State Senator disagrees with making insurance rates a ‘zero sum game’
State Insurance Commissioner Mike Kreidler created an emergency rule that essentially, as Dori describes, makes it so people with bad credit pay less and people with good credit pay more.
Democrat Senator Mark Mullet joined KIRO Radio’s Dori Monson Show to explain why he says — as he wrote in an op-ed for the Seattle Times — that your premiums should not go up needlessly.
“Insurance rates in Washington before, if you filed very few claims, you got the biggest discounts,” Mullet explained. “And the people in our state who filed the fewest claims tend to be senior citizens. They’re better at driving, they file fewer homeowner insurance claims, and they were the biggest beneficiaries of credit-based insurance discounts in the state of Washington.”
“Mike Kreidler, because his bill couldn’t pass the Legislature, he just decided to make up an emergency and say, ‘I’m going to use my powers to ban credit score discounts,'” Mullet said.
Mullet chairs the Business Financial Services Committee, which held a public hearing this week.
“We were overwhelmed with testimony from senior citizens in Washington who are, like you said, on fixed incomes, they haven’t filed claims in decades, and now they’re having to pay hundreds if not thousands of dollars more for their insurance, so people who do file a lot of claims can pay less,” Mullet said.
The insurance commissioner’s policy is “revenue neutral,” Mullet explained, so every dollar someone pays extra is “so somebody who files more claims can pay less.” People who file more claims are seeing discounts, while people who file fewer claims are seeing increases.
As to whether or not Kriedler has the power to create this policy, Mullet says that’s being challenged.
“We are fighting him in court. There’ll be a court hearing next month whether he has the legal ability to do what he did,” Mullet said. “And so hopefully we win the court decision.”
“I think the point of the public hearing [Tuesday] was to make sure, just in case we don’t win in court, that the legislature needs to take action to undo what [Kreidler] did because it’s just unfair to the senior citizen population of the state to have their rates go up by this amount, just to subsidize riskier policyholders,” he added.
One example is a Kirkland couple who has been in the same house since 1984. They have not filed one insurance claim in that entire time, but their combined auto and home insurance rates went up $600. The husband testified at the public hearing, and was one of many who had their rate increase. Mullet believes there was one person who testified at the hearing whose rates went down.
This policy, Mullet points out, is impacting all senior citizens, regardless of race or other demographics.
“It’s everyone who is a senior citizen in the state,” he said. “All those buckets have been negatively impacted because of the commissioner’s actions.”
Mullet says he personally invited Kreidler to the public hearing, but he did not show up.
“What we learned in the hearing yesterday is over two million Washington residents are having their insurance rates go up. This is in the hundreds and hundreds of millions of dollars. We’re talking $500 or $600 million that people are having to pay extra so somebody else can pay less,” Mullet said. “And the commissioner would not come to the hearing to at least defend what he did.”
When people get these increases, Mullet encourages them to reach out and says not to buy what he calls the “cliché responses” that the insurance companies are all making more money.
“The reality is he forced them to lower premiums to offset whatever increases there are,” he said about Kreidler. “So he’s just forced the cost shift across the state of Washington. The insurance companies are getting the exact same amount of money they were getting before. It’s just now the people who file more claims are able to pay less, and the people who are safer are having to pay more.”
Looking ahead, Mullet thinks there’s a way to come up with a better solution, if the judge who will hear the case next month does not overturn it first.
“My big disagreement with the insurance commissioner is it doesn’t have to be a zero sum game,” he said. “You can find ways to protect people with bad credit. You can find ways to improve credit. There’s a lot I think we could do to raise the credit scores of people who do have bad credit.”
“But the last thing we should be doing, especially given that senior citizens are the biggest beneficiaries of credit score discounts, is remove credit score discounts,” he added.
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