Washington lawmakers next year should take a close look at insurance rates in the state. But they also should be aware that legislative meddling in insurance is a complex endeavor, particularly in the age of COVID-19.
Those two issues might sound divergent. But as debate rages in the state about rates for auto, home and renters insurance, it is not a stretch to drag health insurance into the mix.
State Insurance Commissioner Mike Kreidler this year issued an emergency order banning insurance providers from using credit scores to help determine premium rates for customers. This came after a bill sought by Kreidler was rejected during the legislative session. Three states, including California, have banned the use of credit scores in setting premiums.
In October, a Thurston County Superior Court judge upheld insurance industry challenges to Kreidler’s mandate. But many insurance customers have already faced increased premiums after providers removed consideration of their good credit scores.
Indeed, customers should not face an eye-opening increase on their bills — some jumps reportedly are 50 percent — simply because of a state mandate. And indeed, Kreidler should have sold the Legislature on the idea rather than acting unilaterally to enact a three-year ban under what he deemed emergency conditions.
But Kreidler makes a compelling argument in favor of the move. “What does a credit score have to do with how you — whether a senior citizen or young adult — drive your car or treat your property?” reads an opinion piece he co-wrote for The Seattle Times. Other statements drive home the point: “Credit scores do not cause accidents” and “insurers could use dozens of other more reliable risk factors to determine your premiums.”
Insurance representatives, meanwhile, say there is a correlation between credit scores and the likelihood of filing a claim — a correlation strong enough to warrant consideration of credit scores in setting rates.
All of this must be sorted out by the Legislature, and it must result in a solution that benefits consumers. As Kreidler notes, insurance companies manage to be profitable in states that have prohibited the use of credit scores.
Consideration of a policy holder’s credit history, however, is only one of the important issues surrounding the insurance industry. Another is how health insurance companies and state governments will react to residents who decline coronavirus vaccinations and then contract COVID-19.
Early in the pandemic, most insurers waived shared payments for customers who contracted the virus. With vaccines widely available for a year now, companies have abandoned that stance.
And in some states, lawmakers have considered preventing insurance providers or the government from covering COVID-19 costs for unvaccinated patients. In Illinois, a legislator who proposed such a bill subsequently withdrew it following threats made against him, his staff and his family.
The fact is that coronavirus vaccines are widely available at no cost. And people who contract the disease deliver vast social and medical costs upon the rest of their community.
As an opinion piece at MarketWatch.com argues: “It’s time for the unvaccinated to live up to the ideals of individual freedom and personal responsibility by taking on more of the consequences of their actions.”
That is a rather draconian stance that belies our belief that we are all in this pandemic together. But it adds to the important discussions about insurance facing the Legislature.