Jesse Jones

Judge overturns emergency order removing credit scoring from insurance rates

THURSTON COUNTY, Wash. — In a huge win for the insurance industry, a Thurston County Superior Court Judge just ended the Insurance Commissioner’s emergency ruling eliminating the use of credit scores to determine insurance rates.

Judge Mary Sue Wilson made the ruling by saying Commissioner Mike Kreidler did not have “good cause” to file it as an emergency. Part of her reasoning was that Kreidler did not tell the legislature this was an emergency while they were considering a bill that would have done the same thing. That bill died in the Senate and Kreidler announced the emergency rule afterward.

Kreidler had told KIRO 7 that the use of credit scores was unfair to people who live in communities of color.

He also told us that since some credit reporting rules had changed due to the CARES Act, it made credit scoring unreliable.

Insurance companies countered by saying credit scores are not biased and that the rule would hurt seniors.

So what does this mean for people’s rates?

We’ve heard from lots of seniors whose rates went up. We’ve heard from others whose rates went down.

There may be an appeal. An insurance industry insider we spoke to says they don’t expect action until the industry gets more clarity. No need to jack people’s rates around again.

But when there is clarity, rates could go back to the way they were before the new rule, very quickly.

What does Commissioner Kreidler have to say about the ruling?

Kreider says he is disappointed. And he sent us a statement that says, in part, he is weighing his options for his next move:

“It’s way past time for the industry to apply reliable and fairer factors to determine premiums. There are better ways to maintain their profits than relying on this outdated practice that depends on people struggling with their credit scores. I will continue the fight to permanently ban credit scoring and will be considering my options.”

So what’s next?

The Insurance Commissioner can go through the formal rulemaking process to replace the emergency order.

He can appeal.

Or, he can let it go.

What’s the industry’s take on the ruling?

We spoke with Claire Howard, general counsel for the American Property Casualty Insurance which was one of the industry groups that brought the suit.

“There are still questions about rating plans and how this will impact all Washington drivers, homeowners and renters that have been hit with increases. The OIC - which is the acronym for the office of insurance commissioner - will now need to solve those problems for insurance consumers,” says Howard. “I think this is an important ruling and I’m very satisfied with the outcome.”

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