Washington to Tackle Credit Scoring, Streamline Agent/Broker Licensing

Bills to ban the use of credit scoring, streamline the licensing of agents and brokers, and improve health care are all on Washington’s Office of the Insurance Commissioner’s (OIC) legislative agenda for 2010. Among the proposed changes:

Credit scoring: The OIC is seeking to prohibit the use of credit history, education and income for rating and underwriting personal insurance. Most insurance companies use credit as a key factor in setting rates. Insurance Commissioner Mike Kreidler believes that this is unfair and inherently discriminatory, especially when families are struggling due to the recent economic downturn, the OIC said.

Proposed legislation would still allow discounts for good students and people who complete driver’s training. To view the draft bill, visit www.insurance.wa.gov.

Licensing: Washington law requires out-of-state agents and brokers to submit fingerprints and maintain bonds in Washington. They typically already have to do the same thing in their home states. To streamline the process, and for the sake of interstate reciprocity in licensing, the OIC would like to eliminate Washington’s fingerprinting and bonding requirements for out-of-state agents and brokers.

Joint Underwriting Authority: Concerns about potential flooding below Washington’s Howard Hanson Dam have made it difficult for some businesses to find flood coverage in the Green River Valley, according to the OIC. Yet the area is a key engine for the state’s economy, which relies on businesses being able to shield themselves from catastrophic risk. Thus, the OIC supports formation of a “joint underwriting association,” or JUA. These are publicly sponsored, temporary, not-for-profit insurers of last resort, stepping in to provide insurance when certain coverages become unavailable on the open market.

Medical malpractice law: In 2006, Washington lawmakers reformed health care liability laws. Among the changes are that some people handling medical malpractice claims are required to report claims data to the insurance commissioner. Unfortunately, many of the groups required to report claims data have failed to do so, despite repeated urging, the OIC said. Others wait until the last minute to report their data, which leaves little time for the OIC to analyze the data and report to the Legislature. The department would like to improve compliance by creating penalties for failing to report the data.

Receiverships: Financially troubled insurers can be placed into receivership to try to rehabilitate them or, if necessary, to dissolve the company. But a question has arisen over whether the participation of the OIC in managing these receiverships renders the receivership a public agency, and thus subject to public disclosure laws. The OIC believes that insurers in receivership should have the same business confidentiality protections provided to other companies. Disclosure of the records could put the company at a competitive disadvantage, making it less likely that the company could be rehabilitated, the OIC said.

For more information on the OIC’s legislative agenda, visit www.insurance.wa.gov/legislative/index.shtml.