Washington Judge Throws Out Rule Against Credit Rating in Insurance Pricing


Insurance companies won the latest round in the fight over credit-score-based insurance pricing in Washington, but the battle is not over, Insurance Commissioner Mike Kreidler said.

Kreidler decried a “narrow ruling” by Thurston County Superior Court Judge Mary Sue Wilson, who overturned Kreidler’s emergency rule banning credit ratings in setting insurance rates.

“I’m disappointed by today’s ruling,” Kreidler said Friday evening in a statement. “I have authority to take continuing action to protect consumers from the insurance industry’s unjust, secretive and unrealistic method to determine what consumers pay to insure their vehicles and homes.

“I will continue the fight to permanently ban credit scoring and will be considering my options,” Kreidler said.

It is not clear what form that fight will take.

Kreidler tried, and failed, to get the Legislature to ban credit scoring in this year’s legislative session, and he decided to act unilaterally instead. He then issued the new rule, which Wilson struck down on summary judgment.

The Office of the Insurance Commissioner did not return a request for comment on whether it plans to appeal.

Failing that, Kreidler’s office looks to be doing something similar with the long-term bureaucratic rulemaking process. Friday's ruling struck down a temporary emergency rule, which Kreidler justified on the basis that COVID-19 disruptions have had a generally awful effect on credit ratings. Insurance companies dispute this, citing data from credit ratings agencies.

“This emergency rule has been stopped because there was no emergency regarding the use of credit history,” American Property Casualty Insurance Association Senior Vice President Claire Howard said in a statement. “However, the Commissioner’s permanent rulemaking process to adopt a rule banning credit history for three years continues.”

Insurance companies have been willing to litigate the position Kreidler “lacks the authority to ban credit history” because two existing laws “explicitly authorize insurers to use it and he has no power to overturn or suspend statutes,” Howard said.

This outcome of this fight will be acutely felt by many Washington residents with good credit but limited incomes, Howard said.

“Since the imposition of Commissioner Kreidler’s emergency rule, which was just deemed invalid, seniors, many of whom are on fixed incomes, have been disproportionately and negatively impacted, and the emergency rule resulted in higher premiums for more than one million Washington residents,” she said.