Washington State Insurance Commissioner Mike Kreidler has announced potential changes to the state’s new premium transparency rule, which aims to provide policyholders with more precise insights into why their insurance premiums are rising.
The proposed modification specifically targets Phase 2 of the rule, delaying the automatic requirement for insurers to include explanations for premium increases in renewal notices from June 2027 to June 2029. Phase 1, currently in effect, mandates that insurers provide reasons for premium increases upon request by the policyholder.
Commissioner Kreidler emphasized that the change in timing for Phase 2 would allow the Insurance Commissioner’s office to gather more comprehensive data on the implementation of Phase 1 and collaborate further with the insurance industry. “This transparency rule is important to consumers and insurers alike and is helping people get clear answers about why they are paying what they pay for insurance,” Kreidler said.
As part of the Phase 1 evaluation, the Office of the Insurance Commissioner will initiate a data call with insurance companies to assess its impacts and effectiveness.
Phase 1 and Phase 2: How They Differ
- Phase 1 (in effect now) requires insurance companies to include a disclaimer on renewal notices or billing statements, advising policyholders that they can request more information about premium changes. Insurers must respond to these requests within 20 days, providing a clear explanation for the premium increase.
- Phase 2, initially set for June 2027, would make the disclosure proactive, requiring insurers to include the reasons for a 10% or higher premium increase automatically with renewal notices. The explanation would need to cover the primary factors behind the change, which could include claims history, discounts, demographic details, and other rate determinants.
The current premium transparency rule, which covers auto and homeowner insurance policies in Washington, is a pioneering effort aimed at making insurance pricing more transparent to consumers. It was crafted following extensive consultation, including five interested-party meetings involving both consumers and industry stakeholders. The rule represents a significant shift in insurance regulation, with Washington becoming the first state to enforce such requirements.
Commissioner Kreidler’s proposed delay for Phase 2 reflects a desire for a smoother transition, ensuring both insurers and consumers have the information and clarity they need.