Consumer Groups Support Washington State's Ban on Using Credit Scores in Insurance Decisions

Advocate Andy

Coalition of groups files court brief urging continuation of credit score ban

A coalition of consumer groups has filed a brief in Thurston County Superior Court urging the court to uphold a ban on using credit scores in insurance decisions. The temporary ban was issued by Washington's Commissioner of Insurance.

The coalition supporting the ban includes Consumer Federation of America (CFA), Northwest Justice Project, and Northwest Consumer Law Center.

In a statement, the groups explained that credit scores are not directly correlated to insurance risk and the use of credit scores unfairly discriminates against low income and minority consumers.

“As the economic pain of the pandemic starts showing up on consumers’ credit scores, it’s critical that the Insurance Commissioner’s consumer protection rules take effect.” said Doug Heller, Director of Insurance for Consumer Federation of America. “So many safe drivers and responsible homeowners and renters are facing insurance premium hikes simply because the pandemic wreaked havoc on their finances and credit. That’s not fair, and as the Commissioner has rightly pointed out, it’s illegal under Washington law, which is why the Court must uphold these rules and end the insurance industry’s obstructionism.”

The Commissioner’s rule temporarily blocks insurance companies from using the credit history of customers when setting insurance premiums, in light of the impact the pandemic will have on the credit history of Washington residents, especially as relief programs and credit protection rules set up during the pandemic expire. Because the pandemic has disproportionately harmed communities of color and lower-income consumers, using credit scores at this moment will illegally amplify unfair discrimination in the state’s insurance markets.

“This temporary prohibition on the use of credit history to determine rates for private passenger automobile coverage, renter’s coverage, and homeowner’s coverage is necessary to address the unfair discrimination caused by the impact of the pandemic and related public policy responses on consumer credit histories, as well as the pandemic’s amplification of racial disparities caused by the use of credit history in insurance underwriting, pricing, and other practices,” the groups explained.

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Andy Spears is a middle Tennessee writer and policy advocate. He reports on news around public policy issues - education, health care, consumer protection, and more.

Nashville, TN

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