State Insurance Commissioner Mike Kreidler sent a letter Dec. 6 to 136 insurers requesting specific information about consumers’ premiums after they removed credit as a rating factor.
He took this action in response to testimony he heard from consumers during the public hearing on Nov. 23, according to a Office of the Insurance Commissioner news release. In particular, he wants to fully understand the impact of this rule on homeowner, auto and renter insurance markets. Responses are due Dec. 20.
“I heard testimony from people who saw their rates change as a result of this rule,” Kreidler said. “I am asking insurers to share data about how they applied these changes to their policyholders.”
Kreidler’s proposed rule would prevent insurers from using an individual’s credit history in the formulas they use to set rates for auto, home and renter insurance for three years, according to the news release. He proposed this rule in response to the economic harm many people experienced during the COVID-19 pandemic—harm that has been disproportionately borne by communities of color and those who were already financially vulnerable.
Although the federal CARES Act provides some protections for consumers, those protections do not apply to everyone. This makes the credit histories used by insurers temporarily unreliable and inaccurate, according to the news release. Since we don’t know when the public health emergency will end, insurers must temporarily remove the inaccurate credit rating factor.
“I am carefully considering all of the public comments we have received and will not make any final decisions about the rule until I evaluate the information insurers provide,” Kreidler said.
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