Jesse Jones

Insurance industry helped write changes that regulator says ‘gutted’ bill to take credit scoring out of insurance

Olympia, WA — Senate Bill 5010 was supposed to end the use of credit scores to determine insurance rates.

Now it’s been amended to a bill that freezes your credit score for insurance purposes.

“For the next three years your score can go up but it can’t go backwards,” says Washington state Senator Mark Mullet. “And we’re buying some time for, hopefully to continue to look at this policy.”

Senator Mark Mullet (D-Issaquah) is the Chairman of the Senate Business, Financial Services & Trade Committee. It’s the committee the bill was just voted out of.

“No one - anyone who has a credit impact from Covid, this bill ensures that that credit impact will not increase the cost of their insurance,” says Mullet.

I went to Washington’s Insurance Commissioner Mike Kreidler, who proposed the bill. I asked him if he thought the insurance industry flipped the bill.

“It has. They took a bill that was there to help consumers, certainly addressed the issues of equity in our society, and essentially gutted it to the point where it protects their interests of the insurance industry at the expense of consumers,” said Kreidler..

I’ve learned that a government relations employee of an insurance company helped draft the amendments. Senator Mullet admits that’s true.

“I mean I think it’s - yeah. He’s - I mean, there’s stuff in there. But like I said, the three year moratorium piece - you don’t need much help drafting that. It’s a pretty straightforward thing,” says Mullet.

Commissioner Kreidler says the amended bill is watered down and still allows the use of credit scoring. It also only applies to renewal policies.

“This is really old-time politics where you effectively turn it over to the industry to effectively control what the legislature does,” says Kreidler.

Senator Mullet sent me this email after Kreidler sent a press release urging voters to ask their senators to reject the changes.

“I have shared with Kreidler the Federal Reserve Data that shows that the distribution of credit scores is similar across all income brackets. Kreider can’t just declare a correlation exists without providing data to back it up.”

We’ve been investigating the use of credit scoring to determine insurance rates. Numbers provided by the Consumer Federation of America show, in many cases, that the zip codes with the highest percentages of blacks also had the highest insurance rates in the state.

And the AARP has come out against the practice too.

“And in the case of many seniors, they have - no longer have credit. They don’t have revolving credit on credit cards or they pay them off or they rely solely on a debit card which does not impact your credit rating. Or they’ve paid off their mortgage and are no longer holding a mortgage. And a credit score reflects your payment history,” says AARP Washington advocacy director Cathy MacCaul.

Kreidler says he’s provided information including a Consumer Federation of America study that shows people with clean driving records but poor credit scores pay nearly 80% more than a good driver with a high credit score.

Kreidler says the bill in its old form needs to be voted on. If not:

“Then I’d say let the bill die,” says Kreidler. “It doesn’t do anything for consumers.”

See our previous reporting here:

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