Summer, 2021 impact of WA banning of credit scoring
The Washington State Insurance Commissioner issued an order in March, 2021 banning the use of credit scores in determining Property & Casualty insurance premiums. This order became effective just three months later on June 20, 2021. All insurance companies doing business in Washington are subject to the order. A link to the Insurance Commissioner’s position is here: https://www.insurance.wa.gov/credit-scoring-ban
The rule required all insurance companies to refile with the Insurance Commissioner’s Office for review and approval how they were going to remove credit scores from their premium calculations. The impact will be felt differently by each family. Some families will lose the premium reductions enjoyed by having high credit scores, meaning they will see premium increases. Some families will see decreases in premium if their credit scores were adding any cost to their insurance. The Insurance Commissioner did not allow insurance companies to provide any mitigation to affected customers, even if to smooth out the impact of larger premium increases.
It is impossible for us to predict the longer term impact. Some in our industry are suggesting that the speed with which the Insurance Commissioner required a response from insurance companies forced an initial requirement to comply that missed an opportunity to respond with less volatility to families. We know some insurance companies are rapidly going back to the Commissioner with filings seeking approval to try and mitigate the large premiums swings caused by compliance.
We believe in the public’s right to information and to entrust some of their interests to a publicly-elected Commissioner. We also believe that the free market will continue to try and find solutions to problems that families face. Our agency’s hope is that the Commissioner and the insurance industry will find a long term solution that brings transparency and stability to a market that would benefit from both.