Washington Insurance Commissioner Mike Kreidler adopted a rule requiring insurers to explain premium increases to their policyholders “in language they can understand.”
“If your insurance company is going to increase your premium, you have a right to know why,” Kreidler said in a statement. “This is pretty basic information you should expect from your insurance company, but we hear from hundreds of consumers every year who cannot get a clear, understandable answer on why they’re being charged more.”
According to Kreidler, when a consumer’s auto or homeowners insurance premium goes up, and the insurance company hasn’t explained why, they contact the Office of the Insurance Commissioner. Then, when the OIC asks on their behalf, it gets a more detailed response. Kreidler believes consumers deserve the same information.
The OIC held five meetings with interested parties over the last year and learned that some insurers’ rating formulas have become so complex, they can’t readily specify the reasons behind someone’s premium change. Some insurers’ computer systems are unable to generate a clear answer, according to the OIC.
The new rule is designed to create more transparency for consumers, and it is intended to give insurers sufficient time to implement the new consumer protections in two phases.
The rule applies to all property/casualty insurers in Washington that sell private passenger auto and homeowners coverage, including coverage for manufactured homes, condominiums and renters.
The American Property Casualty Insurers Association has been reached out to for comment.
The rule specifies that from June 1, 2024, to June 1, 2027: When a policy renews and the premium increases, insurers must give policyholders who ask reasonable explanations using terms they can understand.
Starting June 1, 2027: Insurance companies must provide a written notice to policyholders who received a premium increase of 10% or more explaining the primary factors behind the increase. They are also required to provide this same notice to any policyholder who asks.
Primary factors include: the vehicle’s location, driving record, miles driven, number of drivers, claims history, discounts, fees and surcharges, the driver’s age, credit history, education, gender, marital status, occupation, property age, and value.
Topics Carriers Trends Pricing Trends Washington
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