Kreidler wants insurance companies to ban using credit scoring to set prices

Kreidler wants insurance companies to ban using credit scoring to set prices

‘Unfair practice’

State Insurance Commissioner Mike Kreidler reached out to insurance company CEOs and urged them to stand behind their recent pledges to end discrimination and racial inequities by supporting his proposal to ban the unfair practice of using credit scoring in setting prices for auto, homeowner’s, renter’s and life insurance.

“Many leaders in the insurance industry have recently pledged to eliminate inequity,” Kreidler said in a July 15 news release. “My proposal is an opportunity to convert these pledges into action.

“People will feel the economic impact of the coronavirus pandemic for years to come,” he added. “It will be extremely hard for many people to improve their credit scores or even maintain their current score. They should not be penalized for circumstances that are no fault of their own.”

What we know about income and racial disparity in Washington state:

Since March 2020, more than 1.2 million people in Washington filed for unemployment. That number is 89% higher than during the peak of the great recession from 2007-2009.

In 2018, 8% of whites in Washington lived in poverty, compared to 20% of Blacks and 17% of Hispanics, according to the news release.

Kreidler is asking the Legislature to amend two state laws that allow insurance companies to help determine rates for consumers in Washington. The companies can continue to use other factors to set premiums, including age, gender, claims history, driving record, where a person lives, marital status and more.

His proposal has early support and will be sponsored by Sen. Mona Das, D- Kent, and Rep. Steve Kirby, D-Tacoma.

“Insurers believe there is a correlation between someone’s credit score and the likelihood they’ll file a claim in the future,” Kreidler said. “They believe that if you are reckless with your credit, you’ll be reckless in managing your finances and maintaining your home. But many people see their credit scores drop when they lose their jobs or suffer from a serious illness. It’s more likely the correlation has less to do with risk and more to do with your income and what wealth you’ve accumulated.”

He added, “The way insurers use your credit information is a secret. Even I don’t get to see their formula for how they use the credit data they collect. Insurers have easy access to credit scores, but the data is frequently inaccurate. They have plenty of other more accurate data they can use to price fairly.”

Kreidler has sought a ban on insurers’ use of credit scoring several times since 2001 and succeeded in limiting its use. Today, insurers cannot use your credit history to deny you coverage or cancel your policy. They are also prohibited from using certain credit factors, such as medical bankruptcy, to determine how much you pay.

“Credit scoring institutionalizes racism and holds down people with low incomes,” Kreidler said. “I believe the insurance industry leaders do not want to be on the wrong side of this issue. I think they’ll recognize that relying on such arbitrary data as credit scoring at a time our country is coming to terms with extreme economic hardship and its history of racial disparity does not enhance their corporate image.”


Talk to us

Please share your story tips by emailing editor@seattleweekly.com.

More in northwest

Screenshot of April 5 Edmonds City Council meeting. Inset (L-R): Mayor Mike Nelson and council members Kristiana Johnson, Will Chen, Neil Tibbott, Diane Buckshnis, Vivian Olson, Susan Paine and Laura Johnson. (City of Edmonds)
After long debate, Edmonds bans homeless people from living outside

The criminal law is unenforceable if no shelter is open within 35 miles. The City Council approved it over public outcry.

Judged by XII: A King County Local Dive podcast. The hands shown here belong to Auburn Police Officer Jeffrey Nelson, who has been charged with homicide in the 2019 death of Jesse Sarey.
JUDGED BY XII (Episode 4): Foster mom wants accountability in Auburn cop’s upcoming murder trial

Special podcast series explores Auburn Police Officer Jeffrey Nelson’s role in the death of Jesse Sarey.

Sound Publishing archives
Cannabis DUI challenge rejected by state Supreme Court

Everett man argued the law must be tossed because legal limit for THC is not supported by science.

Tsr
No more stolen sisters: How WA is responding to missing and murdered Indigenous people

Across the state, 126 Indigenous people remain missing, with 31 having gone missing in King County.

Judged by XII: A King County Local Dive podcast. The hands shown here belong to Auburn Police Officer Jeffrey Nelson, who has been charged with homicide in the 2019 death of Jesse Sarey.
JUDGED BY XII (Episode 3): Behind the decision to charge a police officer with murder | King County Local Dive

Special podcast series explores Auburn Police Officer Jeffrey Nelson’s role in the death of Jesse Sarey.

Photo courtesy of the Washington Department of Fish and Wildlife
Washington wolf population continues to rise, report shows

In 2021, four new wolf packs were documented in four different counties.

A man who appears to be President Joe Biden is seen in the back seat of a car in the president’s motorcade, departing the Green River College after the president’s speech. Photo by Alex Bruell/Sound Publishing
Judged by XII: A King County Local Dive podcast. The hands shown here belong to Auburn Police Officer Jeffrey Nelson, who has been charged with homicide in the 2019 death of Jesse Sarey.
Judged by XII (Episode 2): Police officer’s history of violence | King County Local Dive

Special podcast series explores Auburn Police Officer Jeffrey Nelson’s role in the death of Jesse Sarey.

President Joe Biden. Photo courtesy of Wikipedia
Biden visits Seattle and Green River College during trip to Pacific Northwest

The president will stress infrastructure in Portland and Seattle while raising money for the Democratic Party.

The Sammamish Valley is home to a collection of farms, wineries and tasting rooms. File photo
The Sammamish Valley is home to a collection of farms, wineries and tasting rooms. File photo
King County continues to grapple with alcohol rules in rural areas

Much of the debate surrounds wineries, breweries and distilleries operating as retail businesses.

Teaser
How a Ukrainian and Russian couple escaped a war zone

“We will never forget that sound. Boom. Boom,” said Valeriia Horodnycha, who has been staying in Mercer Island.

Sunset at Mount Rainier. NPS
Mount Rainier park approves nine new lahar monitoring stations

The new monitors can give local communities up to 10 extra minutes to evacuate in case of a disaster.