Washington state’s Office of the Insurance Commissioner (OIC) recently issued an emergency rule to prevent credit scores from being used to determine insurance premiums.
This might mean a change in your insurance rates, and many of you have reached out with questions and concerns about your rates increasing. Below is some information to clarify the changes and help you get assistance.
Why the rule change
Because of the pandemic, the federal CARES Act placed a temporary hold on credit scoring, resulting in bureaus collecting inaccurate credit histories. Because insurers use these credit histories to set rates, the models they use are now unreliable.
The OIC issued an emergency rule to ban the use of credit scores in setting insurance premiums for the next three years, which will help ensure that insurance rates are not excessive or unfairly discriminatory. With the pandemic causing devastating financial struggles across the state, this rule change helps protect low income and other vulnerable people who would otherwise have experienced unfair treatment due to their credit score.
The new rule is designed to protect those most greatly impacted by the pandemic from having to pay even higher premiums. It will also help people who will see their credit scores drop after federal CARES Act protections end.
97% of the auto and homeowner insurance market has already filed plans to comply with the new rule.
What you can do if your premiums have gone up
The OIC estimated that similar numbers of Washingtonians will see rate increases as those who see rate decreases. Early estimates showed that some people could see up to 60% reductions in their rates.
If you have received a rate increase, you can contact your company and let them know you’ll be shopping around for better rates. For many of us, looking for new coverage is a great opportunity to save more money.
You can also leave a comment for the OIC on their website. They want to hear from you and how you might have been impacted by credit scoring.