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

Friday, May 28, 2021by  PEMCO Insurance

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Update 10/25/21

On Oct. 8, 2021, Washington’s Thurston County Superior Court struck down the Washington State Office of the Insurance Commissioner’s (OIC) emergency rule which prohibited the use of credit scoring history in determining rates, premium, or coverage eligibility. Following a review of that ruling, Insurance Commissioner Mike Kreidler announced that the OIC will seek an effective date of Jan. 1, 2022, for a permanent rule that would ban the use of credit scores for three years.

What this ruling means for PEMCO and our policyholders in Washington is unclear. As a regulated industry, how we calculate premiums is required to be reviewed and approved by the OIC. The OIC’s emergency rule went into effect in June 2021. While Thurston County Superior Court struck down the emergency rule now, whether or not the use of credit history will continue to be prohibited in Washington State on a permanent basis is unknown. 

We understand the current situation is confusing and frustrating – especially for our customers who saw increased rates following the emergency rule.  PEMCO is monitoring this situation closely and will be prepared to take appropriate action as soon as the issue is resolved by either the OIC or by the Washington State Legislature. 


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 in 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 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 takes 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. PEMCO's policies renew annually, and 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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Comments on this post

personDan 11/30/2021 02:17 AM
Disheartening to say the least. My Homeowners Insurance up 29% and like most others, with no claim history over 35 years.  Being loyal somehow does not seem to matter.  I have not seen my other Pemco policy renewals - yet  -but imagine they will also have hefty increases.  Pemco,  It would be wise  to consider other factors if the credit scores can no longer be used, rather than raise the rates of some of your longest and best customers.  Complaining to the Insurance Commissioner Office falls on deaf ears and Pemco you need to do better.  
personKen N11/28/2021 10:46 AM
My dad insurance goes up from 1700 to 3600.  Unbelievable.
personMM11/22/2021 01:43 PM
I'm renewing my homeowners policy since it is due this week but shopping once this holiday season is over. PEMCO, you can do better. Seems PEMCO will be loosing many loyal customers.
personJackie11/18/2021 10:46 AM
My Car insurance went up  49.8%.   I have been with Pemco for 40+ years.   Clean record.   Unbelievable.
personSuzanne11/12/2021 01:45 PM
20% not even close. Our Home Insurance rate went up 60%. Have not received our Auto yet. No claims.
personMathew Staub11/03/2021 08:12 PM
I’m a very frustrated  customer.

My homeowners policy went from 540.04 to 716.56 (that’s over 40% !!! )

My auto policy went from 3,561.13 to 4,915.12 ( that’s just slightly under 40% !!! )

This is devastating to our family. What’s a matter with the rates I was already paying. I’m so disappointed, I can’t even describe how it feels.  
personSteve Schattenbild11/03/2021 12:12 AM
Interesting fluff response from Pemco.
My Progressive auto insurance rates jacked 44% using the same BS excuse that Pemco is using.
I spoke to a Progressive Insurance agent, and called BS on the rate hike, as they did not have my SSN and could not have done a credit check on my initial policy (and no, my SSN is not tied to my driver license).
I have no traffic convictions and no accidents, but will be dropping Progressive.
If my Pemco homeowner policy renews with a similar hike, I will be dropping Pemco as well.
If everyone here acts on their displeasure with Pemco and leaves, that will be an exodus of responsible non-claimants, leaving Pemco with an excess of irresponsible claimants, forcing them to hike rates further on the responsible non-claimants that remain. They will in turn leave, resulting in a negative feedback loop for Pemco, which will most definitely not be revenue neutral.
Since a considerable number of people will leave Pemco, if you decide to stay, you can be assured there will be another rate increase coming to compensate for those non-claimants that left, resulting in a higher proportion of policies paying claims.

personMike10/26/2021 10:25 AM
Is there anyway customers can "opt out" and voluntarily let insurance companies use our credit scores? 
personchris10/15/2021 04:04 PM
Another one bites the dust. The opportunity to take advantage of a loophole and pass painful rate increases on to undeserving  loyal patrons tarnishes the unique reputation of an independent northwest company.  Bottom line mentality may seem a good thing for Pemco but it will hurt in the long run as loyal low cost customers flee to other companies.

personWilliam Kirchner10/12/2021 11:05 AM
My home owners policy just went up by 43.8%, yet PEMCO says increases will be in the 20% range??? REALLY?  Since when is 43.8% = 20%???

I am asking everyone to call the State Insurance Commissioner's office and complain. I called and the person I talked to could care less about any of us whose rates have skyrocketed because of their actions. All the gentleman kept saying to me was "other people's rates will decrease". And who's rates will decrease, I asked? People with bad credit scores. So it pays to be irresponsible!

