Auto insurance

FAQs: What changes in Washington insurers’ use of credit history may mean to you

May 27, 2021 by PEMCO Insurance

Update 3/9/22  PEMCO will reintroduce the use of credit-based insurance scores in Washington for new business and renewals starting in April.  

Our decision comes after a Thurston County Superior Court judge issued a stay on the Washington State Office of the Insurance Commissioner’s (OIC) three-year ban on credit scoring, which had been scheduled to go into effect on March 4, 2022. The court agreed to combine lawsuits challenging the regulation that were filed separately by insurance industry groups. The parties agreed to a pause while the court addresses the challenge.  Currently, a hearing isn’t anticipated to occur until mid- to late May, with a decision anticipated in June.  So, insurers can still use credit at least until that time.  

For decades, credit history has proven to be predictive of customer risk. Some of our competitors have already resumed the use of credit-based insurance scores. To regain a level playing field, PEMCO is resuming the use of credit-based insurance scores as a rating factor beginning in April 2022 (see chart below for exact dates for renewals). 

Effective dates for reintroducing credit-based insurance scores in WA
4/13/22  Effective date for Washington Auto renewals  
4/30/22  Effective date for Washington Home, Condo, Renter renewals  


Since the late 1990's, like nearly all insurers, PEMCO has considered individuals' insurance scores (which include credit history) as one of the many factors we use to calculate prices. Along with other variables like personal driving record and past claims, using a person's credit history has historically proven to be a very reliable way to predict both how likely that person is to file a claim in the future, as well as how big those claims are likely to be. And all that's important to account for, so we can do a better job of setting prices and serving our customers. 

In response to the economic impacts of COVID-19, Washington State Office of the Insurance Commissioner issued an emergency rule which prohibits all insurers operating in Washington State from considering individuals' credit histories in determining rates, premiums and coverage eligibility for personal auto, renter, condo and home insurance. The initial rule applies to new policies effective on and after June 20, 2021, as well as to existing policies with renewals processing on or after that date.  

The Commissioner plans to extend the emergency rule to last for three years from the date the COVID National Emergencies Act ends or the date the governor ends the state of emergency in Washington State, whichever is later.  

This new rule is a significant change, to be made in a very short amount of time. Virtually every company that sells auto, home, renter, or condo insurance in Washington has been required to change how they calculate rates. Typically, such changes would take months or even years, as insurance companies are required by law to prove our pricing is an accurate reflection of individuals' risks and will, in aggregate, be sufficient to ensure we're able to pay for our customers losses appropriately. In this instance, the emergency rule asked insurers to make the required updates in 45 days.  

While we don't yet know all the answers about how this new statewide rule will affect individual customers, we've compiled the FAQs we can answer below to help make sense of the change. We'll continue to update this list as we learn more. 

Does the emergency rule affect all PEMCO customers?

No. The emergency rule applies only to Washington policyholders who have auto, renter, condo and/or home insurance.  

When will this happen? 

The emergency rule's impact on policies took effect June 20, 2021. That means for all new policies that start on or after that date, credit history will no longer be used to help in setting prices. Existing policies that will process renewals on or after that date will likewise no longer use credit history, and some customers are likely to see changes in their existing rates as a result. The change will apply at your first renewal under the emergency rule.  

Will my rates change as a result? 

More than likely. We anticipate most people will see a change in their rate, ranging from a 20% increase to a 20% decrease. A smaller number of customers may see a more significant change in price due to this new rule. However, if you do see a change on your bill, it's not necessarily entirely the result of this new emergency rule and could be due to changes in your policy, your coverage, your claims, or other factors. 

How will the change appear? 

The new rule will take effect automatically. Just like how any changes in your rates are currently presented, you'll find your new annual premium on your policy Declarations page.  

Can PEMCO do anything to mitigate potential price increases related to eliminating the use of credit history? 

No. As directed by the state, the elimination of credit history is mandated to be a standalone change with no other changes allowed.  

My policy renewed (or will renew) before the emergency rule's effective date. I want the impact of credit history removed now, without waiting for my next renewal after the effective date. 

We're unable to re-rate policies before your renewal date. If you're concerned about your premiums, please contact us. Your local PEMCO agent or a PEMCO representative at 1-800-GO-PEMCO will be happy to help you explore ways to make your policy more affordable. 

Once credit history is no longer used to determine rates, premiums and coverage eligibility, what are some of the factors that will determine my rates? 

We'll continue to rely on the factors we currently use. For auto, they include things like driving record, past claims, annual mileage and the type of vehicle you drive. For homeowners, premium is based on things like past claims, type of home construction, and the cost to replace your home and belongings. 

Looking to the future, we'll also consider the merits of other factors. PEMCO, like most insurance companies, always looks for additional factors that can help us in determining rates for each customer. The more data points we have available, the better we're able to rate you more precisely. PEMCO is committed to ensuring a fair and competitive marketplace for all while upholding our values and financial strength.  

Does this change affect all insurance companies or only insurance companies headquartered in Washington? 

The emergency rule applies to all companies that sell auto, renter, condo and home insurance in Washington and use credit history to determine rates, premium or coverage eligibility, regardless of where the company is headquartered. 

For more about credit-based insurance scores, check out this overview from the Insurance Information Institute: Background on Credit Scoring.

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