Major insurers and more comply with credit score ban despite industry whining

The top 10 companies offering auto insurance in Washington have filed new rating factors without the use of credit scores, complying with an emergency rule that takes effect June 20.

Combined, these 10 companies command 60% of the market share in the state. Their filings — which were due May 6 — offer additional proof that insurers can pivot quickly to serve consumers.

Graphic showing Top 10 companies that sell auto insurance in Washington state as of 2020, comprising 60% of the state’s market share

But you wouldn’t know that from recent messages from the industry associations. Just last week they claimed the “complex operational changes” necessary to comply meant “many” companies would be unable to meet the deadline.

Instead, well over 50 companies filed new rate plans without the use of credit scores for their combined 1.6 million policyholders. Conveniently missing from the associations’ messages was the fact they were given six weeks of notice to comply.

Insurance Commissioner Mike Kreidler also provided the companies a streamlined process for filing. His office committed to completing reviews within just four days.

Still, the associations complained. They even claimed that companies will be “forced by the new rule to stop writing new business” in the state.

Judging from the companies that filed, it seems that removing the use of credit scores to set rates for consumers for auto, homeowner and renters’ insurance was not the burden the associations predicted. No surprise. Most of the top 10 and others have done without the use of credit scores in three other states where it’s prohibited. This includes California, the biggest insurance market in the country.

The industry has been profitable there for years. And well-managed companies have done just fine in Washington since Kreidler took office two decades ago. Insurance is a $47 billion industry in this state.

Kreidler’s office expects about an even split in consumers who will see rates increase and decrease when their individual renewal periods roll around. The initial analysis shows some could see up to 60% reductions.

The associations’ continuing use of scare tactics reveals the key goal — preserve the status quo no matter who continues to get punished. Safe drivers with no claims and low credit scores in Washington are charged 79% more.

The insurance industry has so far been unsuccessful in its challenge of Kreidler’s rule issued March 23. A judge in April denied an insurance industry request for a preliminary injunction. The court found that industry associations were unlikely to succeed with their two main arguments that Kreidler lacked “good cause” and had no authority to issue the rule.

The rule is designed to protect those who are the most hurt financially by the pandemic from being forced to pay even higher premiums. It will also protect those who will see their credit scores plummet when the state and federal protections under the CARES Act end.

Washington state Insurance Commissioner Mike Kreidler regulates the insurance industry and protects insurance consumers.