Credit scoring and insurance | Washington state Office of the Insurance Commissioner

Many insurance consumers have recently reached out to their insurers to ask why their rates are increasing despite record profits in the insurance industry. We’ve gotten calls from some who have received confusing or untrue answers. We want to cut through the confusion by posting answers to common questions insurance consumers are asking our office and their insurers about the credit scoring ban.

I understand there’s a new rule banning insurers from using credit scoring. Is it in effect now?

Currently, the rule is not in effect. On Feb. 25, 2022, the Thurston County Superior Court granted a temporary stay of the new rule, which means it’s paused. A hearing is scheduled for July 8, 2022, to determine if the rule will go into effect.

Why is my premium going up? My company told me it’s because of your credit scoring rule.

At this time, insurance companies can use credit information. All they have to do is submit a rate filing to our office to add credit back to the way they charge insurance premiums. Ask your insurance company to explain to you the factors it used to determine the rates for your premium. If the company refuses to provide an explanation, you do have the right to file a complaint with our office about this matter.

What can I do to lower my premium?

It does not hurt to ask your insurance company how you can lower your premium. You might think about increasing your deductible or dropping different coverages in your policy. You also have the right to shop around for a better deal for coverage with a different insurance company.

Why won’t you let my insurer use my credit information?

With the current stay granted by the court, insurance companies can use credit information to determine rates for coverage. The decision for insurance companies to use credit information rests with them.

I believe credit scoring rewards good behavior. Why won’t you let my insurer give me a discount for being responsible?

Historically, insurance companies do not use credit scoring as a discount. It’s another rating factor, and companies use many different ones to determine rates for their insurance coverage. The change in the use of this rating factor caused rates to change for all customers. With the current stay in place, you are welcome to ask your insurer when they will start using credit information again and if doing so will decrease your premium.

I believe I’m being punished for being responsible at the same time you’re rewarding irresponsible people who can not manage their finances. Why?

The credit score ban was pursued because insurance companies were relying heavily on credit information. There are other factors that are just as important to consider and may be better for predicting future claims, such as your driving record and claims history. When determining insurance rates, insurance companies should not base someone’s individual risk on their financial information.

If the credit score ban is overturned, will my insurance company owe me a refund?

Under current regulations, your insurance company will not owe you a refund if the ban is overturned.

If there’s no ban and an insurance company is not using my credit like they were before, wouldn’t it be illegal for them to not consider my credit when rating my policy?

It’s not illegal. It’s up to the insurance company to decide if they want to use credit as a factor in the premium they charge. If they do not want to, an insurance company is not required to use credit information.

How can I get a clear breakdown of a rate increase that my insurance company implied was due to the credit scoring ban?

Ask your insurance company to provide you with the breakdown. If your insurer refuses to provide you with this information, you can file a complaint with our office, and we can ask them to provide this information.

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