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Washington Commissioner’s Bill to Ban Insurers from Using Credit Scores Heads to Senate

2021-01-12 21:48:53
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Washington Insurance Commissioner Mike Kreidler's bill to ban insurers from including information from consumer credit history in insurance scores used to calculate premiums for automobiles, homeowners, renters, and life insurance policies will pass in the Senate this week. be included.

The bill, Senate Law 5010, is a joint request for legislation with Governor Jay Inslee and will be heard before the Senate Committee on Business, Financial Services and Commerce at 8 a.m. Thursday.

Kreidler contacted the CEOs of insurance companies in a letter over the summer urging them to stand behind their recent pledges to end discrimination and racial inequality through his proposal support to ban the unfair practice of using credit in setting prices for cars, home owners and renters. and life insurance.

Kreidler is asking the legislature to amend two state laws that currently allow insurance companies to help set rates for consumers in Washington. The companies can continue to use other factors to determine premiums, including age, gender, residence, marital status and more, he noted.

Washington Insurance Commissioner Mike Kreidler

He has continued to insist on the unfairness of insurers' use of credit scores and has called for a ban twice, first in 2001 and later in 2010 during the economic recession.

“People struggle in ways we never imagined,” said Kreidler. “We are dealing with record unemployment and people are struggling to pay their bills, including their insurance premium. Insurers rely on credit scores for too long to determine your premium. don't understand, even their agents can't explain it to them, except to say it's their credit score.

Meanwhile, insurers continue to rely on these secret scores or formulas to shake off consumers they have determined to be unwanted. "

Insurance groups have opposed the proposal, arguing that insurers don't use credit scores in the same way that banks, employers, landlords, or others do.

Property / casualty insurers weigh specific factors from credit reports and combine those factors with other insurance-specific factors, such as driving history, previous claims, or home rental or ownership history, to determine a rate. Life insurers also vary in their use of credit information, they say.

Insurance companies considering credit information do so because their own actuarial experience and other studies have shown a link between credit-based insurance scores and the risk of loss. And for most consumers of P / C insurance, including credit information in the insurance rating results in premiums that are lower than if credit information were not taken into account, insurer groups opposing Kreidler on the matter.

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