Washington Insurance Commissioner Mike Kreidler’s emergency order to prohibit insurers from using policyholders’ credit scores when determining their insurance rates is unjust and unrealistic, as well as being illogical.
Credit scores are just one of the multiple factors that insurance companies use to determine policyholders’ rates. Among the others are moving violations, numbers and costs of claims, and miles driven. All the factors used by insurance companies to determine rates are factually based. Studies by both the Insurance Information Institute and the Federal Trade Commission have shown that persons with higher credit scores have fewer accidents and cost insurance companies less in claims.
The Columbian’s story cites the case of Tom Effinger, a retiree with a high credit score, whose insurance rates rose about 40 percent as a result of Kreidler’s rule. Many retirees and others who are in Effinger’s situation would suffer the same penalty. The president of the Northwest Insurance Council said that as many as 1 million may be affected.
A judge has placed a stay on Kreidler’s order, but he continues to seek the ban through legislation. Kreidler should abandon his irrational attempts to unfairly penalize fixed-income retirees and others because they have been responsible enough to have high credit scores.
