Washington State: Insurers must explain WHY premiums are increasing in clear, plain language

Note: The rule below actually doesn't apply to health insurance carriers, who I presume are bound by other federal and state transparency provisions in the ACA and other laws/regulations; it's primarily focused on auto and homeowner's insurance policies. I found it noteworthy enough to include here regardless, given my annual ACA rate filing project.

via the Washington Insurance Dept.:

Rule adopted requiring insurers to tell you why your premium is going up

OLYMPIA, Wash. — Washington state Insurance Commissioner Mike Kreidler has adopted a rule that requires insurance companies 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. “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.”

When consumers’ auto or homeowners insurance premium goes up, and the insurance company hasn’t explained why, consumers contact the Office of the Insurance Commissioner (OIC). When the OIC asks on their behalf, it gets a more detailed response — and Kreidler believes consumers deserve the same information. 

The OIC held five meetings with interested parties over the last year to understand why providing better transparency on premium changes was needed and to hear from the insurers directly. 

It 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.

The new rule creates more transparency for consumers and gives the insurers sufficient time to implement the new consumer protections in two phases. 

The rule applies to all property and casualty insurers in Washington state that sell private passenger auto and homeowners coverage, including coverage for manufactured homes, condominiums and renters. 

From June 1, 2024, to June 1, 2027:

  • When a policy renews and the premium increases, insurance companies 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 must also 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.

Sure enough, the actual language of the rule specifically exempts health & other complex medical insurance carrier policies...I'm assuming the actuarial language & data for healthcare policy is far too dense & complex for it to be practical to have to explain it using layman terminology?

(1) This chapter ap- plies to policies renewed on or after June 1, 2024.

(2) This chapter applies to authorized insurers with the follow- ing types of personal insurance policies: (a) Private passenger automobile coverage; and (b) Homeowner's coverage, including mobile homeowners, manufac- tured homeowners, condominium owners, and renter's coverage.

(3) This chapter applies to renewals of policies and will not ap- ply to the purchase of new policies or new insurance applications.

(4) Exemptions:

  • (a) This chapter does not apply to personal insurance policies for coverage of boats, motorcycles, off-road vehicles, recreational vehicles, antique or collector vehicles, classic vehicles, and specialty vehicles.
  • (b) Insurers of health, disability, life, and long-term care are exempt from compliance with this chapter. Health care services contractors and health maintenance organizations are also exempt from compliance with this chapter.