A proposed law to restrict the use of credit-based insurance scores under consideration by the Washington Legislature is premature and could raise premiums for Washington insurance consumers, according to the American Insurance Association (AIA).
“Washington already has a law on the books that provides strong consumer protections,” said Steve Suchil, AIA assistant vice president, western region. “Current law should be given time to work because insurers and consumers are still getting acquainted with the changes and regulations it requires. This new bill is unnecessary, premature and creates burdensome restrictions on insurers’ business operations.”
Washington’s current law prevents insurers from canceling or non-renewing auto or homeowners insurance policies based upon a customer’s credit history or insurance score. The proposed law, SB 5275, authored by Sen. Darlene Fairley (D), would prohibit the use of credit history for renewal decisions unless consumers receive a premium reduction.
“If this bill is enacted, Washington consumers who pay their bills on time and have earned a better credit score will be forced to subsidize those who have not managed their credit responsibly,” said Suchil. “Credit-based insurance scoring is a critical tool that helps evaluate risks so customers pay the right rate based on their potential for risk. Numerous studies have confirmed a strong correlation between a person’s insurance score and their likelihood of filing a claim,” explained Suchil.
“AIA will continue to work with members of the Washington Legislature on this measure,” said Suchil. “Right now the Washington Senate should give serious consideration as to whether this bill is really necessary or beneficial to consumers.”
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