I've been with PEMCO for over 40 years covering my vehicles, home, umbrella policy and never once had a claim and this is how we get treated???
personBob Molitor10/12/2021 08:08 AM
I have read the majority of these comments from the PEMCO customers and I agree that all insurance companies are taking advantage of this new rule.   They are literally screwing their customers that have excellent credit to make up for the customers with bad credit.   We just recently purchased a new home and our home insurance will go from $672.00 a year to over $1,300.00 and that's only because we had to lower our coverages and raise our deductible, if not it would have been over $1,500.00.  We are retired so raising our rate from $56. per month to $110.00 is a real screw job.  The insurance companies are covering their a__ since they end up lowering the people with bad credit and raising ours, that way they don't lose a penny.   Somebody should be able to bring charges against the insurance commissioner that initiated this change for robbery because that's what's doing. 
To make things fair for everyone instead of just the people with bad credit we should of had a choice to allow the insurance companies to use our credit scores if we wanted. 
personTHOMAS D BROWN10/07/2021 06:22 PM
you raised my HO insurance package from 760 to 1070 a year, an over %50 INCREASE, all of this based on this this ruling, the State Insurance Commissioner said it's PEMCO"S GREED and not the Insurance commissioner's fault, he said we should have seen no more than a 5 to 7% increase due to the chnge, that is pure and simple Pemco has decided to improperly apply the law to increase profits and nothing more. Tip from the Insurance Commissioner, shop your insurance, and my tip is vote REPUBLICAN next election no more Governors or Insurance Commissioners for life.
personJoe Hawk10/06/2021 02:27 AM
I pay everything in cash or debit card. I don't use credit. My previous insurance had me set up to take the amount out of the bank. SS messed with my amount I received taking out a giant chunk all at once so I I had the option on their site to stop automatic withdrawals and I pressed the button to do so. They did not and removed that option. Costing me hundreds of extra dollars in bounced withdrawal fees and they would not shut down my account down until I paid them back adding more debt to my account. I disputed it in the three credit reporting agencies In two I won but they have " --- " for my credit rating now. Equifax is the only one that still gives me a credit rating.

