For quite some time now Commissioner Mike Kriedler has advocated, and even required, insurers to stop using credit scoring when rating and underwriting homeowners, personal auto, and tenant's policies. In March 2021, he issued an emergency order temporarily prohibiting the use of credit scoring in such a manner, stating that credit scoring negatively affects consumers financially. The order was to take effect June 20, 2021. Insurers protested the order on the premise that the commissioner exceeded his authority and that the move affected the ability of insurers to continue to competitively provide coverage. In April, the American Property Casualty Insurance Association (APCIA) filed for injunctive relief, which was later denied.
One of the requirements of the emergency filing was for insurers to submit amended rate filings by May 6, 2021. The department committed to reviewing those rate filings within four days of submission.
In October last year, a ruling in favor of the insurers' position against the credit scoring order was allowed, and the commissioner stated that he would continue to fight for consumers. In December, a bulletin was issued requiring insurers to provide a premium impact worksheet showing how premiums would change at renewal in light of the order.
In March 2022, a temporary stay of the order was granted by the Thurston County Supreme Court. On August 29, 2022, it was announced that Commissioner Kriedler and The National Association of Mutual Insurance Companies along with the APCIA agreed to a final order regarding the emergency order and that the commissioner will not appeal the order. In an earlier ruling, the court found that the Commissioner's office did not violate procedures and that his actions were not arbitrary or capricious as had been claimed. However, the judge did find that the commissioner had exceeded his authority in adopting the rule temporarily banning credit scoring when there was a state statute that allowed the use of credit scoring by insurers. The court acknowledged that the intent of the rule was to protect residents and that the temporary order did indeed protect residents from discrimination. With this final ruling from the court, the temporary order is eliminated, and insurers may return to using credit scoring in underwriting and rating policies.
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Christine G. Barlow, CPCU
Christine G. Barlow, CPCU, is Executive Editor of FC&S Expert Coverage Interpretation, a division of National Underwriter Company and ALM. Christine has over thirty years’ experience in the insurance industry, beginning as a claims adjuster then working as an underwriter and underwriting supervisor handling personal lines. Christine regularly presents and moderates webinars on a variety of topics and is an experienced presenter.