Washington Judge Shoots Down Insurance Commissioner’s Credit Scoring Ban

October 11, 2021

A judge in Washington ruled in favor of the insurance industry’s argument against Washington Insurance Commissioner Mike Kreidler’s emergency rule temporarily banning use of credit scoring.

Kreidler’s emergency order prohibited insurers from using a consumer’s credit score to price auto, renters and homeowners coverage. He’s been working to eliminate credit scores from insurer consideration for some time. His most recent effort failed when a bill he backed, Senate Bill 5010, was gutted by an insurance industry amendment in the Senate Business, Financial Services & Trade Committee on Feb. 15.

The American Property Casualty Insurance Association, the National Association of Mutual Insurance Cos. and the Northwest Insurance Council argued that Kriedler’s actions exceeded his statutory authority, violate the separation of powers between the executive and legislative branches of government and could be in direct conflict with the existing statutes.

Washington Insurance Commissioner Mike Kreidler
Washington Insurance Commissioner Mike Kreidler

In April, the groups filed a petition for declaratory and injunctive relief in Superior Court in Thurston County, which asks the court to declare the commissioner’s action invalid and enjoin its enforcement.

The groups issued a statement on Monday attributable to Claire Howard, APCIA senior vice president, general counsel, and corporate secretary.

“APCIA argued that the commissioner failed to satisfy the requirements necessary to adopt a rule on an emergency basis and side-step the statutory rulemaking process that requires notice and comment from those who would be affected by the rule. This emergency rule has been stopped because there was no emergency regarding the use of credit history. However, the commissioner’s permanent rulemaking process to adopt a rule banning credit history for three years continues. We believe the commissioner lacks the authority to ban credit history because two preexisting statutes in Washington explicitly authorize insurers to use it and he has no power to overturn or suspend statutes.”

Since the imposition of Kreidler’s emergency rule, seniors have been disproportionately and negatively impacted, and the emergency rule resulted in higher premiums for more than one million Washington residents, according to the groups’ statement.

Kreidler issued the following statement:

“I’m disappointed by today’s ruling. I have authority to take continuing action to protect consumers from the insurance industry’s unjust, secretive and unrealistic method to determine what consumers pay to insure their vehicles and homes. It’s way past time for the industry to apply reliable and fairer factors to determine premiums. There are better ways to maintain their profits than relying on this outdated practice that depends on people struggling with their credit scores.”

He continued: “I will continue the fight to permanently ban credit scoring and will be considering my options.”

Related:

Topics Legislation Washington

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Latest Comments

  • October 12, 2021 at 3:12 pm
    Observor says:
    This is really an over extension of executive privilege where the commissioner is not just enforcing law, but actually legislating new law without the approval required by eve... read more
  • October 12, 2021 at 12:18 pm
    Jamie says:
    My husband and I have 2 cars that we drive less than 5,000 miles each per year. Our auto premium just went up a whopping 17% because of Kreidler's ban. As someone who has spen... read more
  • October 11, 2021 at 2:23 pm
    martin says:
    The scoring is no less fair than running credit to buy a home or car. Statistics don't lie. People with bad credit neglect other things in their life and that is a known fact.... read more

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