Insurance companies, commission trade barbs over plan to ban credit rating pricing

(The Center Square) – The insurance industry is not happy about Washington State Insurance Commissioner Mike Kreidler’s latest effort to ban the use of credit ratings in setting home, rental and car insurance rates.

“We call on Commissioner Kreidler and the [Office of the Insurance Commissioner] to not adopt this rule,” said Claire Howard, senior vice president of the American Property Casualty Insurance Association (APCIA), in a statement.

Howard charged that the rule “will continue to disrupt Washington’s homeowners and auto insurance market and raise rates for over one million consumers, including seniors on fixed incomes, as did its predecessor emergency rule, which was declared invalid…by order of a Thurston County Superior Court judge.”

On Oct. 8, Thurston County Superior Court Judge Mary Sue Wilson granted summary judgment to the insurance industry and struck down Kreidler’s ban on insurance pricing by emergency rule.

The Office of the Insurance Commissioner (OIC) held a virtual meeting on Nov. 23 seeking input on its proposed new rule to ban using credit ratings in setting insurance rates, which would last for three years.

The credit pricing ban was supposed to be implemented in a way that was revenue neutral, meaning that as some people with good credit see their rates go up, those with lower credit scores would see costs go down.

The insurance industry argues this led to rate hikes on more than 1 million Washington residents with good credit, many of them retirees on fixed incomes.

In addition to questioning the factual and moral basis of the new rule, APCIA charged procedural irregularities.

“We also strongly oppose adoption of this rule and the less-than open and transparent process being used to finalize the rule,” Howard said.

She charged that the hearing process “operated under guidelines that limited persons testifying to two minutes and discouraged those who submitted comment letters from explaining their opposition during oral testimony,” which is “contrary to the Administrative Procedures Act (APA).”

A spokeswoman for the insurance commissioner disputed that claim.

“The insurance industry’s trade association’s charge is false,” Stephanie Marquis, OIC media and outreach manager, told The Center Square. “The APA outlines how the agency shall provide an opportunity for oral comment during a rule-making hearing. Rule-making hearings are legislative in character and are conducted by the presiding official in a manner that allows all interested persons the opportunity to present comment individually. All comments must be made in the presence and hearing of other attendees.”

Marquis said the OIC received “approximately 3,000 comments” on the proposed rule before the hearing and was “anticipating a lot of people who wanted to testify during the hearing.”

“Legislative hearings often impose time limits on public testimony in order to hear from as many people as possible,” she said. “We let everyone know at the beginning of the hearing that once everyone had a chance to testify once we would circle back to anyone wanting to speak more and allowed them to speak as much as they want. We did this. The hearing was open until everyone that wanted to speak was fully heard.”

The hearing was broadcast on TVW and ran for one hour and 46 minutes.

The OIC is attempting to implement the new rule by Jan. 1, 2022.

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