The office of Washington Attorney General Bob Ferguson announced on November 8, 2022 that a Thurston County Superior Court judge had dismissed an attempt by PEMCO Mutual Insurance Company and Progressive Corporation subsidiaries to arrest a his office’s investigation into potential racial discrimination against Washington drivers. through consumer use credit history in determining automobile insurance premiums.
A statement from Ferguson’s office says PEMCO and Progressive “use consumer credit history – or”credit-based insurance scores“derived from a consumer’s credit history – in deciding whether to sell, and at what price to sell, their auto insurance products, despite evidence that this practice disproportionately harms people of color.”
Credit history is just one of the factors used to determine a driver’s auto insurance score, which carriers use to predict an applicant’s likelihood of having future claims. Other data that can affect an insurance score varies, but often includes the claimant’s accident history and previous claims. There are differences in regulations from state to state regarding what information insurers can use in calculating insurance scores, or whether they are allowed to use an insurance score as the sole determinant of insurance. coverage or the price of the policy.
“Washington law is clear: unfair, deceptive, or discriminatory trade practices are illegal,” Attorney General Ferguson said in a statement. “Significant evidence shows that using credit history to price insurance disproportionately affects people of color – even when their driving history is just as safe as white drivers. to investigate racial discrimination against Washingtonians. I intend to do so.
It is not the first time that the The Thurston County Superior Court weighed on the use of credit-based insurance scores. In March 2021, Washington State Insurance Commissioner Mike Kreidler issued an emergency rule prohibiting insurers from using credit scores to set personal property rates for a period of three years due provisions of the federal CARES (Coronavirus Aid, Relief and Economic Security) Act.
In Challenge July 2022 to the emergency rule, a Thurston County Superior Court judge ruled that although the Office of the Insurance Commissioner provided credible information that the use of credit scores is discriminatory, Kriedler exceeded its authority legal with prohibition. This ruling maintained a reprieve from the credit score rule.
The Washington State Attorney General’s Office has asked Washington residents for information about PEMCO or Progressive’s use of credit history to determine insurance coverage or rates – including anyone who feels they have been discriminated against by these practices. Instructions on how to submit the applicable information can be found here.