Ban on credit scores for calculating premiums overtuned by Judge

Ban on credit scores for calculating premiums overtuned by Judge

The ban on credit scores for calculating premiums has been overturned by a judge of a superior court in Washington state.

Mike Kreidler, Insurance Commissioner had earlier in an emergency ruling, banned the use of credit scores for calculating premiums.

However, Judge Mary Sue Wilson of Thurston County Superior Court, ruled that the Insurance Commissioner did not have a “good cause” to file the ban as an emergency.

Kreidler failed to inform the legislature that the ban was an emergency at a time when the Senate was considering a bill that would have the same purpose, the Judge added. That bill, however, later died in the Senate.

Speaking to KIRO-7 News after the court’s ruling, the Insurance Commissioner said that he was disappointed with the ruling.

He said the use of credit scores to determine insurance rates is unfair to people living in communities of color, adding that some credit reporting rules had already changed because of the CARES Act, making the use of credit ratings unreliable.

“It’s way past time for the industry to apply reliable and fairer factors to determine premiums,” he said in a statement sent to KIRO-7 News. “There are better ways to maintain their profits than relying on this outdated practice that depends on people struggling with their credit scores. I will continue the fight to permanently ban credit scoring and will be considering my options.”

The ban had raised concerns among insurance practitioners, who welcomed the ruling.

“I think this is an important ruling and I’m very satisfied with the outcome,” said Claire Howard, general counsel for the American Property Casualty Insurance Association (APCIA), one of the industry groups that brought the suit.

“There are still questions about rating plans and how this will impact all Washington drivers, homeowners, and renters that have been hit with increases. The OIC – which is the acronym for the office of insurance commissioner – will now need to solve those problems for insurance consumers,” she told KIRO-7 News.

Author: Greg