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Regulatory Update

Bill to ban credit scores in underwriting is introduced in the state of Washington.
  • February 2021
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Credit Scoring: A pair of Washington state senators have filed a bill proposing a long-held goal of Insurance Commissioner Mike Kreidler—banning the use of credit scoring in underwriting personal lines of insurance.

Washington state Sen. Mona Das and Sen. Emily Randall filed S.B. 5010 at Kreidler's request.

The bill is in the Business, Financial Services and Trade Committee, and a hearing was scheduled for Jan. 14.

Gov. Jay Inslee is backing Kreidler, who said insurers use credit scoring to predict whether consumers will file claims, not whether they will pay their premiums.

A proposed new section in the bill states that using credit scores to underwrite auto and other personal lines is “unfair” and has a “disproportionate” impact on the poor and people of color.

Individuals who lost their jobs in the COVID-19 pandemic would be an example of those who are hurt by the use of credit scores, Kreidler has said.

Their credit scores fall through no fault of their own, and the harm does not inform an insurer about the likelihood of filing a claim, he said.

Insurance trade groups in the past have said studies by state insurance departments, universities and the Federal Trade Commission show a definitive link between credit-based insurance scores and risk of insurance loss.

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