State Insurance Commissioner prohibits insurers from using credit scores to set rates

Mar 23, 2021, 5:11 PM
credit scores, credit cards...
Credit cards in a wallet. (Photo by Joe Raedle/Getty Images)
(Photo by Joe Raedle/Getty Images)

An emergency order issued Tuesday demands that insurance companies stop using credit scores to help set auto, renter, and homeowner rates in Washington state.

State Insurance Commissioner Mike Kreidler says credit scores are not a fair way to determine insurance rates, especially during a pandemic. He says he has a duty to protect consumers in emergencies. Additionally, state law prevents prevents insurers from charging different rates to similar groups of people for the same coverage.

“They can challenge, and if they do, we’ll be fully ready to meet them in court,” Kreidler said.

WA Rep: Bill ending use of credit scores for insurance would lead to rate increase for older drivers

Good drivers with bad credit, for example, are often charged extra for auto insurance, but Kreidler’s emergency order stops that practice. He says some good drivers with low credit scores pay nearly 80% more for mandatory auto coverage.

“Look at what people do when they drive a car, don’t take a look at credit and make an assumption that any individual out there that has a low credit score, it’s purely because of personal choices,” Kreidler told KIRO Radio.

“It’s not fair. It’s a bias against low-income people and making judgments about them,” he added.

Kreidler’s directive applies to all vehicle, renter, and homeowner policies. The rule takes effect immediately and lasts for 120 days. He says he’s looking for a permanent solution after proposed legislation on credit scoring and insurance prices failed to pass out of committee by the deadline.

The KIRO Radio Newsdesk contributed to this report.

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State Insurance Commissioner prohibits insurers from using credit scores to set rates