The Washington state Office of the Insurance Commissioner recently promulgated a regulation that would prohibit the ability of insurers to utilize credit history information in connection with the rating and underwriting of automobile, homeowners, and renters coverage. Unless struck down by the state's courts, the regulatory ban is scheduled to take effect on March 4 and will remain in place for at least three years.

The issuance of the new rule is the latest effort by Mike Kreidler, the Insurance Commissioner of Washington, to end the insurance industry's use of credit histories and information in his state. 

Last year, Kreidler advocated for legislation aimed at replacing the longstanding statutory requirements that apply to the use of such factors with an outright prohibition. After state legislators rejected his pleas and call for action, the commissioner maintained that he already possessed the authority needed to implement such a ban and sought to do so through the issuance of an emergency regulation in March 2021.

However, the emergency rule was challenged in court by a coalition of other industry groups, including the Independent Insurance Agents & Brokers of Washington (IIABW). A state judge concluded in October that the insurance commissioner lacked “good cause" for the ban and tossed it aside. In the short time it was in effect, the emergency regulation had chaotic marketplace effects and hundreds of thousands of consumers received rate increases as a direct result of the restrictions imposed by the commissioner. 

The new regulation faces similar legal scrutiny. The IIABW and other associations immediately challenged the rule in court, and the industry plaintiffs assert that the commissioner has once again exceeded his authority and is not authorized to trump the decades-old statutory framework. The groups are also asking the judiciary to suspend the implementation of the rule until the case can be heard. A decision on the request for a stay is expected from the Washington courts in the next two weeks. 

Wes Bissett is Big “I" government affairs senior counsel.