AN ACT Relating to conducting a study of credit history, credit-based insurance scores, and other rate factors that may disparately impact Washington residents, in making rates for personal insurance;
SB 5589 directs the Washington Office of the Insurance Commissioner to conduct a study of how insurers use credit history, credit-based insurance scores, and other rating factors when setting personal insurance premiums, rates, and eligibility for coverage. The bill is based on a legislative finding that these factors may be affecting Washington residents in unintended or unacceptable ways, including possible disparate impacts on consumers of different races, ethnicities, sexes, socioeconomic statuses, and national origins.
The study requires the commissioner to gather information from insurers, investigate relevant data, and work with actuaries and other consultants to evaluate both current rating practices and possible alternatives. The analysis must consider consumer costs, premiums, eligibility for coverage, and the overall availability of insurance, and it must identify policy options for legislative consideration, including whether to allow, prohibit, or condition the use of credit-related and other potentially disparate-impactful rating factors. The bill also requires preliminary and final reports to the Legislature by specified deadlines and makes clear that aggregate data may be published while company-specific data remains confidential.
The bill does not directly change the substantive insurance rating laws in this act; instead, it creates a temporary statutory study section and reporting mandate for the Insurance Commissioner. It authorizes the commissioner to collect information from insurers, retain consultants, and analyze alternatives to credit-based rating practices, while preserving existing authority under the insurance code and protecting submitted data as confidential except in aggregate form. The practical impact is to build a legislative record that could support future changes to Washington insurance law governing personal lines pricing, underwriting, and eligibility standards.
The overall sentiment appears supportive but cautious. The bill passed the Senate Business, Financial Services & Trade Committee 5-4 and later passed Senate third reading 29-20, indicating meaningful but not unanimous support. The votes suggest a split between lawmakers who see value in studying possible discriminatory or unfair effects of credit-based insurance scoring and those who are more skeptical of additional regulation or of questioning existing actuarial practices.
The main point of contention is whether credit history and credit-based insurance scores should continue to be used in personal insurance pricing and eligibility decisions, and if so, under what limits. Supporters appear focused on potential disparate impacts, consumer affordability, and access to coverage for protected and lower-income groups. Opponents likely worry about interfering with insurer underwriting tools, the actuarial basis for rates, and the possibility that restricting these factors could raise costs or reduce availability of insurance. The bill’s confidentiality provisions and the scope of the commissioner’s study are also likely relevant to debate, since they determine how much insurer data will be examined and how much of it can be made public.