New Rule Forces Washington Residents With Good Credit to Pay More for Insurance

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(The Center Square) – Washington residents with good credit scores are facing sticker shock when their car or home insurance comes up for renewal.

Rates are increasing because Washington Insurance Commissioner Mike Kreidler has banned insurance companies from using credit scores in setting rates.

The policy went into effect in late June. Since most insurance policies are sold on an annualized basis, residents are getting sticker shock whenever their policies are set to renew.

Blaine resident Andy Weeda is one of the shocked. His family “had all of the little benefits,” that came with excellent credit and a good driving record, he told The Center Square.

“We were told they are all getting pulled in the state of Washington,” Weeda said. This all amounts to “leveling the driving field, I guess.”

Banning credit rating was rejected by the Washington Legislature earlier this year and instead enacted by the Office of the Insurance Commissioner by an emergency rule.

The rule is supposed to be revenue neutral, meaning insurance companies cannot just raise rates on those with great credit. Insurance providers have to lower rates on those with worse credit as well.

Kreidler argued credit-score-based pricing unfairly penalized those with poor credit, including minorities.

A Federal Trade Commission report to Congress that looked at the issue did not find overwhelming evidence of racial bias in this kind of insurance pricing.

Rather, the study found, “Credit-based insurance scores are effective predictors of risk under automobile policies.”

Credit scores “are predictive of the number of claims consumers file and the total cost of those claims,” and using such scores in setting insurance rates is “therefore likely to make the price of insurance better match the risk of loss posed by the consumer,” the FTC said.

The federal agency further found this to be true within demographic groups.

“Tests also showed that scores predict insurance risk within racial and ethnic minority groups (e.g., Hispanics with lower scores have higher estimated risk than Hispanics with higher scores). This within-group effect of scores is inconsistent with the theory that scores are solely a proxy for race and ethnicity,” the report said.

Kreidler’s office did not immediately return a request for comment on whether he is aware of the FTC report and its findings.

In an address to a conference put on by the Professional Insurance Agents (PIA) and the Independent Insurance Agents & Brokers of Washington in September, the insurance commissioner decried the influence of big data and big, out-of-state insurance companies.

Kreidler denounced a worldview “driven by numbers.” He protested against “boiling everybody down to an algorithm that tells you, ‘Oh this is a good person,’ because they’re likely to give us a bottom-line number that we like, ‘And this person is a bad person,’ regardless of the circumstances that they may wind up in.”

The insurance commissioner admitted of credit scoring, “Yes, it is a predictor. It also has the opportunity to dramatically impact the amount of resources that a company has to spend on underwriting. They don’t have to spend a lot of time taking a look at how they drive a car or maintain their home, because they take a look at some statistics, some numbers.”

“And where does it stop? Where does it stop?” Kreidler asked.

PIA lobbyist Mel Sorensen, speaking at the same conference on a different day, pointed out Kreidler’s office opposed two bills in the Legislature this year which seem to undercut his arguments.

One bill, supported by the insurance industry, would have mandated insurance companies can use credit scoring only when it benefits the ratepayers. The other bill would have allowed insurance companies to take life circumstances into account to counter a bad credit score.

The insurance companies have and continue to challenge this rule in court. The next challenge is scheduled to be heard in Thurston County Superior Court on Friday.

Comments

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JamesC377

Incredible, once again those that do things right are being punished. I’m sick and tired of being penalized for having worked and now retired. They let criminals go after they steal, harm, threaten us. They give drug addicts the gear and a place to do what they do. We spend millions on the homeless, yet for some reason most beds/apt/houses stay empty. We get taxed to give billions away to countries that wouldn’t spit on us if we were on fire. Politician is the newest and worst swear word I have ever heard. We can include the morons in the insurance commissioners office also. They are disgusting thieves. Billions of dollars mysteriously disappear. Yet all they can do is cry “more taxes. Promise us the world, and deliver the exact opposite. Our country is being given away to other countries, hoards of undocumented “visitors “. Hell they, the visitors, have more access to government give aways, programs, loan than a citizen does.. Hell come to america. Sit on your ass and we’ll pay you. And my favorite is the whole retirement/social security debacle. Our gutless leaders are to special to be a part of ss. Yep they have their own retirement plan. Put these thieves on the ss plan and see how fast it gets fixed. Seems all we are is an open pocket book for all these crooks. Makes me sick to have served 20 years in our military. This is not America any more. It’s a free for all and the (swear word coming) politicians and big business are raping us, our land, and rights. Here’s a cheer for the America of years gone by and a hearty *$*#$$8 to all those in power today. America is dying.

Saturday, October 9
Ghost of King Chuck

JamesC377

Has a nice fat retirement check, full medical coverage, and is probably a Trump supporter. Does anyone know WTF he's complaining about when he has it made?

Saturday, October 9
Thalia Melpomene

Ghost of King Chuck

Please do tell us why you begrudge him, given what he said, not what you assume. Please, we're all ears.

