WA Rep: Insurance commissioner move to ban credit scores not legally defendable
The state Legislature was given the opportunity to pass a ban on credit scores related to insurance, but instead opted to go in a more nuanced direction and continue the debate. But this week, Insurance Commissioner Mike Kreidler issued an emergency rule banning insurers from using credit scores to set their rates for personal property over the course of the next three years.
“I’ve never seen anything like it during my nine years in the Senate. This is why you have committee hearings, you have public input, you try to get the pros and cons of the ideas that are put forward — if they can’t get to the finish line, that means they don’t happen,” he said.
“So it’s really surprising to have the insurance commissioner just declaring it’s going to happen just because he wants it to, even though he couldn’t get his bill through the Legislature,” Mullet said.
As Jason noted, the commissioner’s argument is that this prevents discriminatory pricing, which is in relation to the Federal Cares Act placing, he says, “a temporary hold on the reporting of certain negative credit information. As a result, bureaus are currently collecting a credit history that is inaccurate for some consumers and producing unreliable credit scores.”
“I don’t know what data he’s getting,” Mullet responded. “Because we spent the last few months looking at this issue since he proposed the bill. It’s crystal clear that credit scores on average — and not just Washington state, but across the entire country — have gone up in the past year. That’s because you haven’t had evictions, you had flexibility in paying your mortgage.”
“At the same time, you had a lot of federal stimulus payments that came in, you had enhanced unemployment payments, and the end result of all of that is we actually have higher credit scores in the country than we did before the pandemic started,” he added. “So I don’t know what the commissioner is referring to when he talks about this. It’s really bizarre.”
What should be the response from the Legislature to this?
“I’m guessing he’s going to end up just in a bunch of legal hot water because my guess is insurance companies are going to say, ‘Well, you’re not allowed to do this. We have approved rate filings based on the laws on the books now of how we file our rates,'” Mullet said. “So I’m guessing he’s just going to create a lot of legal headaches for the state of Washington to try to defend something that I don’t think is defendable.”
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