WA senate studying credit score impact on insurance

WA bill to study credit history impacts on insurance

The Washington Senate has passed a bill to look into how credit history and other factors could impact someone's insurance coverage.

OLYMPIA, Wash. - The state Senate has passed a bill to look into how credit history and other factors could disparately impact a person’s insurance coverage. Proponents argue the system unfairly assesses people based on arbitrary measures, while while opponents say changing the system is unfair itself.

Senate Bill 5589 would require the state’s Office of the Insurance Commissioner to study how insurance companies use credit scores and other factors to determine someone’s insurance eligibility and how much they’d pay for home, auto and other personal insurance coverage.

By the fall of 2026, the office would then recommend policy changes to the legislature on alternative ways insurers could set rates.

Consumer advocacy groups like Consumer Reports and the Consumer Federation of America have found that drivers with clean records pay large differences in auto insurance premiums based on their credit score.

What they're saying:

Proponents of the legislation argue insurers relying on credit history and other factors have disparate impacts on consumers, and coverage should be based on things like driving history or the state of a home.

"It should not be based on whether or not you have a college degree or whether or not you work in a blue collar job as opposed to a white collar job. Or your zip code," said prime sponsor Sen. Bob Hasegawa, D-Tukwila.

The legislation was requested by the Insurance Commissioner’s office. In 2022, they tried to ban insurers from using credit history to determine insurance eligibility and rates, but the effort was challenged and later overturned by a court.

The other side:

Senate Republicans voiced concern about how the previous attempt to ban credit history consideration resulted in higher premiums for some people based on other factors like age.

"I know that there are multiple factors, but we’ve already seen the effects of that," said Sen. Perry Dozier, R-Waitsburg. "I still can’t support a study when we saw what did happen."

The bill passed 29-20, with one Democrat joining all Republicans in opposition. It now heads to the House for further consideration.

Albert James is a television reporter covering state government as part of the Murrow News Fellowship program – a collaborative effort between news outlets statewide and Washington State University.

The Source: Information for this article comes from the Olympia News Bureau.