Washington State Proposes CreditInsurance Reform
OLYMPIA, Wash. - (12/24/04) -- The state Insurance Commissioner hasproposed a variety of reforms for the credit union insurancemarket, including greater payouts by the state's insuranceproviders. The proposals would require that buyers of credit lifeor credit disability insurance be told they have the right tocancel a policy within 30 days; that there might be a variety ofplans a consumer could purchase; and that consumers have the rightto provide alternative coverage of their own. Insurers would alsohave to disclose that credit insurance is not required for creditapproval. The proposals would also require insurance companies topay out at least 60 cents on every dollar of premium collect eachyear. The state's largest credit insurer, CUNA Mutual Insurance,which does business exclusively through credit unions, pays out thehighest amount, 60.6% of its premiums to policyholders in 2003. Thesecond-largest insurer, American Security Insurance, paid only8.4%. The state regulator found that credit insurers pay out anaverage of only 33% of the premiums they collect.