American Property Casualty Insurance Association Files Litigation to Stop Regulations That Will Likely Raise Insurance Rates for Over a Million Washington Consumers

WASHINGTON, April 7 -- The American Property Casualty Insurance Association issued the following statement on April 6, 2021:

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The following statement is regarding legal action taken today by the American Property Casualty Insurance Association (APCIA) in response to emergency regulations recently filed by Washington Insurance Commissioner Mike Kreidler, which ban the use of credit-based insurance scores in the rating and underwriting of insurance. This statement can be attributed to Claire Howard, APCIA senior vice president, general counsel, and corporate secretary.

"APCIA and our members that write auto, home and renters insurance policies in Washington strongly oppose the unilateral action taken recently by Washington Insurance Commissioner Mike Kreidler. The Commissioner's extreme action exceeds his authority, bypasses the legislature, and robs consumers of the benefits of a highly competitive private market.

"That is why APCIA is pursing legal action to redress this abuse of authority. A petition for declaratory and injunctive relief was filed today in Superior Court in Thurston County, which asks the Court to declare the Commissioner's action invalid and enjoin its enforcement. This legal action is about stopping the Commissioner from acting beyond the scope of his authority and requiring him to comply with existing statutes governing the use of credit-based insurance scores by the insurance industry, among other statutes.

"Commissioner Kreidler is attempting to prohibit an important risk-based rating tool that has been in place for nearly 20 years for the benefit of consumers. The Commissioner is attempting to circumvent the Washington Legislature by taking an action the Legislature recently explicitly rejected.

"Commissioner Kreidler's arbitrary and capricious actions will harm more than a million of Washington's hard-working insurance consumers in Washington, who today pay less for auto, home, and renters insurance because of the use of credit-based insurance scores to effectively predict risk and set accurate rates.

"Most consumers save money when credit-based insurance scores are used to assess how much they pay for insurance. Insurance scores are not credit scores like the ones used by banks to offer loans or credit cards. Insurers use specific information about how consumers use credit as one factor to give consumers the most affordable and accurate rate. Many other factors go into how much you pay for insurance, but not race or income. Without these tools, insurance rates could go up for more than a million Washingtonians who are already struggling to pay bills during the COVID-19 pandemic recession.

"A new report by Lexis Nexis shows that, during the COVID-19 pandemic, credit-based insurance scores remained stable nationally and in Washington, and there is no information based on which to conclude a decline is on the way, making Commissioner Mike Kreidler's emergency rule unnecessary, and actually harmful to those paying for car, home and renters insurance.

"Equally important, when a legislative solution was on the table to help consumers facing extraordinary life circumstances like financial setbacks due to COVID, Kreidler stood in the way, insisting on an 'all-or-nothing' ban.

"These actions exceed the statutory authority of the Commissioner, violate the separation of powers between the executive and legislative branches of government, and directly conflicts with several existing statutes, including those that regulate, but clearly allow, credit information to be considered by insurers.

"What's more, these regulations could cause significant market disruptions at a time when the business community is working together on long-term economic recovery. In the end, it is Washington consumers who will suffer, at the very worst time for the state's economy and family budgets. That is why we're seeking to remedy this abuse of power in court."