Washington AG can continue auto insurer racial discrimination investigation
A judge has allowed Washington Attorney General Bob Ferguson’s office to continue an investigation into whether PEMCO and Progressive’s use of credit scores in rating is discriminatory.
The office of Washington Attorney General Bob Ferguson announced November 8, 2022, that a Thurston County Superior Court Judge had rejected an attempt by PEMCO Mutual Insurance Company and subsidiaries of the Progressive Corporation to halt an investigation by his office into potential racial discrimination against Washington drivers through the use of consumer credit histories in determining auto insurance premiums.
A release from Ferguson’s office states both PEMCO and Progressive “use consumer credit histories — or “credit-based insurance scores” derived from a consumer’s credit history — to decide whether to sell, and at what price to sell, their auto insurance products, despite evidence that this practice disproportionately harms people of color.”
Credit history is just one factor used to determine a driver’s auto insurance score, which carriers use to predict how likely it is that an applicant will have future claims. Other data that can affect an insurance score varies, but often includes the applicant’s accident history and past claims. There are differences in regulations state-to-state regarding what information insurers can use in the calculation of insurance scores, or whether they are allowed to use an insurance score as the sole determinant of policy coverage or price.
“Washington law is clear: Unfair, deceptive or discriminatory business practices are illegal,” Attorney General Ferguson said in a release. “Significant evidence shows that using credit history to price insurance disproportionately affects people of color — even when their driving history is just as safe as white drivers. My office has a responsibility to investigate race discrimination against Washingtonians. I intend to do that.”
This is not the first time the Thurston County Superior Court has weighed in on the use of credit-based insurance scores. In March 2021, Washington State Insurance Commissioner Mike Kreidler issued an emergency rule that prohibited insurers from using credit scores to set personal property rates for a period of three years due to provisions in the federal Coronavirus Aid, Relief and Economic Security (CARES) Act.
In July 2022 challenge to the emergency rule, a Thurston County Superior Court Judge ruled that while the Office of the Insurance Commissioner supplied credible information that the use of credit scores is discriminatory, Kriedler had overstepped his statutory authority with the ban. This ruling kept a stay in place on the credit scoring rule.
The Washington State Office of the Attorney General has asked Washington residents with any information about PEMCO or Progressive’s use of credit history in determining insurance coverage or rates – including anyone who feels they have experienced discrimination from these practices. Instructions for how to submit applicable information can be found here.