Credit score historical past is only one issue used to find out a driver’s auto insurance coverage rating, which carriers use to foretell how possible it’s that an applicant can have future claims. Different information that may have an effect on an insurance coverage rating varies, however usually contains the applicant’s accident historical past and previous claims. (Credit score: Aerial Mike/Adobe Inventory)The workplace of Washington Legal professional Basic Bob Ferguson introduced November 8, 2022, {that a} Thurston County Superior Court docket Decide had rejected an try by PEMCO Mutual Insurance coverage Firm and subsidiaries of the Progressive Company to halt an investigation by his workplace into potential racial discrimination in opposition to Washington drivers by means of using shopper credit histories in figuring out auto insurance coverage premiums.
A launch from Ferguson’s workplace states each PEMCO and Progressive “use shopper credit score histories — or “credit-based insurance scores” derived from a shopper’s credit score historical past — to resolve whether or not to promote, and at what worth to promote, their auto insurance coverage merchandise, regardless of proof that this observe disproportionately harms individuals of shade.”
Credit score historical past is only one issue used to find out a driver’s auto insurance coverage rating, which carriers use to foretell how possible it’s that an applicant can have future claims. Different information that may have an effect on an insurance coverage rating varies, however usually contains the applicant’s accident historical past and previous claims. There are variations in laws state-to-state concerning what info insurers can use within the calculation of insurance coverage scores, or whether or not they’re allowed to make use of an insurance coverage rating as the only determinant of coverage protection or worth.
“Washington regulation is evident: Unfair, misleading or discriminatory enterprise practices are unlawful,” Legal professional Basic Ferguson mentioned in a launch. “Vital proof reveals that utilizing credit score historical past to cost insurance coverage disproportionately impacts individuals of shade — even when their driving historical past is simply as protected as white drivers. My workplace has a accountability to research race discrimination in opposition to Washingtonians. I intend to try this.”
This isn’t the primary time the Thurston County Superior Court has weighed in on using credit-based insurance coverage scores. In March 2021, Washington State Insurance coverage Commissioner Mike Kreidler issued an emergency rule that prohibited insurers from utilizing credit score scores to set private property charges for a interval of three years resulting from provisions within the federal Coronavirus Assist, Aid and Financial Safety (CARES) Act.
In July 2022 challenge to the emergency rule, a Thurston County Superior Court docket Decide dominated that whereas the Workplace of the Insurance coverage Commissioner equipped credible info that using credit score scores is discriminatory, Kriedler had overstepped his statutory authority with the ban. This ruling saved a keep in place on the credit score scoring rule.
The Washington State Workplace of the Legal professional Basic has requested Washington residents with any details about PEMCO or Progressive’s use of credit score historical past in figuring out insurance coverage protection or charges – together with anybody who feels they’ve skilled discrimination from these practices. Directions for how one can submit relevant info will be discovered here.
