Insurance rate increases are challenging enough to deal with. But not knowing exactly why your rates are rising is even more frustrating. Fortunately, Washington state’s insurance commissioner recently enacted new rules to help policyholders understand the logic behind rate adjustments.
Insurance commissioner Mike Kreidler recently adopted a new rule requiring insurers to explain rate increases. The law affects all property and casualty insurance companies operating in the state that sell private auto and homeowners insurance. This includes insurers selling coverage for condominiums, manufactured homes and renters.
A statement from Kreidler’s office said that the rule was implemented after several meetings with interested parties. Those meetings revealed that some insurers’ rating formulas were so complex that they couldn’t immediately explain premium changes.
Why rate change transparency is important
You might be asking yourself: What does this rule mean to me? Knowing why your insurance premium is increasing might help justify the changes. But the rule can also help you discover if your insurer unfairly increases your rates for discriminatory reasons.
Washington state has laws prohibiting insurers from discriminating against their insureds in the amount of premiums charged. It’s believed that some insurers have used factors such as credit history, ZIP codes and even race to calculate premiums. If Washington’s new transparency rule reveals that your insurer increased your premiums based on discrimination, you could hold them responsible for such an unfair practice.
If you believe your insurer has unfairly increased your premium using discriminatory practices, consider seeking legal counsel before filing a lawsuit. You will need an ally experienced in insurance law to confront a major insurance company in court.