Wash. insurance commissioner exceeded authority with credit scoring ban
The court did find that the insurance office presented records that contained credible information that the use of credit scores is discriminatory.
Thurston County Superior Court Judge Indu Thomas ruled that Washington State Insurance Commissioner Mike Kreidler exceeded his authority when he issued a permanent rule banning the use of credit-based insurance scores.
The most recent ruling keeps in place a stay on the credit scoring rule, according to the Office of the Insurance Commissioner for Washington state.
“Clearly, today’s ruling is disappointing for Washington consumers,” Kreidler said in a release. “I adopted the credit scoring rule because I believed it was good public policy and would protect policyholders financially impacted during the pandemic. Unfortunately, the court has ruled otherwise, saying I acted in good faith, but misinterpreted our authority.”
However, the court did find that the insurance office presented records that contained credible information that the use of credit scores is discriminatory.
Judge Thomas found that the insurance department cannot rely on the “more general rating standard statute that prohibited ‘excessive, inadequate, or unfairly discriminatory’ rates to ‘eliminate all meaning from the more specific credit history statutes by which the legislature had authorized its use,’” according to a release from a group of trade associations.
“Today’s decision confirms that the best place to permanently address this issue is in the legislature. I hope legislators will listen to all policyholders impacted by this practice and not just the insurance industry,” Kreidler said.
The March 2021 order prohibited insurers from using credit scoring to set rates for personal auto, home and renters insurance for three years due to provisions in the federal Coronavirus Aid, Relief, and Economic Security (CARES) Act, which impacted credit information. The order stated that consumer protections provided by the CARES Act resulted in incorrect information recorded by credit bureaus for some consumers, making them unreliable as a predictive tool for insurers.
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