The Washington State Insurance Commissioner has proposed a bill that would prevent insurance companies from using credit scores when setting rates.
Television station KOMO reports that Insurance Commissioner Mike Kreidler has proposed a bill for an upcoming special legislative session that would ban the practice.
The credit score is one of several factors used in the state to set rates. Other considerations are driving and claim history, car maintenance, age, make and model of your vehicle, and even how you maintain your home. Where you live and the community crime rate are also considered.
Insurance companies say that there is a direct correlation between credit history and risk, and that removing that factor means that those who are higher risk will wind up paying less that low-risk customers. But Kreidler says the practice is “biased” and “clearly hits people who are lower income and people of color. He says using the credit score unfairly puts people who have a clean driving record but do not have credit or can’t afford financial emergencies in a higher-risk category.
Kreidler says the COVID-19 pandemic may negatively affect credit scores due to increased financial hardships, and that could raise their insurance rates. But NW Insurance Council President Kenton Brine says that assumption is not accurate. “There is no evidence to support what he (Kreidler) is saying,” he told KOMO.
Details of the bill are expected to be released as early as this week.