Pandemic rule led to auto insurance refund. Now that rule is expiring [Las Vegas Review-Journal]

Las Vegas Review-Journal (NV)

A pandemic-era temporary auto insurance regulation that has returned more than $26 million to Nevada drivers is set to expire later this year.

The regulation, called R087-20, bars insurance companies from using credit scores as a metric when determining an auto insurance rate. The regulation became fully effective in February 2023 after the Nevada Supreme Court ruled it could be implemented. It expires on May 20.

The Nevada Division of Insurance estimated this regulation provided $26.7 million in refunds to more than 195,000 policyholders in Nevada who were improperly charged.

The Consumer Federation of America, a nonprofit consumer organization, has advocated that credit scores shouldn’t be used to determine auto rates, since a person’s credit score doesn’t translate to their driving ability. Also, the group argues economic factors shouldn’t determine auto insurance rates.

“Punishing safe drivers with higher premiums just because they don’t have perfect credit has always been unfair,” said Douglas Heller, director of insurance for the Consumer Federation of America, in a statement.

Once this regulation expires, some insurance providers could use credit scores to raise their rates in Nevada, which already has some of the highest auto insurance rates in the nation.

The expiration of this regulation may not impact every Nevada driver, because only a “minority” of auto insurance providers have told the Division of Insurance they plan to reincorporate credit scores as a factor in their rates, a division spokesperson said.