State Insurance Commissioner Mike Kreidler says a bill to ban insurers (Senate Bill 5010) from using consumers’ credit scores to determine auto and homeowner insurance premiums was gutted by an insurance industry amendment in the Senate Business, Financial Services & Trade Committee on Feb. 15.

Kreidler for two decades has called out the unfairness of insurers’ use of credit scoring and has requested a ban twice, first in 2001 and later in 2010 during the economic recession. Now, as consumers struggle with the economic fallout of the coronavirus pandemic, he calls a ban on credit scoring critical because many people will suffer financially for years to come.

“Once again, the insurance industry is asserting its muscle in Olympia,” Kreidler said in a Feb. 18 news release. “At a time when they’re raking in billions in excess virus-driven profits, they’re working against the policyholders they claim to protect. Considering the economic peril so many are facing and our country’s confrontation with its failure on racial justice, I had hoped that we’d see everyone rally around a solution that puts consumers first. But given how much the insurers rely on this unjust tool, I’m not surprised they oppose our proposal. Insurers believe that if you have low credit, you’re less responsible. I disagree. How about giving full consideration to how people drive, a factor that is equal for everyone?

“When insurers want to maintain their old ways of doing business, it means they are failing to honor their pledges on equity. The amended legislation from the insurance industry offers no long-term protection to consumers harmed by insurers’ use of credit scoring.”

Kreidler said the substitute bill would limit relief and allow even short-term assistance to rapidly expire. In addition:

• After three years, the industry gets to return to its old ways of doing business.

• The bill would not impact premium calculations until Fall 2021 – 18 months after the start of the pandemic.

• The industry amendment only applies to policies that are renewing. That means all new property insurance policies will be priced based on consumers’ existing credit scores.

• If your credit suffered during the pandemic and your policy renews before October 2021, the bill offers you no relief.

• If you want to shop around for a better policy, you’ll get hit with your current credit score – not the best score.

“This insurance industry designed this bill to make sure you stay with your current company,” Kreidler said. “That’s a great incentive for the industry and a bad deal for consumers. Credit scoring is an insidious industry tool that for too long has subsidized the well-off at the expense of punishing low-income people and many people of color. The insurance industry’s bill maintains this inequity. I do not support this watered-down bill and am committed to seeing that we get a full ban in our state.”