Saturday, October 9
@Ghost of King

You I am sure are exactly who he is referring to based on your bigoted irrational comments made. You belittle a man that not only served this once upon a time country honorably and worked his butt off while making choices so that he would have retirement medical and good credit because in the real world when you do better you get better things. When you are scum and to lazy to get off the dope and get a job while stealing from others that work hard and avoid trouble or crimes against others or that affect others they shouldn’t be treated the same as he’s working trustworthy people that have always done what’s right. Yet here we are having to give up what many have worked for and even if maybe we had a rocky start in life we worked hard to clean up our acts so that we could pay less on things that have good credit discounts or get approved for a loan or home based on making our payments on time or maintaining a job regardless of pay or hours or our own needs so that we could provide in whatever way we needed. So we shouldn’t have to sink to the level of the worthless drug addict or thief that wasn’t taught how to be a good human due to usually poor parenting as well as the crutch people like King Inslee enables on the mentally ignorant so that he can further take advantage of them all while pushing his agenda with the one world communist agenda. People like you act as if you have it so hard with your government handouts all while still living in your moms basement. Turn off the garbage TV take a shower get dressed and go find a job and learn responsibly. Learn what it’s like to be a good moral human being rather than a sell out to the human race. No matter the struggle; if you are of any moral value and even worth having in society you would learn when to shut your mouth and look inside yourself as to what’s your actual issue that you are unable to obtain these things. Once you figure them out without blaming everyone else for your issues and can focus on fixing yourself maybe then you will learn the value of a hard earned dollar and have some respect for those that give up a lot so they can obtain the better discounts, the better living areas, the better schools, the better cars, the better stores, the better jobs, the better pay, the better rates on loans, the better anything they want. They worked for it. They gave up much when the losers that can’t get off their couch made excuses and whined and still are. Now we have a tyrannical government that are forcing us into third world conditions because in order to have a one world government all countries have to be equal and they can’t quite bring all the others up to the level of America so we are being drug down to their level. The same thing is happening in our society and it’s clear that the lazy scum will benefit while those who gave all to have more, get screwed out of everything they worked for all for some ignorant lazy firms of life that politicians use to line their own pockets while destroying the very nation that has made it even possible to be worthless yet survive while other bust their butt so you can live off their hard work all while complaining they have to much. Your ignorance is disgusting and shows exactly who you are. Get help and learn how to grow up and be a responsible human. You probably won’t. But there’s hope for all the ignorant indeed there’s hope for you too. God bless and get help. Maybe pray or give your life to the common good rather than the demonic ways that keep you paralyzed in life.

Saturday, October 9
JamesC377

Ahh ghost, can’t even put your name on your comments, are you afraid people will see the real you? obviously you never spent time in the military…. Fat pay checks and free everything. You don’t have a clue do you? I knew going in that I would never make big money and I didn’t care. I wanted to be a Marine. I worked my backside off, spent many holidays and special occasions away from friends and family. Ended up in places I wouldn’t wish on my least favorite person. Yep, nothing but a world tour vacation. And your idiotic trump assumption… what is with that? Maybe you don’t have the comprehension skills, but I clearly stated I don’t like politicians. Any of them! I think the donkeys and the elephants are equally corrupt and both sides are lying to us, stealing from us…. So enjoy your day doing whatever it is you do, and thanks for making me rich, lol, fat paychecks. Can’t wait for those to come rolling in.

Sunday, October 10
Thalia0Melpomene

Thank you @Ghost

I don't know about you, but I feel better for you having spelled it out for a pos coward that can't do anything but spew the vomit he sucked off Rachel Madcow (and where do you think SHE lives?). It's youngcon with another ID to try and make himself relevant, since I, for one, have been skipping his empty comments. Definition for young con: empty, as in devoid of intellect or mettle.

Sunday, October 10
partsgirl

Not using a hard earned credit score is pretty sad. My coverage went up over $100 for six months. It's a challenge, but I will pay it. I have gone without a lot of what I wanted over the years so I could pay for what is necessary. I've never collected unemployment or any other handout. I don't even know what the point of raising the rates and not letting credit scores be used was. I guess just another kick in the ass for the working people. It will hurt a lot of older people on fixed incomes.

Sunday, October 10
JamesC377

Thalia, lol I’ll take that as a compliment? Or were you talking to goats? An6way thank you very much and yes it did feel good…

Sunday, October 10
JamesC377

Oops, sorry I have tremors and sometimes my typing is messy. But I meant to type in ghost. Anyway would work also. How I got a 6 in there is….

Sunday, October 10
JamesC377

Oops, sorry I have tremors and sometimes my typing is messy. But I meant to type in ghost. Anyway would work also. How I got a 6 in there is….

Sunday, October 10
youngcontrarian

@Thalia You are absolutely wrong. I actually agree with James on most everything. I like his commentary. Go on being wrong, a broken clock is right twice a day.

Sunday, October 10