Like I said I pay all my bills on time. They do not show it, so my credit never goes up. If they are using our credit then they need to reflect our payment history. That was the only time I had an issue in my credit and it was because SS are heartless and took one giant chunk knowing I am low income. It was for more than one month of their miscalculations. Not mine. Costing me big time on top of the money they took from me. I never am late once I caught back up. But they illegally accrued their bill by not shutting down my account when I removed automatic payment as an option. The whole credit system is a debt system ad they want us to be a slave to their system, so they can get part of our income. It needs to be done away with. What happened to me had nothing to do with credit, because an Insurance will not show your payments that were on time. In my case they only showed debt they made happen. I will not pay it since it was their fault! I paid what I owed but not the rest. It was their fault and since I do not get credit for my on time payments which I am usually earlier than the due date. No, Insurance companies should not even be allowed to use our credit rating, Period. Not unless they are also giving you good ratings which they don't. Scam Big time!
personWalter Frigeri10/06/2021 01:03 AM
PEMCO in their rebuttal to the reason for all of the dramatic increases in policy rates has stated
several times that your credit score i only one of many factors affecting your yearly rates By the
size of the rate increases customers are reporting, it must be the biggest factor.
I have been a PEMCO customer since 1984 and have lived in the same home for the past 27
years. I have never had a claim during that time. Yet my Home Owners policy increased 30%
at renewal this October. I find it hard to believe that I was getting a 30% discount prior to the
Insurance Commissioner's required change not allowing credit scores.
I too like many customers, am retired and on a fixed income. In order to afford the large increase
in my HO policy, I had to increase the deductible from 1k to 5k; and hope I never have a claim!
I am afraid to imagine the potential  increase in my Auto  policy! Will I have to give up driving?
personTom Antos09/21/2021 01:29 PM
The rate increase is ridiculous. My annual homeowners premium went up 51.9 percent. We've been with PEMCO for home and auto for many decades, since the '70's. Our last  small claim was over ten years ago. Plus according to my bank we have an excellent credit score.
This feels abusive. If PEMCO's explanation is true I want to see some folks come forward who had their premiums go down 40 or 50%. Also, PEMCO could publish a generalized summary of statistics showing percentage gains or decreases by percent of policyholders. Does it really balance out to revenue neutral?
This is the first time in decades I felt the need to start shopping around. Will see if there's any hope.
I would also like to warn folks that insurance quotes provided by some of the big national firms are lowballed. Check closely and you'll see home and property valuation and liability coverage etc. are low. So you may not be getting the coverage you need.
ACTION ITEM for all affected by this nonsense: Next election for State Insurance Commissioner watch for the candidate who's keen on this issue and promises to reverse the decision. Apparently our current commissioner, Mr. Kreidler, doesn't appreciate the effect of political backlash. He handed his opponents a gift.
personVK09/08/2021 11:34 PM
Government may want to provide relief to the needy but not at the cost of jacking the price up for others. If a person doesn't have a good score because of pandemic, his requirement for credit score can be omitted but this doesn't definitely mean that you have to deprive others with good score and penalize them. It is so bizarre that I can't even understand whether we have really educated people in those positions.
personAnn09/07/2021 01:59 PM
This is outrageous, however, this is not Texas or Florida.  We can write our state representatives, the governor and our insurance commissioner . . . but because of the prevailing philosophy in Washington, my opinion is this will do nothing.  Robbing one group to give to another is the definition of communism.  Think about it, we are now no longer constrained by societal mores to pay our bills on time or follow traffic laws.  Another attempt to destroy our culture and country.   Will this be factored into the inflation index?  Thank you Governor Newsom. . .North.
personPETER SHREVE09/05/2021 01:16 PM
My homeowners insurance increased 37% solely due to the emergency ruling SB 5010-2021-22; an additional increase of 3% was due to a rate increase.  This ruling was made and passed/filed by a committee and never voted on by the legislature. It clearly forces people with historically good credit scores to subsidize people with historically bad credit scores (which cost more to insure).  This is grossly unfair and discriminatory and allows insurance companies to increase  profits far beyond limits set by the Office of the Insurance Commissioner. It makes sense that the insurance companies are not fighting this dysfunctional ruling.  It was definitely not well thought out or written. It is critical that all adversely impacted contact their state senators and representatives to insure it does not get extended three more years.  This can be easily done at:
personN809/01/2021 11:02 AM
From Pemco's response above:
"First, the emergency rule issued by the Washington Office of the Insurance Commissioner (OIC) required all insurance companies to make this change revenue neutral."
So shall we read this to say the OIC made this emergency rule to help those constituents that are struggling financially, but not at the expense of the insurance companies and instead by punishing those insurance customers with less costly claim records?  It seems like we can certainly interpret it that way and then it starts to look like another 'tax the rich' tactic that only hurts the diminishing 'middle class' and rewards insurance companies for essentially making a few tweaks to their quoting software, not actually working for their customers.  This definitely indicates that Pemco has no skin in the game at all and refuses to challenge the powers that be to do right by their customers.  A pattern of Pemco over the last decade or so in my experience.  Perhaps the OIC made the revenue rule because they thought they were protecting the folks with worse credit from higher rates...they either didn't think and/or didn't care about those on the other end of this change.  Or perhaps the rule actually states that the revenue can't increase from raising premiums for those with lower credit ratings and Pemco et al decided that means revenue must remain neutral across the board?  Their response indicates that they're only raising premiums for those with good credit ratings to offset the loss of revenue from those with bad credit ratings....
Also from Pemco's response above:
"Credit has only ever been one of many factors used to calculate premiums. Your driving record, your past claims, and the details of your homes and vehicles are some of the many factors that we have historically used as well. Credit has proven very predictive of future claims, and for 20 years the OIC allowed the regulated use of credit to help insurance companies reduce prices where historical loss data suggests they can. The emergency rule has taken that option away."
I remember when using credit score became allowable (has it really been 20 years? wow, time flies eh?).  It was a big deal back then for the same reason being stated now; it unnecessarily and unfairly hurts those people that are struggling financially.  But, if I remember correctly, folks that had better credit ratings suddenly saw a drop in premiums so people largely stopped talking about it and the folks being hurt the most were squelched and the issue fell by the wayside.  But read Pemco's response I snipped above.  It says that 'Credit has proven very PREDICTIVE of future claims.'  How much weight should really  be placed on predicted claims?  This seems to border on 'guilty until proven innocent'.  When I first started driving, I couldn't drive the first car I bought for about a month and a half because teenagers statistically had more claims and I had to save up for the justifiably expensive premium payment after I spent most of my savings on the car.  Surely Pemco and the insurance companies can put their data analyzing horsepower into researching PAST claims statistics vs. demographics instead of using a credit score (for something it was never intended for) to label people with something that is merely 'predictive'?  C'mon Pemco, stop playing the victim and try to innovate here.
personCynthia 08/24/2021 09:26 PM
I have been a loyal Pemco customer since 1977, and  I am disheartened and disappointed in  receiving such a huge auto insurance premium increase.   I have never had a traffic ticket or accident, and this hike seems way too extreme.   We should reward safe driving and loyalty; not discourage it.   I have always trusted Pemco but now I am deeply saddened that something like this can happen.  We are losing common decency and any sense of "fair play" infrastructure in our society.  
personSophia08/19/2021 04:15 PM
Why in the world would the Insurance Commissioner pass on allowing those w/good credit scores continue to use that info for ins. and give a waiver to those economically impacted by the pandemic?  It seems after reading the comments above that the Ins Commissioner did have the opportunity to do so and didn't.  This is such a misguided way to help us recover from the Covid chaos.  There should be help for those on fixed income whether retired or disability. 
personJohn08/15/2021 09:06 PM
My Home (over 30 Yrs w/pemco) went up 30%. Does this mean I was getting a 30% reduction in my premiums for a good credit score? I think not. Can't wait to get the auto. Pemco's explanation did not mention any attempt to mitigate the increase and I am seeing a boardroom full of grinning shareholders after being told they can increase profit by 30% and blame it on the state. It will be interesting to see the revenue #'s on their annual report this coming year. OH and Yes I too will be shopping.....
personjulie08/14/2021 10:06 AM
My home policy went up 40%. So let me get this straight....good credit score you pay more, poor credit score you pay less. I'm paying for the irresponsible person....AGAIN
personPEMCO Insurance08/11/2021 04:30 PM
Thank you to everyone for your comments. We hear your frustration, and we want to do everything we can to help our customers. From the discussion below, we’d like to clarify some points regarding the removal of credit information in determining insurance premiums.

