OTTAWA, Jan. 10, 2013 /CNW/ - Today, 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 which supports IBAO'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," stated Randy Carroll, CEO of IBAO. "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."
The use of credit information to determine insurance premiums only serves to make it more difficult, if not impossible, for brokers to meet important obligations to their consumers. In addition, the use of credit scoring is not being used to predict whether consumers will pay their bills. IBAO believes this practice 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.
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. Unfortunately, the report released by the Commissioner reports: "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."
For more information, the ruling can be found at:
The Insurance Brokers Association of Ontario (IBAO) is a 'not for profit' association that represents and serves the interests of over 11,500 independent Property & Casualty Insurance Brokers in the Province of Ontario. For information about IBAO, visit www.ibao.org or www.ibao.org/blog to receive timely news and information updates. You can also follow IBAO on Twitter or join the IBAO Facebook Fan Page.
SOURCE: Insurance Brokers Association of Ontario (IBAO)
For further information:
Kalene DeBaeremaeker, IBAO Public Relations
E-mail: [email protected]