Insurance industry silent on racial equity, but vocal on profits
Early last summer, Insurance Commissioner Mike Kreidler signaled his intent to propose legislation banning insurers from using consumers’ credit information. A month later, when the country began confronting its long history of racial injustice and major corporations — including top insurers — voiced their commitment to racial equity, Kreidler asked industry CEOs to join him in his effort to ban credit scoring.
The silence was deafening.
But based on what we know now, it really wasn’t shocking.
The CEOs of major insurers across the country expressed their commitment to racial justice through social media posts and ad campaigns. Throughout the pandemic, they showed their solidarity to the communities hardest hit through meager premium rebates and continued silence on what steps they were taking to flush out the racism permeating our institutions.
However, on the issue of credit scoring, they let the lobbyists and trade groups speak for them.
Despite support from all but one Democratic senator on the committee charged with moving Kreidler’s proposal (the chair, Sen. Mark Mullet of Issaquah, seems to think the pandemic actually helped people) insurance industry lobbyists gutted the bill in the industry’s favor. In fact, a lobbyist for Allstate — the third-largest property and casualty insurer in Washington — was enlisted to write amendments to the bill.
No insurance CEO testified or went on record with the media. Not one offered to discuss their belief on how communities of color and people with lower incomes are safe from the negative impacts of credit scoring.
We watched as the same lobbyists who spoke out against the credit scoring bill also joked about progressive actions Washingtonians support in lifting up their neighbors and protecting our environment. It really wasn’t shocking.
Neither was the news that despite premium rebates and record unemployment, insurers are doing better than expected. For every dollar of premium they collect, they’re paying out an average of 10% less in claims.
- Safe drivers with no claims and low credit scores in Washington are charged 79% more.
- Complaints to the federal Consumer Financial Protection Bureau jumped 54% to 542,300 in 2020, with the majority citing inaccurate information on credit reports.
- 87% of student loans are in forbearance, and
- The federal CARES Act that prevents reporting of some negative credit information is set to expire when the pandemic ends. Without these protections, many consumers will see their credit scores plummet. Insurers are relying on these scores to set premiums despite the dramatic fluctuations we anticipate people will endure.
So, given all of this, what IS shocking is that when Kreidler used his authority to protect consumers from a practice shown to negatively impact the lives of so many for too long — a step that is championed by the NAACP, WA Build Back Black Alliance, AARP, the Consumer Federation of America, and Consumer Reports — the insurance industry didn’t take him seriously.
Industry spokespeople claimed to be shocked that Kreidler put the insurance-buying public first. But with a national reputation of sticking up for consumers and more than two decades of fair and balanced regulation of a $47 billion industry in Washington, it shouldn’t surprise anyone that he made equity a priority.
Insurance CEOs offered only words. Then they let the associations they finance and the lobbyists they hire put their action into the value they treasure above anything else — profits. They blocked meaningful and long-overdue reform. Their actions speak volumes about where their commitment truly lies.