by Shauna Sowersby
Washington State lawmakers are considering a proposal to eliminate the use of credit history to increase insurance rates or to determine premiums when renewing personal insurance.
SB 5010 is just one of the measures being considered as part of Gov. Jay Inslee’s “package of proposals that address systemic racism.” The bill seeks reforms to insurance policies such as auto coverage, homeowners insurance, and earthquake insurance.
Sen. Mona Das (D-47, Kent) is the prime sponsor of the bill. Last month, she testified to the Senate Committee on Business, Financial Services & Trade that low-income households, specifically in communities of color, are most likely to be negatively affected by credit scores.
Additionally, the bill would help the people who have lost their jobs or had their businesses affected by the COVID-19 pandemic, Das explained.
“Many of these folks will see credit scores go down as they struggle to pay their bills and manage their credit,” she told the committee. “To penalize folks with increased rates or restricted access to coverage just because their credit history suffered during this challenging time is inequitable, it’s unfair and really makes no sense.”
Studies from the Federal Trade Commission and the Consumer Federation of America, among others, have shown that people who live in communities of color and those living in low-income households are far more likely to pay higher insurance premiums, even if they have clean records.
In addition, the CFA study showed that everything else being equal, “safe drivers with poor credit pay 79%, or $370, more on average than a driver with excellent credit,” statewide.
“Black, brown and also poor white Washingtonians occupy the bottom rung of our economic hierarchy,” said former Seattle City Council candidate Shaun Scott, who testified on behalf of the Poverty Action Network.
Continue reading “Taking on Insurance Companies, Lawmakers Seek Racial Equity Reforms”