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[UPDATE] Washington state temporarily bans insurers from using credit scores effective March 4

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Updated March 9, 2022

Washington state’s three-year rule banning insurers from using credit scores to set auto, homeowner and renter insurance rates has been put on hold as of March 8, 2022. 

The rule was challenged by the American Property Casualty Insurance Association and the National Association of Mutual Insurance Companies who both filed lawsuits against the commissioner, as it would raise rates for over a million state consumers.

Effective March 4, Washington state will temporarily ban insurers from using credit scores to set auto, homeowner and renter insurance for the next three years. 

The state insurance commissioner is also proposing a new transparency rule that requires insurers to send policyholders a written explanation for any changes in premiums. Commissioner Kreidler hopes this would allow carriers to be rate neutral, meaning any rate change is evenly spread across all policyholders. 

This isn’t the first time Kreidler has pushed a rule like this; Kreidler proposed a similar emergency rule back in 2021 and it was struck down in court. In addition, The American Property Casualty Insurance Association (APCIA), the Professional Insurance Agents of Washington and the Independent Insurance Agents and Brokers of Washington have all joined in filing a lawsuit against Kreidler, stating that his efforts to ban credit scores in rate-setting is invalid. 

So far, a total of 37 carriers with a presence across the state has responded to the transparency rule by at least providing some data to the commissioner.

Other states with similar rules

Currently, California insurers don't use credit-based scores to underwrite or set rates for auto and homeowners policies, and your credit score won't impact your ability to get or renew an existing policy. According to the insurance commissioner in your state, your credit report should not impact how much you pay in premiums.

Just like Washington, Hawaii bans the use of credit ratings when setting standards, which include underwriting standards and rating plans. However, credit does impact your homeowner's insurance policy in the state. 

In Massachusetts, the law forbids auto and home insurers from using credit information or credit-based scores when setting rates and underwriting new policies. Auto insurers also can't use your score when renewing an auto policy, either.

While insurers in Maryland could use your credit history to help determine your rates on a brand new policy, they can’t use it to deny, cancel, refuse to renew or increase your premiums during policy renewal. 

In Michigan, insurance carriers can’t use credit or credit-based scores as a part of the decision-making process to deny, cancel or refuse to renew policies, but credit information could be used to determine premium payment options depending on the circumstances.

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Jasmine KimB2B Content Manager

Jasmine is The Zebra’s newsroom content writer. With a background in journalism, she reports on breaking news, trends, mergers and acquisitions, and financial reports related to the insurance industry.