June 20. To comply, insurers must file rating plans by May 6 for review and approval by Kreidler’s office. To date, approximately 20 insurance companies have filed the required documentation. 

“It’s time for the insurance industry to step up and meet its obligation to policyholders,” Kreidler said. “The financial impacts of the pandemic on individuals and families have only exacerbated the unfairness of the use of credit scores. The industry in Washington should rely on fair factors to determine what they charge for policies. For far too long the industry has subsidized more well-off customers at the expense of those with lower incomes.”

Drivers in Washington with safe records and low credit scores pay 79% more for coverage than those with poor driving records but higher credit scores, according to a study by the Consumer Federation of America

Kreidler said the rule will protect those who are the most hurt financially by the pandemic from being forced to pay even higher premiums. It will also protect those whose will see their credit scores plummet when the federal protections on pandemic credit reporting end.

Approximately 200 companies are licensed to sell policies for auto, homeowner and renters insurance in Washington.