With insurance rates at stake, judge quashes Washington executive power


The extent to which the Washington state executive was able to invoke the COVID-19 pandemic in its use of emergency rulings reached a turning point in court last Friday afternoon.

In an October 8 summary judgment hearing, Thurston County Superior Court ruled against Washington State Insurance Commissioner Mike Kreidler’s emergency order banning the use of credit history when determining private insurance rates.

The emergency order from March of this year was based on the expiration of the federal Coronavirus Aid, Relief and Economic Security (CARES) law which the commissioner said artificially supported the odds of credit. Its expiration 120 days after the end of the state of emergency will end this protection, with an increase in insurance premiums likely to follow.

“Credit scoring models are no longer accurately reflected – or may no longer be accurate due to the change in reporting requirements of the CARES Act, but also of this… question[s] the future validity of credit insurance models that relied on pre-pandemic information where… circumstances were significantly altered by the pandemic, ”Kreidler’s representation said at Friday’s hearing.

“Consumers don’t seem to realize they are in financial difficulty because of the artificial protections in the CARES law at the time and the temporary protections that limit the ability to provide accurate credit history information,” he said. continued the defense. “This has an impact… on insurance consumers because, again, it shows that some people do not have an accurate credit history reported to credit bureaus whose information is then used by credit insurers to determine how insurance premiums will be determined. ”

It was on this basis that the State Insurance Commissioner defended the Emergency Insurance Tariff Ordinance. However, the extent to which the executive office can flex that muscle was questioned by plaintiffs, the American Property Casualty Insurance Association (APCIA), in Friday’s ruling, which ultimately overturned intended consumer protection.

“The problem is the commissioner by regulatory decree in the event of a state of emergency [can] overturn the authorization by legislative statutes that have been in place for almost 19 or 20 years, ”said an APCIA representative.

State legislator aims to raise insurance rates, blames executive overshoot

Ultimately, the judge ruled that, while there is a precedent for executive law to be enacted in a true state of emergency, and the commissioner’s office had indeed persuaded that the expiration of the law CARES was sufficient justification in and of itself, the Commissioner had simply failed to communicate this emergency to the public and to the state legislature in a sufficiently short period of time, in a manner that would allow the normal processes of developing laws: public comment, notice, etc.

“The agency can dispense with many parts of regular or permanent rule making if it is an emergency, and the agency must find that good cause for adoption, modification or repeal. immediate rule [which] is necessary for the preservation of public health, safety or general well-being, and that meeting the time limits required for the notice and the opportunity to comment on the adoption of a permanent rule would be contrary to the interest public, ”said the judge.

“I was convinced… sufficiently in favor of the Insurance Commissioner… the development of rules for advice and comments can be carried out quickly, [within] four to six months, and if the Insurance Commissioner had started developing rules for advice and comment, and then learned that the protections of the CARES Act were going to disappear in four months, this would have been the time to adopt a emergency rule saying, “now we urgently need to act,” the judge continued.

Much of the complainant’s case rested on the fact that Kreidler had pursued this policy for some time, even before the pandemic, and the fact that he had not communicated to lawmakers that this was an emergency before. let its emergency decision cast doubt on this justification. .

“From January to March, the commissioner did not say to the legislature, ‘we have this looming crisis'”, added the judge.

Thurston County ultimately ruled against Kreidler, without ruling on the plaintiff’s claim of the “arbitrary and capricious standard” from which the emergency order was made, potentially leaving the door open for future emergency orders, at least for Thurston County. .

“I am disappointed with today’s decision,” the insurance commissioner wrote in a statement. “I have the power to take ongoing action to protect consumers from the insurance industry‘s unfair, covert and unrealistic method of determining what consumers pay to insure their vehicles and homes. “

“I will continue the fight to ban credit scoring permanently and I will consider my options. “


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