If your car insurance premium went up recently, you’ve probably called your insurance company to ask why.
But you’ve also probably come across insurance agents who provide you little to no information about the rate increase. That’s because insurance companies are not required to be transparent about rate increases.
But that is set to change in June 2024.
McClatchy previously reported that car insurance rates in Washington state are expected to see a 20-25% rate change in 2024 due to inflation, cost of labor and auto parts, and an uptick of traffic deaths and accidents.
Aaron VanTuyl, the communications and social media manager at the Washington State Office of the Insurance Commissioner, said in an interview that the increase in car insurance premiums is not necessarily a Washington-specific issue. He said that compared to other states, Washington is actually ranked in the bottom half for annual average premiums for auto insurance coverage.
VanTuyl added that insurance premium costs are based on the market value of cars and since the price of used cars increased during the pandemic, insurers have had to increase their rates because it is now very costly to replace or repair older cars.
Process for increasing WA insurance rates
Insurance companies are required to send their rate requests to the Commissioner’s Office when they want to change their rates.
VanTuyl said that the office requires insurance companies to send in reports that show that they need to increase their insurance premiums with those requests.
Insurance companies must submit reports with about one year’s worth of data that includes what they’ve paid out in claims and administrative costs. Using the data provided in the report, insurance companies must do the math to figure out how much the rate must increase in order to cover their expenses while still making a certain amount of profit.
Once the rate request is filed with the necessary reports, the actuaries review data and do their own calculations before approving a rate increase or approving them for a lower rate increase.
VanTuyl said that as of 2023, the Commissioner’s Office took an average of 79 days to review rate requests.
WA to increase insurance premium transparency
Insurance companies might not need to explain the reasons for why your insurance premium has increased today, but beginning in June 2024, they will be required to give you a reasonable explanation.
That’s because Washington’s insurance commissioner has adopted a new rule called the premium change transparency rule which says that all property and casualty insurers operating in Washington that sell private passenger auto and homeowners coverage “must give policyholders who ask reasonable explanations using terms they can understand.”
“If your auto or homeowners insurance goes up, it’s pretty tough to understand why,” VanTuyl said. “ We get a lot of calls from people asking about it because their insurance company might not give a clear straight answer, and so we held a series of meetings with insurers and consumer groups and worked on a rule that requires insurance companies to be more transparent with their policyholders when they get a premium increase.”
The rule will be in place from June 1, 2024 through June 1, 2027. Beginning June 2027, insurance companies will have to provide written notice to policyholders receiving a premium increase of 10% or more that explains the primary factors that caused the increase. Insurers must also provide a written notice to any policyholders that requests one.
•••
Editor’s note: Aaron VanTuyl is also the associate editor for The Chronicle.
