The Insurance Brokers Association of Ontario (IBAO) and member brokers are calling for a complete ban on the use of credit information when rating or underwriting insurance rates.

Current auto insurance regulations prohibit insurers from using certain financial and other ‘lifestyle’ information when underwriting policies but do not prohibit insurers from asking questions about financial information which, when asked, can put consumers at a disadvantage. There are no rules against the use of credit for other personal lines P&C insurance products.

“The use of credit is not in the best interests of consumers and is unacceptable,” says Rodney Hancock, IBAO chairma. “The only way to protect the interests of consumers is to have a complete ban and that means expanding current regulations in the Insurance Act that protect consumers from unfair or deceptive practices to include the use of credit.”

Ontario’s independent insurance brokers have long championed a full prohibition on use of credit information and were pleased to see the Financial Services Commission of Ontario (FSCO) issue a bulletin this past February that warned insurers about the rules regarding its use. But increasingly the association is hearing from consumers whose efforts to obtain insurance coverage or an insurance quote has been delayed or hindered because of their credit history or their refusal to grant access to the information.

“We’re seeing more and more occasions where insurers are using credit scores behind the scenes to segment prospective customers,” says Hancock. “The misuse of credit scores excludes eligible drivers and home owners from finding the most economical insurance coverage. In many cases, the people that suffer the most, newcomers, single families, the unemployed, and entrepreneurs who have taken out significant loans to start or grown existing businesses are the ones who cannot afford to be punished.”

FSCO is currently conducting a five-year review of the rules and regulation that govern auto insurance in the province. Ontario’s brokers support the recommendation for the prohibition of the use of credit information when determining auto insurance rates, but are urging the Ontario government to implement a full ban for all personal lines P&C insurance products.

“In order to put the interests of Ontario’s insurance consumers first, a ban on using credit ratings should, in addition to auto insurance, include personal line property and causality insurance products.” adds Hancock. “We must protect consumers for all their insurance needs, not just auto insurance.”

IE