Many insurance companies take a person’s credit score into account when setting their rates.
The Inslee administration’s proposal to ban the practice of using credit scores to calculate insurance rates seems unlikely to move forward this year after lawmakers amended the governor’s bill.
Amendments to Senate Bill 5010, approved by a Senate committee last week, would allow insurance companies to continue to use credit scores, but with limits.
Insurance Commissioner Mike Kreidler has criticized lawmakers and insurance companies for allowing the practice to continue.
“Even if it’s unfair, even if it’s racist, (the insurance companies) don’t care, as long as they can keep it in place,” Kreidler said this week.
“Unfortunately, the insurance industry carries far too much weight in the Washington State Legislature.” he said.
In Washington and many other states, insurance companies can use credit scores to help calculate what people pay for auto, home, and renters insurance.
Governor Jay Inslee has called for an end to the practice, saying it is unfair to people of color and low-income people whose credit scores may have suffered during the COVID-19 pandemic.
“If they have a low credit score, they can literally spend hundreds of dollars more than someone with a good credit score,” Kreidler said.
The amended bill, which would expire in three years if passed, would still allow insurance companies to consider a credit score when a consumer purchases a new policy.
Sen. Mark Mullet (D-Issaquah), who chairs the committee that amended the bill, says the original proposal could have resulted in higher insurance bills for seniors, who typically have better credit scores .
“(Kreidler) was so focused on the idea of banning credit ratings that he just wasn’t willing to have any more conversations about common ground,” Mullet said Wednesday.
The original proposal with a total ban on using credit scores didn’t get the votes to pass out of the committee, Mullet said.
During the committee hearing on the bill, Mullet said the amended bill would prevent many consumers from paying higher bills.
“What this bill says is that nobody’s insurance rates can go up because their credit goes down in that three-year window, but it says that if your credit were to go up this time around, you would benefit,” he said.
The American Property Casualty Insurance Association, an insurance industry group, said the amended bill keeps rates affordable for millions of consumers.
“Most people save money when credit is used to gauge how much you pay for insurance, which is why lawmakers are choosing to protect families struggling to make ends meet during the COVID recession. -19,” the band said.
Kreidler says he will continue to fight for a full ban.
“The insurance industry is casting a dark cloud over our ability to be successful, but I’m not going to drop that issue,” he said.
The Senate could vote on the amended bill in the coming weeks, Mullet said.