Failure of Bills to Ban or Restrict Credit Scoring in Wash. Critical to State Ins. Marketplace, Says NAMIC

April 26, 2005

The failure of four bills introduced during the Washington State legislative session that would have banned or added further restrictions to the use of credit-based insurance scoring as an underwriting tool may send the message that the regulatory environment has begun to stabilize, according to the National Association of Mutual Insurance Companies (NAMIC).

Two House bills, HB 1927 and HB 1928, and two Senate bills, SB 5328 and SB 5275, died in committee. An Engrossed Substitute Senate Bill, ESSB 5275, went further in the legislative process, being considered by Rules Committee 3, but later died in committee. The Washington legislature adjourned Sunday.

NAMIC and its state advocacy partner, the Washington Insurers, actively fought to protect the use of credit scoring. This effort became especially critical in light of new credit scoring regulations already scheduled to go into effect on July 1, 2005. Those regulations require insurance companies to provide an explanation to all consumers about the significant factors that adversely affect a consumer’s credit history and insurance score. An insurer must also tell consumers what they can do to improve their credit scores.

“Washington legislators were wise to give due consideration to recent studies that clearly substantiated that credit-based scoring is predictive of the frequency and severity of insurance claims and to give the new insurance regulations a chance to be implemented and evaluated,” said State Affairs Manager, Christian J. Rataj.

“An insurance company’s right to use credit-based insurance scoring as an underwriting tool allows consumers to be quoted insurance rates that reflect the totality of their personal circumstances. Scoring typically benefits consumers by encouraging responsible decision making and rewarding consumers for being sound personal risk managers,” said Rataj.

NAMIC will continue its campaign to protect underwriting freedom and the use of credit scoring as a tool to be used to ensure that consumers’ insurance rates are commensurate to their potential risk of loss.

The new credit scoring regulations can be read at NAMIC Online at

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