At this point there are still a lot of unknowns. This ban was implemented in an emergency basis which is currently set to extend for 120 days. The Commissioner Kreidler has indicated an intent to extend it at least 3 years and all indications are that barring legislative action this will become a permanent change in Washington state. Normally, a ban that completely alters the rating model for insurance carriers would be implemented with years of forewarning allowing companies to adjust their rating models accordingly. Since this order was implemented on an emergency basis, Commissioner Kreidler did not allow carriers to adjust any aspect of their rating model other than to assign all clients the same “neutral credit score” therefore eliminating all credit score surcharges and discounts.
Moving forward, we expect insurance companies to work to adjust their rating models in other ways but unfortunately major changes like this can months or years to fully realize and implement. In the short term, we expect insurance carriers to get much more picky about things they can see and control. On auto insurance that means that driving violations and accidents are likely to more quickly result in adverse action taken by insurance carriers. As rating models adjust to this change we expect surcharges for violations and accidents to significantly increase to offset the loss of credit as a rating factor. On home insurance, we expect condition of home to be weighted much heavier than in the past. Older roofs, peeling paint, and any visible lack of “pride of ownership” are much more likely to result in a cancellation or declination by insurance carriers.
Many auto insurance carriers offer optional telematics apps that can be installed on phones or devices installed in vehicles that can track actual driving habits of insured drivers and result in more personalized discounts. These programs will be one way to add additional discounts to your policy if your carrier offers such a program.
Ultimately we still don’t know how long this ban will last nor how quickly insurance companies will be able to adjust their rating models to this change. We are committed as always to helping our clients navigate this changing insurance environment in a way that is best suited for each individual.