The Insurance Brokers Association of Ontario (IBAO) is urging the Ontario government to take action on the use of credit scoring to price home and other personal property insurance.

In mid-December, the Office of the Privacy Commissioner of Canada released a finding that IBAO says supports the association’s concerns that proper disclosure is not being provided to consumers when accessing credit information for insurance purposes.

Ontario brokers first raised this issue in 2009. Since then, IBAO has warned both the insurance industry and government that consumers are not being properly informed how the use of their credit information may affect their insurance premiums.

“We are extremely pleased with this significant finding, as it supports what we have been saying for years,” said Randy Carroll, CEO of IBAO, in a release issued Thursday.

“Consumers are not being protected under the current regulations, and we need the Ontario government to take action to ban the use of credit scoring in insurance,” he added.

IBAO believes the use of credit information to determine insurance premiums is unfair to consumers, is not transparent, and is inappropriate as a rating tool.

Furthermore, it has nothing to do with the insured risk. Nevertheless, many insurers are using credit scoring to significantly increase home insurance premiums, IBAO says.

In 2011, a ‘voluntary code of conduct’ was implemented by the Insurance Bureau of Canada (IBC) that states consumers must be informed when credit information is being used and must consent.

However, the report released by the Privacy Commissioner concerning complainants that saw their home insurance premium increase significantly states: “we note that the company does not appear to be following the guidance provided by its own industry association with respect to consent.”

“The industry is proving over and over they can’t be trusted to follow their own code,” continued Carroll. “This is one example of an insurance company using credit scoring without meaningful consent, but in truth, this is an industry wide issue and action must be taken to protect consumers.”