WA Legislature Called On To Stop Insurance' Use Of Credit Scoring

OLYMPIA, WA — Washington Insurance Commissioner Mike Kreidler on Wednesday said he is calling on the legislature to stop allowing insurance companies to consider credit scores when setting premiums, a practice he said is unfair and discriminatory.

According to a release, Kreidler is asking the state legislature to amend two laws allowing credit scoring. If the laws are amended, insurance companies will still be allowed to consider age, gender, where a person lives, marital status and more in setting insurance premiums.

Kriedler said the effort is twofold, responding to both the economic downturn caused by the new coronavirus and to a widespread history of racial discrimination in many institutions.

“The use of credit scores in insurance is discriminatory and unjustly targets people of color, those with lower incomes and individuals and businesses struggling during the coronavirus pandemic,” he said in a statement.

Kriedler said insurance companies believe people with lower credit scores are more likely to file claims with their insurance companies.

"I believe it’s inherently abhorrent, unfair and unjust," he said. "There’s plenty of information an insurer can use to determine your premium. They don’t need to use credit information to build up their profits.

Now, he's asking for changes to state laws RCW 48.19.035 and RCW 48.18.545, both of which allow the use of credit scores in determining insurance rates and underwriting.

The commissioner's proposal is sponsored by Sen. Mona Das, D- Kent, and Rep. Steve Kirby, D-Tacoma.

The release states since 2001 Kreidler has succeeded in limiting insurance companies' use of credit scoring several times. Today, factors like medical bankruptcy cannot be used to determine insurance premiums.

“People will feel the economic impact of this pandemic for years to come,” he said. “They don’t need to be hit even harder by their insurance company. It will be extremely hard for many people to improve their credit scores or even maintain their current score. They should not be penalized for circumstances that are no fault of their own.”