Washington Senate Passes Restitution, Credit Scoring Study Bills

The Washington state Senate passed three bills with insurance implications in mid-March, including a bill giving the insurance commissioner the authority to order restitution to harmed policyholders and a bill studying the impacts of insurance rating factors like credit scores.

Senate Bill 5331 gives the commissioner the authority to order restitution for harmed policyholders. The commissioner can fine insurance entities that violate the law but can’t order them to pay restitution to the people they’ve victimized.

The bill, sponsored by Senator Adrian Cortes (D-Battle Ground), also authorizes the commissioner to fine property/casualty insurance companies up to $10,000 per violation, rather than issue a total fine of $10,000.

Senate Bill 5589 was introduced by Insurance Commissioner Patty Kuderer and sponsored by state Sen. Bob Hasegawa, D-Seattle.

The bill would enable the commissioner’s office to analyze how insurance companies use credit history and credit-based insurance scores to understand premiums for lines of insurance like homeowners and auto.

Kuderer has raised concern about the reliance on algorithms and data determining premiums. The study would also look at factors that bill proponents believe could create unfair discriminatory barriers for specific groups of residents.

The effort appears to pick up where Washington Insurance Commissioner Mike Kreidler left off. He created a controversial rule banning credit scoring in insurance underwriting, which was challenged in court.

The bill calls for a preliminary report to be submitted to the Legislature by Dec. 31.

The Senate also passed a technical cleanup bill on Monday and passed a bill modifying the authority for fire loss insurance data on Friday.

The bills now move through the House of Representatives and must pass out of that chamber by April 16.