The American Property Casualty Insurance Association (APCIA), the Professional Insurance Agents of Washington (PIA), and the Independent Insurance Agents and Brokers of Washington (IIABW) have jointly filed two legal actions designed to stop the implementation and enforcement of Washington Insurance Commissioner Mike Kreidler’s permanent rule banning the use of credit-based insurance scores in the rating and underwriting of insurance.
The organizations have filed an administrative challenge and a civil court challenge to stop the permanent rule Kreidler recently implemented. The organizations are acting on behalf of the insurance agents, brokers, and companies they represent.
According to a statement by Claire Howard, APCIA senior vice president, general counsel, and corporate secretary, the Commissioner’s “extreme action exceeds his authority, bypasses the legislature, and robs consumers of the benefits of a highly competitive private market.”
Howard argues that the rule will continue to throw the Washington insurance market into chaos and will raise rates for over a million consumers. The rule has the potential to be particularly harmful to seniors on fixed incomes and individuals and families struggling to recover economically from the COVID-19 pandemic.
According to Howard, thousands of letters were sent to the Commissioner and to the legislature by consumers opposing his rule, detailing how the action forced them to make difficult financial sacrifices. These letters were ignored.
Adopting a permanent rule to chill legislative efforts to make credit-based insurance scores work for Washington consumers is a highly unprecedented action. In fact, the predecessor emergency rule was declared invalid in September by order of a Thurston County Superior Court judge.
The risk-based rating tool was put in place by the Legislature nearly 20 years ago in order to benefit consumers. Kreidler’s new rule has already impacted the amount of money that Washington policyholders pay for auto, boat, RV, home, and renters insurance “because the use of credit-based insurance scores effectively predicted risk and set accurate rates.” according to Howard.
In her statement, she commented that the legal actions are intended to redress an abuse of authority, preserve the legislative prerogative to enact statutes, and the public’s right to count on statutes enacted by the legislature to be faithfully executed by the executive branch of government.
