Insurance Industry Files Legal Action Against Rule Banning Credit Score Pricing | State
(The Center Square) – The property insurance industry has opened two new lines of attack against the Office of the Insurance Commissioner (OIC) over the fight to use credit scores in insurance pricing. He filed legal and administrative challenges on Thursday to block the rule from taking effect on March 4.
“We knew a legal challenge was possible and we’re prepared for whatever comes up,” OIC media and outreach manager Stephanie Marquis told The Center Square. “We believe this rule is within the commissioner’s statutory authority to enact and is the best option for consumers in Washington.”
The insurance industry pointed out in a press release that the OCI also believes it has the authority to issue essentially the same rule using the emergency powers of the Washington State Insurance Commissioner, Mike Kreidler, which turned out not to be the case.
“The Commissioner’s predecessor’s emergency rule has been declared invalid … by order of a Thurston County Superior Court judge,” said Claire Howard, senior vice president of the American Property Casualty Insurance Association (APCIA ), in a press release.
In what Kreidler called at the time a “narrow decision,” Thurston County Superior Court Judge Mary Sue Wilson said he couldn’t do it with his emergency powers and issued a summary judgment to the insurance industry on October 8, 2021.
APIA, along with Professional Insurance Agents in Washington, is suing the OCI for this rule and telegraphed what may be the subject of their case in the press release.
The substantive arguments boil down to the firm legal basis for credit-based insurance pricing and the claim that the manner in which Kreidler attempted to implement this policy has harmed many Washington residents.
“Commissioner Kreidler is trying to ban an important risk-based scoring tool that was put in place by the Legislature nearly 20 years ago for the benefit of consumers,” Howard said. “Before Commissioner Kreidler’s permanent emergency rules disrupted the insurance market, policyholders in Washington were paying less for auto, boat, RV, home, and renters insurance because the use of scores credit-based insurance effectively predicted risk and set accurate rates.”
The insurance industry says the emergency rule, which is essentially the same as the permanent rule, has raised prices for more than a million Washingtonians with good credit, many of whom are seniors in fixed income.
Kreidler had disputed this assertion and appealed for data from insurance companies. APCIA Vice President Mark Sektnan dismissed Kreidler’s appeal as “flawed” and “issued under the wrong statutory authority.”
Perhaps in response to this criticism, the OCI also proposed an additional rule “requiring insurers to provide policyholders with a written explanation of any premium changes” at the same time as it announced the rule to re-prohibit premium pricing depending on credit.
APCIA is also taking advantage of the fact that the OCI announced this new pending rule around the same time as a state senate hearing that would have preempted the office’s ability to act.
“Commissioner Kreidler has taken the unprecedented step of passing a permanent rule to curb legislative efforts to make credit-based insurance scores work for consumers in Washington,” Howard said. “Furthermore, the commissioner ignored thousands of letters sent to him and to the Legislative Assembly by consumers opposing his rule, detailing how that action forced them to make difficult financial sacrifices.”