Dear friends and neighbors:
Many of you have or will soon be seeing significant increases in your insurance premiums because of a recent emergency rule by the state insurance commissioner to prohibit the use of credit scores in insurance. The basic effect is that many people who file few claims will now pay higher premiums while premiums will go down for many people who file numerous claims.
I disagree with this policy and have been fighting for months to protect Washingtonians with good insurance and credit histories from these arbitrary rate hikes. My recent op-ed in the Seattle Times explains the situation in further detail.
Last Monday, I chaired a work session of the Senate Business, Financial Services & Trade Committee to look into this. I wanted to hear why the OIC felt this was necessary and I wanted to hear about the real-world ramifications from consumers and local insurance agents. (You can view the full session here.)
I was dismayed, but not surprised, by what I heard.
A single mother, for example, testified that she lives frugally to make ends meet and resents seeing her premiums rise, for no reason, especially when she has been so responsible. A man with poor credit testified that he appreciated a reduction in his premiums but felt it was wrong that older people with good credit histories should suddenly see hikes in their premiums. A retiree living on fixed income testified that his home insurance rate rose 86 percent. People across the state have also written to me with stories like these.
When OIC officials testified, I was disappointed that they failed to offer credible answers to why safe drivers with good credit histories should see increases in their insurance rates. I felt their response — that people should shop other insurance companies for possible better rates, as different companies follow different criteria — ignores consumer loyalty and confidence in a company with a history of dependable service. We also heard testimony from people who had shopped around and most were unable to find better rates. If anything, policyholders deserve more practical tips — if you telework because of the pandemic, for instance, you could ask your insurance agent if you qualify for reduced rates because you’re driving fewer miles.
If you’re one of the many people whose premiums are going up because of this policy change, you may want to encourage the insurance commissioner to rescind his ruling until we can come up with a better solution in the 2022 legislative session. We want to help people with poor credit but it’s important we do that without unfairly penalizing others.