Excluding representatives from policymaking isn’t OK: Kreidler’s rule gets overturned

Aug 1, 2022

“Today’s decision confirms that the best place to permanently address this issue is in the Legislature,” Washington state Insurance Commissioner Mike Kreidler said of a Friday court ruling. That ruling overturned his decision prohibiting insurers from using credit scores to help set rates for auto, homeowner and renter insurance. 

Ya think? Kreidler is singing our tune. One-man rule for policy decisions is a bad idea. Still, it's happening because state leaders are taking advantage of allowances available to them in pandemic times.

Kreidler’s rule — initially made using emergency powers the commissioner had because of COVID-19 ongoings — caused many Washingtonians’ insurance rates to spike. Elderly people on fixed incomes were among those who had earned good-credit discounts and were monetarily harmed by the Kreidler rule. 

The commissioner had been wanting a prohibition on credit scores for decades. And recent legislation to get that want into law failed. Shortly thereafter came the Kreidler overreach. Read more about the failed legislation, Kreidler’s rule and the market interference that caused premium increases in a Seattle Times’ opinion piece by Sen. Mark Mullet, D-Issaquah.

Mullet says none of this was ever an emergency. Judges agree it was a misuse of power. 

The Kreidler rule was paused while legal proceedings continued, but that pause didn’t keep many people with good credit from seeing insurance-rate spikes. I wrote in October that an industry insider told KIRO 7 News not to expect corrective action until the insurance industry had more clarity on what tools it could use in determining insurance premiums. (See premium displacement charts from the Office of the Insurance Commissioner here.) Until then, there was “no need to jack people’s rates around again,” reported Jesse Jones.  

I’m not sure Friday’s court decision will bring that clarity. After all, Kreidler said in reaction to the ruling that he’d be consulting with the state Attorney General’s Office on appropriate next steps — despite acknowledging that the “decision confirms that the best place to permanently address this issue is in the Legislature.” 

Correlations exist between credit scores and insurance claims. The higher your credit score is, the lower the chances are that you’ll file a claim, study shows. It’s similar to teenage boys being charged higher insurance premiums due to their behavior on the road. Using credit scores or youth as a factor in insurance rating is complex, debatable and worthy of discussion. That’s what a Legislature made up of elected representatives can provide.

In September, a Senate Business, Financial Services & Trade Committee meeting allowed for quality discussion and real-world examples of the impact a government regulation can have on people. Alternate policy suggestions were also discussed. 

Mullet once said of Kreidler, “I think it would be nice for him to answer questions directly now that we’ve realized the huge inconvenience his emergency order [has] caused [for] over a million people.” That'd be nice. Remarking that the Legislature is the place where a policy should be decided, however, is even better.

Update: I have heard at least one insurance company will go back to using credit scores as a factor to help set insurance rates. Call your insurer for more information. 

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