First, the emergency rule issued by the Washington Office of the Insurance Commissioner (OIC) required all insurance companies to make this change revenue neutral. PEMCO and other companies are required to keep total premiums unchanged, meaning that if removing credit as a factor reduced premiums for some policyholders, premiums must be increased for others in order to maintain the same overall premium volume for each insurer.

Second, the estimated $955 billion in “surplus” the OIC has cited is a nationwide figure, not specific to PEMCO or even Washington state. Surplus funds can’t be used at the discretion of individual insurance companies. They’re there to provide protection to their insureds against covered losses.

Credit has only ever been one of many factors used to calculate premiums. Your driving record, your past claims, and the details of your homes and vehicles are some of the many factors that we have historically used as well. Credit has proven very predictive of future claims, and for 20 years the OIC allowed the regulated use of credit to help insurance companies reduce prices where historical loss data suggests they can. The emergency rule has taken that option away.

All that said, PEMCO is always looking for ways to improve our products and provide competitive rates. If you have seen your rate go up, please talk with your agent or call us directly to review your policy and help you to determine the right amount of coverage for you, and all the discounts you qualify for.
personDennis08/10/2021 08:04 PM
This is BS, it is all about the money and greed on the part of insurers. Everyone is raising prices on everything, so lets get Pemco in line and jab its customers; they don't care about your credit rating, your non claim status, whether you are retired or still fully employed. I have been with Pemco since 1990, have never even looked for another insurance company until now ... bye bye Pemco, I went from $490 to $752.
personRod08/10/2021 02:30 PM
If the state insurance reserve was 9 billion and there was no need to raise everyone’s rates. Mine went up 30%.
personJon08/06/2021 01:00 AM
Very interesting comments, however there are points being missed.  An early on effort to drag this outrageous matter before a liberal judge to reverse the Insurance Commissioner's emergency rule failed.  In my contact with Pemco they state they are "studying" further court action.  The truth of the matter is Pemco really has no skin in the game on this issue because the rates reduced for those with poor credit rating are increased on the other end with higher rates for people with responsible records of bill payment.  There is likely no net loss or gain for Pemco.  I have been with Pemco over 25 years with a very minimum amount of auto or home claims and I feel that while that the Insurance Commissioner's emergency rule isn't of Pemco's making they might get some loyalty in behalf of their insured by appealing the lower court's ruling. 
There is one other matter.  I always thought Pemco was a premier insurance company which one would reasonably think is comprised of first rate responsible clients.  When did Pemco start insuring less responsible drivers and home owners that the rest of us now have to pay for? 
personWilliam Suhm08/05/2021 04:03 PM
We are going to review our bundled policies and shop for others.
We have no had any home claims and one autos claim since 1976.
We are also retired and are watching political missteps taking our cost of living too high.
personRick08/04/2021 05:30 AM
I received my notice of change in premium on Saturday..up a WHOPPING 57%!!!!!
My total of coverages PEMCO would be responsible for in a "total loss" went up only 10%.
I have to say that the commissioner made a less than informed decision and if the "billions in insurers reserves" comment is true then PEMCO and other companies have over-reacted to the side of greed.
personEdwin08/03/2021 06:55 PM
Comment by Jeffhere/08/03/2021 nailed it! In the interest of “equality” .I am betting that this will be made permanent in this state!they will say using credit scores is discriminatory to make it permanent!guess I need to move to a red state!

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